Bankrate.com

Many people try to reduce the possibility of filing errors by turning
their returns over to tax professionals or using computer software.
But even in these cases, a close review of your return is critical. In
the final inspection you might find something that slipped by you on
the computer screen or that your accountant entered incorrectly. Such
scrutiny is important since you bear the ultimate responsibility for
your tax bill.

10 common tax mistakes

1. Making math blunders
2. Entering wrong ID numbers
3. Ignoring IRS material
4. Picking the wrong 1040 form
5. Omitting some forms
6. Overlooking unearned income
7. Using the wrong tax table
8. Fumbling payment procedures
9.Forgetting to sign the return
10. Missing the deadline

1. Making math blunders

Far and away, says the IRS, the most common mistake on tax returns is
bad math. Numbers are transposed, left out or totaled incorrectly. And
since a total figured on one tax form or work sheet often is
transferred to another form (or forms), that one simple mistake could
quickly compound into a very costly miscalculation.
Even if you use tax software, you're not off the hook. Sure, the
computer program will do the figuring for you, but if you put the
wrong numbers in to begin with, the machine won't catch that. So
double-check your entries, whether on paper or on your PC.

2. Entering wrong ID numbers

These nine-digit identifiers are crucial to tax forms. Write your
Social Security number correctly and clearly on each page of your tax
return. If you're married and filing jointly, be sure that your
spouse's Social Security number is entered correctly, too.
Don't forget about your dependents, be they your children or an older
relative for whom you're financially responsible. An incorrect Social
Security number in any of these cases could delay your refund or cause
the IRS to nullify some credits you might claim.
Your Social Security number also shows up on various income documents,
from your W-2 form to investment and savings account statements to
retirement plan contribution reports -- and the IRS gets copies of all
of these. Tax examiners will be looking at each of these documents
closely, both the amounts earned and the taxpayer's ID number.

3. Ignoring IRS material

More than 73 million people filed electronically this year. But almost
63 million others sent in paper forms. If you still fill out your
return by hand, use the label preprinted with your name and address
along with the envelope that comes with your tax packet to send in
your form.
Your address label will help IRS employees more easily read your
personal information. Even if it's not correct because, for example,
you moved, use it and simply cross out the wrong information and
correct it by hand.
The envelopes, or in some instances, labels printed with the IRS
delivery information, are color-coded to notify tax processors whether
you're getting a refund or are sending in a check. By using the
appropriate envelope or label, your 1040 will get to the correct
office sooner, meaning you'll get your refund more quickly.
Similarly, the pre-addressed envelope or label will ensure that your
return goes to the proper processing site. The IRS has reorganized its
service center operations in recent years, so it's possible your
return could be handled at a different location than it was last year.
The envelope or label has the correct delivery data.

4. Picking the wrong 1040 form

There are three types of 1040 forms, and tax experts, including those
at the IRS, suggest taxpayers use the simplest one possible that meets
your tax needs. But make sure that it does indeed get you the best tax
result.

In some cases, the long Form 1040 is the best move, even if your tax
life is not that complicated. You don't have to fill out every line on
the two-page form, just the ones that apply to you. And since it
offers several more ways to cut taxes than are found on the slightly
shorter 1040A or shortest 1040EZ, it could really pay off.

So take a few extra minutes to look over all three forms and determine
which one best suits your tax situation.

5. Omitting some forms

Again, this is a problem primarily for paper filers. These taxpayers
need to be sure they include their W-2 forms (Copy B) to avoid delays
in processing their returns.

If you received a Form 1099-R that reports federal income tax
withheld, Copy B of that form needs to go into the envelope, too.

And if you have several additional forms, don't forget those either.
That extra paperwork you worked through to gain a tax credit or
deduction won't do you any good if it doesn't make it to the IRS. The
IRS also recommends that you put the forms in proper order behind your
1040. Each one has an attachment sequence number in the upper right
corner, just beneath the year notation.

6. Overlooking unearned income

Thanks to your Social Security number on financial accounts, the IRS
knows exactly how much you make in interest and dividend income each
year. The tax agency gets copies of your Form 1099 earnings each tax
season, and they will use the documents to double-check your filing
information.

So be sure to collect all those earnings statements and put the total
taxable amount on your return. If you don't, IRS return examiners will
let you know what you forgot, usually along with an added bill for
penalty and interest charges that accrued because of your interest and
dividend filing oversight.

7. Using the wrong tax table

It's easy to make a mistake reading the tax tables found in the tax
return instruction booklets. The print is small, and there's a lot of
data crammed on the pages. Make sure you use the correct column for
your filing status.

Using any tax table could be an even costlier mistake for some filers.
If you have long-term capital gains income, you'll need to do some
additional figuring to ensure you don't overpay your taxes, since the
tax rate on this money is usually much lower than regular income tax
rates.

8. Fumbling payment procedures

If you write a check for any taxes you owe, be sure you sign it,
include your Social Security number on it and make it payable to the
U.S. Treasury, not the IRS.

Don't staple the payment to your form; simply include it in the
envelope. IRS examiners want to get payments into the government
account as quickly as possible, even before they check the accuracy of
returns. If they have to pull the check off your form, some other
documents (for example, your W-2) that are necessary to complete the
processing could be separated and lost.

Be just as careful if you're getting, instead of making, a tax
payment. If you have your refund directly deposited, make sure that
you correctly enter your financial institution's routing number and
your account number on your return. Wrong numbers can cause your
refund to be delayed or misdirected.

9. Forgetting to sign the return

It's the last thing you must do when filing, but many taxpayers who
send in paper 1040s forget to sign the form. The oversight could be
quite costly. The IRS won't process a tax return that lacks a
signature.

If you make this mistake in February, you still have plenty of time
for the IRS to notify you and then refile a signed form. But if you
forget to sign a return you mail just before the April deadline, by
the time you correct the oversight, you'll be in late-filing
territory, which carries an automatic penalty.

10. Missing the deadline

You wouldn't think that people could overlook April 15, but it does
happen. Maybe time just got away from you or an emergency arose that
prevented you from filing on time.

Regardless, the result is the same: If you owe the government and
don't pay by the deadline, you'll end up owing additional money. The
IRS imposes both failure-to-file and failure-to-pay penalties. The
total late-filing penalty is usually 4.5 percent of the tax you owe
for each month, or part of a month, that your return is late; this
accrues for up to five months. If your return is over 60 days late,
the minimum penalty for late-filing is the smaller of $100 or 100
percent of the tax owed.

And remember, you'll also owe interest on the unpaid amount.

If you just can't get the forms completed on time, ask for an
automatic six-month extension by filing Form 4868. By filing the
extension, you avoid the late-filing penalty. However, Form 4868 does
not extend the time to pay your income tax. So, estimate your tax bill
and send that amount with your Form 4868. If you can't pay it all, at
least pay whatever amount you can. The IRS is amenable to several tax
payment options.
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