10 Common Tax Mistakes to Avoid
I have seen many clients make common tax mistakes that can have costly consequences. Here are 10 common tax mistakes to avoid:
1. Failing to file a tax return: If you are required to file a tax return and you fail to do so, you could face penalties and interest.
2. Failing to pay taxes owed: If you owe taxes and you don't pay them, you could face penalties and interest, as well as collection action from the IRS.
3. Incorrectly claiming deductions and credits: If you claim deductions or credits that you are not eligible for, your tax return could be audited and you could face penalties.
4. Failing to keep good records: It's important to keep good records of your income and expenses to support your deductions and credits. If you don't have proper documentation, your deductions and credits could be disallowed.
5. Failing to report all income: You are required to report all income, regardless of whether it is reported on a Form 1099 or W-2. If you fail to report all of your income, you could face penalties.
6. Failing to file estimated tax payments: If you are self-employed or have other types of income that are not subject to withholding, you may be required to make estimated tax payments. If you don't make these payments, you could face penalties.
7. Failing to file a tax return on time: If you don't file your tax return by the deadline, you could face penalties and interest.
8. Failing to file a tax return for a business: If you own a business, you are required to file a tax return for the business, even if you don't owe any taxes.
9. Failing to claim all deductions and credits: Make sure you claim all deductions and credits that you are eligible for. If you don't, you could be leaving money on the table.
10. Failing to consult a tax professional when you really need one. Taxes can get very complex, and not reaching out to a professional can be a costly mistake. Many times tax professionals can save you many headaches and penalties.