Major Tax Mistakes You Need to Avoid
Making a mistake when filing your taxes can have significant consequences and potentially harm your financial well-being. Depending on the mistake, you could be subjected to large tax penalties, IRS wage garnishment, or even the prospect of serving time in prison. This is why it is so important to speak with a seasoned and knowledgeable tax attorney when filing your taxes or when you are contemplating certain tax strategies.
The Internal Revenue Service (IRS) released a list of frequent mistakes committed by individuals while preparing their tax return. Let’s take a look at some of the most frequent oversights committed by taxpayers.
Common Administrative Mistakes
- Selecting the wrong filing status
- Failing to properly enter the names and taxpayer identification numbers for each person listed on your tax return (e.g., spouse, dependents, etc.).
- Forgetting to sign and date your tax return.
- Forgetting to have your spouse sign the return (this is necessary when filing a joint tax return).
Not Obtaining Paper Copies of Tax Forms
More financial information is going paperless, including bank accounts, health insurance, employment benefits, and investment accounts. This may mean that taxpayers who were used to getting a 1099 or other tax form in the mail will be getting those online. Taxpayers may forget about some of these financial accounts or not get an email of the tax form availability. They are still; however, liable for reporting all their tax information, even if they forget or never got a tax form in the mail.
Neglecting Changes to the Internal Revenue Code
Another common oversight committed by many taxpayers is failing to stay up-to-date on important modifications to the tax code, including changes to deductions, credits, and other tax issues. Here are some examples of recent changes to the tax code:
- Higher income brackets – Congress recently modified the income tax brackets and the changes could significantly impact how much you may wind up owing in federal taxes. Here is a breakdown of the income brackets that were in place 2019 (and will likely be in place for 2020):
- If you made more than $510,300 as a single individual, you are subject to the top tax bracket of 37 percent.
- If you made more than $204,100, you are in the 35 percent tax bracket.
- If you made more than $160,725 (but less than $204,100), you are in the 32 percent tax bracket.
- If you made more than $84,200 (but less than $160,725), you are in the 24 percent tax bracket.
- If you made more than $39,475 (but less than $84,200), you are in the 22 percent tax bracket.
- If you made more than $9,700 (but less than $39,475), you are in the 12 percent tax bracket.
- No alimony deduction – Pursuant to the Tax Cuts and Jobs Act of 2017, the alimony tax deduction was eliminated in 2019.
- Individual health insurance mandate eliminated – There is no longer a penalty if you failed to have a health insurance policy through the year.
As you can see, there are a myriad of issues and updates you need to be aware of when filing your taxes. Taking the wrong deduction or assuming you’re in a particular tax bracket could cause a lot of frustration and confusion. Hence, it is in your best interest to consult with an experienced tax lawyer for a successful outcome.
Have Questions About General Taxes or IRS Back Taxes Relief? Contact an Experienced Tax Lawyer Today
If you are struggling to complete your taxes, or you received a notice from the IRS alleging you owe taxes or are being penalized for failing to pay taxes, contact Anderson Bradshaw Tax Consulting. We are here to help and understand how challenging and stress-inducing taxes can be for many. For further information or to schedule an appointment please contact our office today at 877.550.3911or visit www.AndersonBradshawTax.com to learn more.