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1 In 5 Haven't Filed Taxes Yet; Have You?

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1 In 5 Haven't Filed Taxes Yet; Have You?

It's the homestretch to Tax Day, and many have yet to finalize their tax preparations. According to the IRS, an astonishing one in five American tax payers wait until the last week to file.

While the number of procrastinators is shockingly high from a purely statistical perspective – considering the amount of time that has passed for Tax Season '15 against the days left – there is no penalty for filing right up to the deadline. If electronic submissions are completed before 11:59 p.m. Eastern Standard Time on April 15, or snail-mailed paper returns are post-marked April 15, the difference between filing at the countdown as opposed to in January is obsolete.

Additionally, some investors postpone filings until later in the tax season to optimize their returns by maximizing interest.

Whatever the reason for late-in-the-game filing, human nature often steps in and ignites a ravenous sense of urgency that frequently leads to clumsy, avoidable mistakes. The good news is that these mistakes are far from inevitable; simply slowing down and paying attention to details can prevent many of the most common tax pitfalls.

Related Link: 67% Of Millennials Expect Tax Refunds

The Most Common Pitfalls

According to e-filing company Turbo Tax and the IRS, the most frequently cited mistakes on tax filing documents are:

  • Math Errors
  • Illegible Handwriting
  • Unendorsed/Undated Forms

Math Errors

The Situation: Errors involving numbers are among the top tax blunders, whether due to miscalculations or incorrect number order or dropped digits (think Social Security numbers, birthdays, digits misplaced when copying from W2s to the return forms).

The Solution: In order to avoid math errors, make sure to double check all calculations and transfers of number sequences. Use a calculator or Excel spreadsheet if necessary. Even if you rely on an electronic program to complete your taxes, recognize the potential for human error when imputing the numbers at the very beginning of the process.

Pay Attention To:

  • Withholdings
  • Estimated tax payments
  • Taxable amounts for Social Security
  • Earned income credit
  • Disability deductions
  • Social Security numbers
  • Birth dates
  • Routing numbers: Not only make sure that routing numbers are identical to the bank's number sequence, but that they are not switched with account numbers.
  • Account numbers: As mentioned above, account numbers and routing numbers are often accidentally switched. Make sure the appropriate series of numbers is attributed to the appropriate category.

Related Link: Most Tax Refunds Will Go Toward Debt Savings

Nitty Gritty Details

The Situation: As unbelievable as it may sound, spelling errors account for a large number of reported tax errors. In particular, sloppy handwriting on paper forms and name changes are among the most notorious culprits.

The Solution: Pay attention to any legal name changes that occurred within the last fiscal year, including adoptions, maiden names to married names and divorcé/reclaimed-maiden names.

Pay Attention To:

  • Social Security Cards: Check and double check that the names used on all forms match the legal names registered through the Social Security office.
  • Legibility
  • Hyphenation
  • Legal middle initials, as listed on Social Security cards

Filing Status

The Situation: Households are rarely a portrait of a "1950s picturesque father, mother, two young kids" family. Whatever the makeup of your household, be aware of complications that might arise from your unique situation. Whether domestic partnerships make claiming head of household less straightforward, blended families necessitate arduous discussions over claiming dependents or young adult children file as non-dependents while parents still claim them, filing statuses and claiming should not be rushed through.

The Solution: Communicate. Make sure that everyone in the household and legally associated with the tax-filing household is on the same page.

Pay Attention To:

  • Non-minor children who could be claimed as dependents
  • Split households claiming the same dependents
  • Head of household should be claimed by only one member
  • "Married, filing _______"

Related Link: Be Wary: Tax Time Is Prime Season For Fraud

Final Errors

The Situation: Even if all of the calculations are completed correctly, errors can still be made up until the very end of the process.

The Solution: Double check everything.

Pay Attention To:

  • Deadline: Paper forms must be postmarked April 15. Not in the mail to the post office on April 15, but at the post office and stamped as sent to the IRS by no later than April 15. If filing electronically and waiting until the last minute, be aware that submissions must be sent by 11:59 p.m. Eastern Standard Time.
  • Signatures
  • Dates
  • Enclosed payments

Regardless of why your taxes have yet to be filed, inaction is the opposite of a solution. Get prepared, be aware of potential pitfalls and double check everything before submitting.

Submitting later in the season does not need to be a tax death sentence. Take control over your own financial situation and arm yourself with the necessary precautions to avoid these common mistakes.

Image Credit: Public Domain

Posted-In: IRS TurboTaxEducation Personal Finance General Best of Benzinga

 

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