As tax season approaches, many people are busy preparing their individual tax returns. While most people prepare their returns using the software that the IRS provides, there are a few mistakes to avoid if you want to get the most money back.
Mistake #1: Failing to Claim All of Your Deductions
If you are filing your taxes this year, make sure you take the time to review all of your deductions. You may be able to reduce your taxable income by claiming various deductions on your individual tax return. Here are a few to consider:
Home mortgage interest: If you have been using a home equity loan or line of credit to purchase or improve your home, you may be able to claim interest on that debt as a deduction. This includes interest on loans taken out before December 15, 2017.
: If you have been using a home equity loan or line of credit to purchase or improve your home, you may be able to claim interest on that debt as a deduction. This includes interest on loans taken out before December 15, 2017. Medical expenses: You can deduct medical expenses that exceed 10% of your AGI (adjusted gross income). This includes both prescription and over-the-counter medications, doctor visits, and hospital stays. In order for this deduction to apply, the expense must have been paid in 2018 and not covered by insurance.
: You can deduct medical expenses that exceed 10% of your AGI (adjusted gross income).
Mistake #2: Failing to Claim All of Your Charitable Contributions
If you made charitable contributions in 2017, it’s important to claim all of them on your tax return. If you don’t, you may be able to claim a deduction for the value of your contributions, but you won’t receive any money back from the charity.
There are two ways to claim a charitable contribution on your tax return: by listing it as an itemized deduction on your tax form, or by claiming the donation as part of your income. If you choose to list the contribution as an itemized deduction, you’ll need to include information about the donation, such as the amount and the date it was made. You can also attach Form 8283 (Charitable Contributions) to your tax return if this information isn’t available elsewhere.
If you choose to claim the donation as part of your income, you’ll need to provide evidence that indicates how much money was donated and when it was made. You can either submit this information with your tax form or attach it later using Form 1040A or 1040EZ (PDF), depending on which form you file.
Mistake #3: Under claiming Your Earned Income
The third mistake people make when filing their taxes is underclaiming their earned income. This can be a costly mistake, as the IRS can impose penalties and interest on under-claimed income. If you are unsure whether you should claim a certain type of income, contact your tax advisor for help.
Mistake #4: Filing Too Late
There are a few common mistakes that people make when it comes to filing their taxes. One of the most common mistakes is filing too late. This can lead to penalties and interest on any unpaid taxes, as well as decreased refunds. If you’re due a refund, waiting to file your taxes can mean that you won’t get as much money back as you would have if you had filed earlier.
By avoiding these mistakes, you can ensure that your individual tax return is prepared properly and that you get the most money back.