No one likes paying taxes, but we do it. It's the law. It needs to be done right, too. Mistakes and errors may mean you're paying too much in taxes or you're not getting all of the refund you're entitled to. It also means you may face fines, penalties and even criminal charges.
Here's a list of important things to keep in mind to help you avoid the pitfalls when it comes to your taxes.
- No matter you you've read or heard, you're legally required to pay income taxes
- Keep everything: receipts, cancelled checks, medical bills, etc., for your deductions
- Don't wait until the last minute to gather documents
- Put documents in a folder or envelope throughout the year
- Check your math, even if you use tax software or a paid tax preparer
- Use the right filing status
- Divorced parents can't both claim a child as a dependent
- The IRS does look!
- Documents like 1099s, W-2s, and other income statements are tracked by the IRS
- Make sure to report all income as shown on these statements
- Debt relief usually has tax consequences, so think carefully about it
- Get appraisals or repair-replacement estimates for property damaged or destroyed by a fire or natural disaster
- If you can't file in time, ask the IRS for an extension as soon as possible!
- Contact an experienced tax attorney if you have any questions about your taxes or if you're audited later
Taxes can be complicated and stressful. Being well-prepared and organized and knowing how to avoid common errors can make the process much easier.