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Dolans' Dirty Dozen: The twelve most common taxpayer mistakes

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Filed under: Budgets, Tax, The Dolans

Ken and Daria Dolan are widely known as America's First Family of Personal Finance.

Here's a little tax trivia for you...

How many pages long is the United States Tax Code? If you guessed 18,500, you win the prize. It's no wonder that so many of us make mistakes when filing our federal income tax forms.

A mistake or two on your tax return can bring you unnecessary stress, delay your refund and subject you to more pesky paperwork -- or worse yet, an appointment with an IRS agent to fix the problem.

But here's the good news... The most common taxpayer mistakes are, for the most part, very simple to avoid once you know to watch out for them. So let's look at the Dolans' Dirty Dozen. Here are 12 common taxpayer mistakes you can easily avoid:

  1. 2 + 2 = 5. Math mistakes are one of the leading reasons the IRS adjusts returns. We know this sounds basic, but PLEASE double-check all figures on your return and use a calculator!
  2. Incorrect address. If you choose to file a paper return, be sure to use the address label off the tax return the IRS sent you. (You can make any necessary corrections right on that label). If you do not have a peel-off label, fill in all requested information in your very best writing so it's clear as can be. An incorrect address can lead to a delay in processing your return, or worse, IRS correspondence and refunds being sent to the wrong address.
  3. Incorrect filing status. Check only one filing status on the tax return and check the appropriate exemption boxes. Claiming the wrong status could negate your ability to claim the child tax credit, the earned-income credit and dependent exemptions.
  4. Using the wrong tax table. If you use the IRS tax tables, be careful to use the correct column for your filing status.
  5. Omitting or using the wrong Social Security number. The IRS computers will automatically reject your credits and deductions if your Social Security number is wrong.
  6. Direct Deposit errors. If you are asking the IRS to deposit your refund directly into your account, you must be sure you provide the right information. If your account number or routing number is off, your money will float forever between financial institutions!
  7. Incomplete/missing documentation. A complete set of supporting documents is vital to the efficient processing of your return. If the IRS can't verify the information that you provide, it may decide to make its own adjustments--and we don't want that now, do we! Be sure to attach your W-2, Wage and Tax Statement and any other forms that show any tax withheld throughout the year to the front of your return. Attach all other necessary forms and schedules (1099s, etc.) and especially receipts that back up your deductions/credits to your return as well.
  8. Failure to include payment. If you do owe money...enclose a check or money order with your tax return and write your Social Security number, tax form number and tax year on the payment.
  9. Failure to take tax credits and "above the line" deductions. Each year the IRS collects millions of dollars in overpaid taxes thanks to taxpayers who don't claim all the deductions and credits available to you whether you itemize or not. Such credits and deductions include child and dependent care expenses, student loan expenses, moving expenses, alimony paid and tuition expenses.
  10. Sending the IRS your only copy of important tax documents. Be sure to make a copy of your return and all documentation for your records in case you have to go into battle with the IRS.
  11. Failure to report ALL income. Unreported income is a serious mistake that can lead to civil and criminal sanctions, even if it was an accident. DON'T CHANCE IT -- double check that you have reported any and all income.

    And... finally:

  12. Failure to sign and date the return. The EASIEST part of filing... but one of the most common mistakes people make. As far as the IRS is concerned, if you don't sign the return, YOU HAVEN'T FILED. And we all know not filing means all kinds of problems and penalties! Don't forget--BOTH spouses must sign a joint return.

There you have it --12 common mistakes to avoid when filing your taxes this year. Keep this list handy. A five minute run through it once more as you finish up your return can save you a lot of headaches and possibly some big bucks!

Ken and Daria Dolan of Dolans.com have hosted their own national radio program for 22 years, anchored their own television shows on CNN, authored six books on money matters, served as money contributors on CBS This Morning and have now launched a comprehensive web site and free e-letter at Dolans.com.

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