Tax season can be stressful for many people, especially those who have little experience filing their returns. A small mistake can cause delays in processing your refund, trigger an IRS audit, or even result in penalties. That’s why it’s essential to understand the most common tax filing errors and learn how to avoid them. If you live in Denver, Colorado, and want to ensure that your tax return is accurate and efficient, follow these tips.
1. Double-Check All Personal Information
One of the most basic yet frequent mistakes when filing taxes is entering incorrect information. Make sure you correctly enter your full name, Social Security number, and filing status, as even a minor typo can delay the processing of your return. Also, double-check that your dependents’ information is correct—errors in your children’s or spouse’s details can prevent you from qualifying for certain tax credits.
2. Do Not Omit Any Income
All income you earned during the year must be reported, including freelance work, investments, and rental income. Many people only report income from their primary job and forget to include other sources, which can lead to problems if the IRS detects discrepancies with the information it already has on file.
If you worked as an independent contractor or participated in gig economy activities (such as Uber, DoorDash, or Airbnb), make sure to include any 1099 forms you received. Failing to report these earnings could result in penalties and additional tax payments later on.
3. Take Advantage of All Available Tax Credits and Deductions
One of the most costly mistakes is failing to claim tax credits and deductions that you may be eligible for. There are numerous opportunities to lower your tax bill or even increase your refund. Some of the most valuable tax credits include the Earned Income Tax Credit (EITC), the Child and Dependent Care Credit, and Education Credits.
Additionally, if you are self-employed or own a business, you can deduct expenses related to your work, such as office supplies, internet costs, business travel, and insurance. Taking the time to research which credits and deductions apply to your situation can save you a significant amount of money.
4. Don’t Forget to Sign and Date Your Return
It may seem like an obvious mistake, but many tax returns are rejected simply because they are unsigned. If you’re filing a paper return, make sure to sign and date it correctly. If you’re filing electronically, verify that you’ve entered your Personal Identification Number (PIN) or digital signature, as this is the electronic equivalent of signing your return.
5. Choose the Right Payment Method If You Owe Taxes
If you find that you owe taxes when filing your return, it’s essential to make a payment before the deadline to avoid interest and penalties. Many people make the mistake of not paying on time because they think they cannot afford the full amount immediately.
If you’re in this situation, you can set up a payment plan with the IRS to break your tax debt into manageable installments. You can also pay using a credit or debit card through the IRS website. The key is not to ignore the debt, as interest and penalties can quickly accumulate.
6. Do Not File Late
Filing taxes after the deadline without requesting an extension can result in significant penalties. Even if you cannot pay the total amount owed, it’s better to file on time and then arrange a payment plan.
If you need more time to prepare your return, you can request an extension, which gives you up to six additional months to file. However, keep in mind that an extension only grants extra time to file, not to pay any taxes owed.
7. Verify Your Banking Information for Direct Deposit
If you’re expecting a refund, the fastest way to receive it is via direct deposit. However, many people make mistakes when entering their bank account or routing number, which can cause the IRS to deposit the refund into the wrong account or reject the transaction. Before submitting your return, double-check your banking details to avoid delays in receiving your money.
8. Use Tax Software or a Professional for Greater Accuracy
While you can file your taxes on your own, using tax software can help minimize errors by automatically completing calculations and checking for missing credits or deductions. You might also consider hiring a certified tax preparer, especially if you have a complex financial situation, such as multiple sources of income, rental properties, or self-employment earnings.
Tax professionals can help you identify opportunities to save money and ensure that your return is accurate and compliant with all tax regulations. Additionally, if you are ever audited by the IRS, having an expert’s assistance can be invaluable.
9. Do Not Overlook Electronic Filing
Filing your return electronically is one of the best ways to avoid mistakes. Electronic filing systems automatically verify calculations and reduce the risk of omitting important information. Additionally, e-filed returns are processed much faster than paper returns, meaning you can receive your refund sooner.
The IRS recommends filing electronically and choosing direct deposit to speed up processing and reduce the likelihood of errors.
Conclusion
Avoiding mistakes when filing your taxes in Denver, Colorado, is essential to ensuring that your return is processed smoothly and that you receive any refund you’re entitled to as quickly as possible. From verifying personal information to claiming all eligible credits and deductions, every detail matters when it comes to taxes.
Taking the time to review your return, filing on time, and selecting the best payment or refund method can make a significant difference in your tax experience. If you’re unsure about certain aspects of your tax return, consider using tax software or consulting with a professional to avoid costly mistakes.
With proper preparation and avoiding these common errors, you can make tax season much easier and stress-free.
