Checklist of 36 Tax Filing Errors to Avoid

Checklist of 36 Tax Filing Errors to Avoid

Taxes are hard enough without making avoidable errors. Before you file, double check to make sure you do not make these errors.

1. Not signing the return (if you file paper copies)
2. Number transposition and spelling errors
3. Unchecked or unanswered questions
4. Entering incorrect or unpaid estimated tax payments
5. Missing pages in a paper filed return
6. Not correcting reason for a tax notice for a prior year, on this year’s return, if there is a continuing issue
7. Underpaying or overpaying [Ugh!!!] the tax due
8. Sending your tax check to the wrong tax agency
9. Not calculating underpayment penalty, if applicable
10. Not calculating a penalty on an early withdrawal from a retirement or IRA account; or calculating a penalty on a permissible early withdrawal
11. Paying tax and penalty on IRA distributions that were timely rolled over to another IRA account
12. Not calculating self-employment tax on freelance income or commissions
13. Responding to an email notice from a tax agency – they do not send emails. You received spam
14. Your paid preparer did not sign your return or enter their ID numbers
15. Claiming the wrong exemptions or omitting a correct Social Security Number
16. Claiming an exemption for someone that properly can claim themselves (this can occur when a dependent marries during the year; or no longer qualifies as a dependent such as because of excessive income and no longer a student for at least five months of the year; or a child you support where your ex-spouse is entitled to the exemption under a divorce agreement)
17. Omitting a Social Security Number for someone you paid alimony to
18. Not itemizing deductions where you should have
19. Claiming excessive home mortgage interest deductions is a red flag. Interest on home mortgages over $1,100,000 is not deductible
20. Deducting points in full on refinanced mortgages, instead of amortizing them
21. Reporting mortgage interest and real estate taxes on rental properties as itemized deductions
22. Not claiming investment interest costs property and not being aware of limitations
23. Omitting or reporting incorrect state tax payments and withholdings as an itemized deduction
24. Reporting deductions that stretch the imagination, e.g. someone with high debt indicated by mortgage and home equity loan interest usually won’t be making cash charitable contributions equal to 16 percent of their gross income
25. Not properly picking up carry forward expenses or credits from the prior year’s return. This includes charitable contributions, investment interest expense, net operating loss deductions, capital losses, suspended losses from passive activities, alternative minimum tax credits and foreign tax paid credit
26. Reporting as income the state tax refund you received and that was reported on a 1099 when you did not get a full deduction for that on your prior year’s return because of “disallowance” by being subject to the alternative minimum tax
27. Not correctly answering foreign account questions on bottom of Schedule B especially when Schedule B is not otherwise required to be filed and then not filing the FBAR forms
28. Overstating charitable contributions
29. Not having proper charitable contribution receipts in your possession when you file your return claiming those deductions. If you made a gift of tangible property over $5,000 you also must have a certified appraisal and other forms attached to your return
30. Reporting incorrect tax on net investment income – this is the 3.8% tax that became effective for 2013
31. Real estate professionals that do not claim themself as such if they are subject to the tax on net investment income
32. Reporting incorrect cost basis on sales of capital assets. This is common with inherited stocks, stocks received as a gift or dividend reinvestment account accumulations
33. Reporting gross sales from brokerage transactions that are less than the amounts reported on the 1099s issued by your brokers
34. Not reporting proper basis on employer stock sales that were also reported as income on your W-2 form
35. Self-correcting and reporting the “correct” amount where you received an incorrect 1099 (and cannot get a corrected 1099 in time to file your return). You should report on your return the amount on the 1099, even if it is wrong, and subtract an adjustment on another line so the net amount is the proper income you received
36. Omitting allowable IRA, Roth IRA, SEP or other retirement plan contributions

And… make sure you e-file or mail your return by the April 15 due date!