Even though May 17 was the deadline to file and pay federal income taxes for most people, some taxpayers may still be dealing with tax-related issues. If this is your case, here are some tips to avoid filing errors.
Filing your tax return is probably one of your least favorite things, but it’s not optional. If you still haven’t filed your return this year and are doing so now to be able to get the advance CTC payments, missing EIPs or any other credit you are eligible to receive, here are the main things you should do to avoid common mistakes.
1- Avoid Filing under the wrong status
Filing under the correct tax status is important because it determines what you’re eligible for when it comes to claiming tax credits and/or deductions. It also helps you determine how much tax you owe.
The five statuses you can choose from are: Single, Married filing jointly, Married filing separately, Head of household, and Qualified Widow with a qualifying child.
Mistaking your status can add up to lost opportunities for getting a bigger tax refund, so if you have doubts, the IRS offers a helpful tool to decide, on its website.
2- Don’t miss out on tax credits
Taking advantage of tax credits is important for they can help reduce what you owe in taxes for the year on a dollar for dollar basis. They are a credit against the amount of tax owed, and though that may sound like a tax deduction it’s not. Deductions are amounts you can subtract from your taxable income for the year.
Some of the most valuable tax credits include: Child Tax Credit, Dependent Care Credit, Earned Income Tax Credit, or Savers Tax Credit, for example.
You must avoid missing credits by researching which ones you’re eligible for. Each tax credit has its own eligibility rules and they also differ when it comes to how much each credit is worth.
If you feel you are not prepared to do this yourself, online tax preparation companies can review your information and tell you which credits you might be missing out on.
3- Organize your paperwork
Hitting an early start and organization will help you avoid the risk of filing late or missing out on a tax break. Tracking your expenses with an app or your bank account, filing your taxes online, having a checklist of necessary documents, or creating a filing system for paper receipts, will help you be organized if you are filing now or when tax season arrives again.