The 7 Dumbest Last-Minute Tax Mistakes People Make
Take a deep breath. Rushing through most anything lends itself to silly, last-minute errors, and taxes are no exception.
"It's like homework," says Certified Financial Planner Keith Klein of Turning Pointe Wealth Management in Phoenix, Ariz. "You can only do so much, so long, and then you get distracted."
If you're scrambling to get your taxes together at the last minute, it's easy to slip up and enter a wrong number, which can lead to even more paperwork in the form of a tax amendment or paying additional fees to the IRS.
Now that we're getting down to the wire, Klein shares some of the dumb, last-minute filing mistakes you'll want to avoid.
1. Mixing up your federal and state taxes. Tax-preparation software and e-filing can catch a lot of errors, but you're the only one who can keep your envelopes straight. "Even if you're using apps to track your spending and software to file your taxes, you can still send your check to the wrong place," Klein reminds us.
2. Making basic arithmetic errors. Third-grade math has come back to haunt you at last. "I see people adding and subtracting wrong, putting decimals in the wrong places, or making negative numbers positive and vice versa," recalls Klein. "By simply neglecting a minus sign, you could turn a loss into a gain and owe taxes on that money."
The IRS says that most basic calculation errors are caught while processing, so you probably won't need to file an amendment if you added two and two up to five. However, if the IRS catches your mistake, it will issue a correction notice to let you know - and a request for more money if your errors resulted in your paying less than you owe.
3. Forgetting to file extensions. April 15 is not only the filing deadline for your taxes, it's the payment deadline, too. "Even if you're going to file an extension, you have to submit it with a payment," says Klein. "But some people plan on filing extensions … and just plain forget to do it."
The IRS isn't going to forget about your taxes. It will charge you a monthly fee of 5% of what you owe for each month you wait to file, up to 25% of your taxes. If you haven't filed by 60 days after the deadline, you'll owe a fee of either $135 or 100% of your taxes, whichever is lower.
4. Filing under the wrong name. It seems like a stretch, but it's actually not uncommon among newly married people to file with the wrong last name. "Sometimes someone will file under a married name, but hasn't legally changed it," Klein explains. When filing, you need to make sure you're using your legal name, which isn't necessarily the one on your mailbox.
5. Entering the wrong Social Security number. Sure, you know your number by heart, but even the best of us have made a typo (or filled in a three that looks a little too much like an eight). You're going to want to be extra careful when entering those nine digits, because a lot depends on your accuracy. "Your Social Security number is the key thing on your return," Klein says. "Everything is documented under it."
6. Neglecting a form. The more complicated your financial situation, the more forms you may need to submit. "Sometimes people are supposed to include another form, like an extra Schedule C for people who are self-employed, and it just isn't there," Klein says. You can find the basic forms on the IRS website, as well as a handy checklist that outlines some of the forms you might need.
The IRS says that it "may accept returns with certain forms or schedules left out," and will reach out and request a missing W-2 or schedule. So an amendment most likely isn't needed ... but who wants a letter from the IRS?
7. Forgetting to include life events. Did you buy a house this year? Get married? Have a baby? Congratulations! Now, make sure to share the joy on your tax return. "Even for people using software programs, you need to remember to input key events," cautions Klein. "Technology won't realize that on last year's return, you had two kids, and this year you forgot to add your third."
How do you keep from tripping up - and potentially paying up? According to Klein, there's nothing better than a second pair of eyes. "The reality is that there's always a benefit to having someone take a second look at your return, whether that's a husband filling it out and a wife checking his work, running it through a tax-prep program, or seeing your CPA. Even really good CPAs use software to double-check their work."
While filing an amendment isn't the end of the world, Klein says, you don't want to give the IRS another reason to comb through your return. "Any time you open up a can of worms, you never know what might happen," he reminds us. "But if everything's on the up and up, it will all work out well."