Common Tax Filing Errors – Did You Know? (2/2)

Every year, many taxpayers may make mistakes on their returns that cause IRS processing delays. Some common errors may also result in paying too much or too little tax. A miscalculation in either direction can be costly, since the IRS may assess penalties for underpayment.

The following mistakes can cause filers to pay the wrong amount of tax:

Math Mistakes:
Even mathematicians sometimes make errors in simple addition and subtraction, and some of the calculations required for 1040 schedules can be complicated. Thoroughly double-check every bit of math on your return.

Incorrect Filing Status (Single, Married Filing Jointly, etc.):
The IRS will not accept a return showing a filing status that you are not eligible to claim. If you qualify for more than one status (for example, filing jointly or separately if you are married), the option you choose may significantly change your tax.

Incorrectly Figuring Credits or Deductions:
Once you determine that you qualify for a tax deduction or credit, you must carefully compute the amount that you can claim. Many taxpayers fail to take into account income limitations (including the calculations that must be made if your income falls within a “phase-out” range) and other restrictions. Others claim less than they could, or miss out on deductions and credits entirely by not filing the required forms and schedules. The IRS notes that filing errors are common among taxpayers eligible for the earned income credit (EIC) and/or Child and Dependent Care Credit.

Expired ITIN:
Those who file their IRS returns using individual tax identification numbers (ITINs) must keep in mind that ITINs periodically expire. Although a return filed with an expired ITIN may be accepted, the IRS generally will not allow any of the exemptions or tax credits claimed. The taxpayer must renew their ITIN in order to obtain the full refund that they are owed.

To avoid costly mistakes, the IRS recommends having a tax professional prepare or check your return and file it electronically. A tax pro might also help you claim deductions and credits that you would otherwise miss. ... See MoreSee Less

Common Tax Filing Errors – Did You Know? (1/2)

Every year, many taxpayers may make mistakes on their returns that cause IRS processing delays. Some common errors may also result in paying too much or too little tax. A miscalculation in either direction can be costly, since the IRS may assess penalties for underpayment.

The following mistakes may not change your tax, but they can cause processing problems. The IRS may even withhold your refund until the errors are corrected. Be sure to check for the following:

Missing or Inaccurate Social Security Number (SSN):
Even when filing electronically, many people mistype their SSNs and do not catch the error. If the SSN on your return does not match the number on your Social Security card, the IRS may not be able to process your return.

Misspelled Name:
Take your time when filling in every blank on your return, even your name. A misspelling or illegible writing can prevent proper processing.

Incorrect Bank Account or Routing Number:
Getting your return filed electronically and requesting direct deposit is the fastest way to get your refund, IF you provide accurate information. An error in your banking info can cause big headaches.

Missing Signature:
Remember that in most cases, couples filing jointly must both sign their return.

To avoid costly mistakes, a tax professional can help prepare or check your return and file it electronically. A tax pro can also help you claim deductions and credits that you would otherwise miss. ... See MoreSee Less

Important Tax Documents Now Available via IRS Online Account – Did You Know?

For the 2025 tax filing season, the IRS has expanded the services available through a personal IRS online account. You can now use your online account to access copies of important tax documents like W-2 forms, as well as transcripts of more detailed income records. You can also retrieve details from your most recent tax return, such as your adjusted gross income (AGI).

Many of these records include figures you will need in order to file a complete and accurate 2024 tax return. The ability to access all the documents in one place online can be particularly helpful to those who have misplaced paper records, or lost them in a disaster.

You can set up an online account for free by visiting the IRS website (link below). The process usually takes about 15 minutes. Once you create your account, you can use it to access a wide range of IRS services, including creating an identity protection PIN to prevent scammers from filing bogus tax returns in your name.

Create or access an online IRS account: www.irs.gov/payments/online-account-for-individuals ... See MoreSee Less

Additional Child Tax Credit Changes – Did You Know?

Congress enacted several rule changes for tax year 2024 for the Additional Child Tax Credit (ACTC), a companion credit to the standard Child Tax Credit (CTC).

The maximum CTC amount for 2024 is $2,000 per qualifying child and the credit is nonrefundable, which means that if your CTC amount exceeds the tax you owe, you cannot receive the excess credit as a refund. However, many people who qualify for the CTC are also eligible for the ACTC, which makes the CTC at least partially refundable. For 2024, the maximum ACTC amount is $1,700, a $100 increase from 2023. In addition, new rules have made millions more residents of Puerto Rico eligible for the ACTC than in the past.

