Making mistakes is a part of life. But they shouldn’t be part of your tax return! Even the smallest oversight can turn into a big problem down the road. Understanding the tax rules and proper communication with your tax preparer can help you avoid the mistakes that tend to be all too common. A little tax planning can work to keep you on track—so you don’t have any surprises later on.
Common Tax Problems to Review
An ounce of prevention is worth a pound of cure. Confirming that you don’t have any mix-ups with these tax return issues will help make filing your return as smooth as possible.
1. Not Checking Withholdings
The social security withholdings tend to change each year, and that means many people actually end up withholding too little because of their employer’s tax calculations. Checking your withholdings every year after filing your taxes can prompt you to make the right adjustments with a new Form W-4 to use for the following year.
2. Problems with Direct Deposit
If you opt to have your tax refund deposited directly into your bank account, then please be sure to double- and triple-check how you’ve entered those numbers. A simple keystroke typo could keep your refund from you, and the IRS won’t be able to correct these errors on their own. Don’t lose your refund because you’re in a rush while entering these details.
3. Retirement Plan Withdrawals
Individuals who choose to take money out of their pre-tax retirement plans might inadvertently create taxable income for themselves. That’s why it helps to talk with an accountant or financial advisor before rolling funds over from your 401(k) or IRA into another retirement plan.
4. Overlooking Tax-Deferred Retirement
You might also want to take advantage of the tax-deferred retirement options. There are some ways to have more significant impact to your retirement savings, such as employee-match contributions. Look into your eligibility now to get the most out of the tax year!
5. Missing Documentation
From mileage deductions to your charitable donations, there are a lot of details that need to be properly recorded. Taking the time to document your information correctly before tax season can help ease your mind. And remember: it’s best to have both digital and paper records. Log the notes for your deductions as you go, and you’ll be all set.
Let’s Work with Your Unique Situation
While the tax mistakes listed above are relatively common, there are still plenty of issues that can pop up when you don’t have the right experience on your side. Every situation is unique when it comes to your taxes. Let’s make sure you’re set up for success.
It’s never too early to start your tax planning. The discussions we have before the tax season allow us to find the best ways to prepare so you get the right deductions and credits. We’re always happy to speak with our current and prospective clients. To schedule your consultation about the coming year’s tax return, just give us a call at (317) 588-3131. Our team at NSO and Company would be happy to help!