It’s Tax Time Once Again – Tax Mistakes You Need to Avoid

Posted April 6, 2009 by Bernz

Using tax preparation software has a lot of benefits. It allows many people to submit accurate tax returns. However, it is important to remember that even one error in your computer can cost you a lot of money.

irs

To give the right information to the IRS promptly, it is important to avoid the common pitfalls.

Here are some mistakes people commit every year during the tax filing season:

• Direct Deposit Pitfalls –Although it can help you save money on refunds, the chance of committing mistakes is also great. Giving the wrong routing number of account number can let you lose your refund completely. Make sure that you file every donation you have given for the past year. Follow the donation tax rules completely. Take note that the amount is only deductible if the organization has a tax-exempt standing with the IRS.

• PMI Deductions – the private mortgage insurance is a requirement for homeowners who gave a down payment of less than 20 percent. As of 2007, homeowners can now get deductions on their PMI premiums. And this law extends through 2010.

• Unearned Income – never forget to include your unearned income. Remember that since your Social Security number is submitted to financial institutions, the IRS knows how much you’re really earning. In addition, these institutions send the 1099 form to the agency. If you don’t include this during the filing process, you may have to pay penalties.

• Not being honest with your income reporting is probably the biggest mistake a taxpayer could ever make. It’s always better to be on the safe side when it comes to filing your return. “Don’t mess with the IRS”

I used to buy a tax preparation software to do my taxes but now use the services of an Accountant. I strongly recommend you use a professional tax preparer if you can afford one.

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This entry was posted on Monday, April 6, 2009 at 5:36 pm and is filed under Tax Reduction. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

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