A tax professional can help you determine whether you qualify for these and other valuable credits, and help you e-file your return to get your refund as quickly as possible. ... See MoreSee Less

Increased Standard Deductions and IRA Contribution Limits for 2024

Several key deductions and account contributions limits have increased from 2023 to 2024. In particular, standard deductions rose to $14,600 for single filers and married people filing separate returns, $21,900 for head of household filers, and $29,200 for joint filers. All of these figures represent increases of at least $750 over 2023 levels.

The annual contribution limit for IRAs also increased by $500 in 2024, up to $7,000 for people under 50 years old, and $8,000 for those of age 50 or older. If you have not yet reached this limit, then you may still make 2024 contributions to your traditional or Roth IRAs up until April 15, 2025.

A tax professional can help you take advantage of these and other IRS rule changes for 2024, and file your return electronically to get your refund as quickly as possible. ... See MoreSee Less

FinCEN Updates BOI Reporting Deadlines

Under the rules of the Corporate Transparency Act (CTA), most U.S. companies, including many small businesses, must disclose ownership information to the federal government. Specifically, affected business entities must file a report of beneficial ownership information (BOI) with the federal Financial Crimes Enforcement Network (FinCEN).

Originally, FinCEN set a BOI reporting deadline in early January 2025 for all affected businesses that were founded before the end of 2024. However, that deadline was suspended multiple times due to pending litigation related to the CTA. Recently, FinCEN officials announced the following, updated filing deadlines:
- For businesses that were previously given deadlines after March 21, 2025 (for example, due to disaster-related filing extensions), those deadlines remain in place.
- For all other affected businesses, the deadline to file an initial or updated BOI report is now March 21, 2025.

Multiple court cases related to the CTA are still ongoing, and Congress is debating legislation that would further delay the first BOI reporting deadline. In addition, FinCEN is considering additional deadline extensions and/or exemptions for some small businesses. Note that most sole proprietorships are already exempt from BOI reporting requirements. ... See MoreSee Less

Potentially Taxable Income - Did You Know?

In addition to any wages you received as an employee (usually shown on Form W-2), other types of income that you may need to report include:

- Earnings from self-employment activities like freelancing or gig economy work
- Revenue from selling crafts or other goods online
- Investment income like dividends, interest and capital gains
- Prizes, awards or gambling winnings
- Earnings from part-time or seasonal work, or from offering services through a mobile app
- Gains from transactions involving cryptocurrency or other digital assets

Note that certain types of income, such as child support, may be excludable from the total income you report on your tax return. A tax professional can help you determine whether you qualify for any income exclusions, and help you properly report all of your other income to ensure a hassle-free filing season. ... See MoreSee Less

IRS Online Account Setup Scams – Did You Know?

Each year, the IRS issues a list of the most prevalent scams that put taxpayers' identities and hard-earned money at risk.

In the IRS Online Account scam, the scammer contacts a taxpayer, posing as a representative of a supposedly helpful service for people with limited computer skills. The scammer offers to help the taxpayer set up an online IRS account, asking for sensitive information like the taxpayer's address, photo ID, and Social Security number (SSN) or Individual Taxpayer Identification number (ITIN). The scammer then sells this information to criminals, who use it for tax fraud and other forms of identity theft.

The IRS warns taxpayers that ANY such offer is a scam. Most people can readily set up their own IRS online accounts by following the instructions at irs.gov. If you do need help, only seek it from a trusted person, like a family member or tax professional.

IRS Online Account: www.irs.gov/payments/your-online-account. ... See MoreSee Less

Gathering Important Tax Filing Documents

The surest way to get your tax refund quickly is to e-file an accurate, complete return. In order to do that, you may need to reference a variety of tax documents. In addition to your Social Security Number (SSN) or Individual Taxpayer Identification Number (ITIN) and the SSN/ITINs for your spouse and dependents, you may also need:

- Income statements like W-2s and 1099s
- 1098 forms showing expenses that may qualify you for tax deductions or credits, like mortgage or student loan interest, charitable contributions or college tuition
- Form 1095-A (Health Insurance Marketplace statement)
- Records of transactions involving digital assets like cryptocurrency or NFTs
- Purchase records for any vehicle that qualifies for the Clean Vehicle Credit
- Any IRS notices you have received
- Bank account and routing numbers to set up direct deposit of your refund

Once you have gathered up all these materials, a tax professional can help you file your return electronically with direct deposit, to ensure the fastest possible processing. ... See MoreSee Less