Avoiding Common Mistakes When Filing Taxes in October
October may conjure up images of fall foliage, pumpkins, and Halloween for many, but for some taxpayers, it signifies the critical deadline for those who took advantage of the six-month extension to file their taxes. While this extension provides a welcomed reprieve, it can also open the door to potential missteps. Below, we delve into the common mistakes filers make in October and provide advice on how to avoid them.
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1. Procrastination
While the extension grants additional time, waiting until the last minute can lead to hurried mistakes. As October approaches, prioritize gathering all necessary documents, seeking professional advice if needed, and giving yourself ample time to file accurately.
Tip: Mark your calendar with staggered reminders throughout September, gradually increasing the urgency to ensure you're prepared by October.
2. Overlooking the Payment Deadline
Although the filing extension lasts until October, any tax owed was still due by the original April deadline. Filing in October without having made a payment can result in accumulating penalties and interest.
Tip: Always pay an estimate of what you owe by the original April deadline to avoid extra charges.
3. Not Double-Checking Information
Errors such as incorrect Social Security numbers, misspelled names, or transposed figures can trigger delays or notifications of discrepancies.
Tip: Before submitting, review your forms multiple times. If possible, have another pair of eyes look over the documents for any potential mistakes.
4. Ignoring Deductions and Credits
Many individuals rush through their filings, especially when working under an extension, and miss out on valuable deductions and credits.
Tip: Take time to research applicable deductions and credits. Tools like the IRS's Interactive Tax Assistant can guide you through potential savings.
5. Forgetting Supplemental Income
It's easy to remember W-2s and primary income sources, but forgetting about freelance work, side gigs, or any other supplemental income can lead to discrepancies.
Tip: Ensure you've collected all 1099 forms, and be sure to report any additional income—even if you didn't receive a formal document for it.
6. Miscalculating When Self-Employed
Self-employed individuals face additional complexities, like the self-employment tax. Overlooking or miscalculating these values can lead to underpayments.
Tip: Utilize tax software or consult with a tax professional who specializes in self-employed filings to ensure accuracy.
7. Neglecting State Tax Obligations
While you might be focused on federal taxes, remember that state tax obligations might also have been extended. Each state has its guidelines, and missing these can lead to state-specific penalties.
Tip: Check your state's tax agency website for relevant deadlines and requirements.
8. Not Keeping Copies
After the hustle of filing, some forget to keep copies of their tax return and supporting documents. These are crucial for future reference or in case of an audit.
Tip: Always save a digital and printed copy of your completed tax return and associated documentation.
9. Skipping Professional Guidance
If you're uncertain about certain aspects of your tax situation, especially when filing late, seeking a tax professional's help can make a significant difference. They can ensure accuracy, minimize liabilities, and maximize returns.
Tip: Even if you're confident in your tax prowess, a consultation can serve as a valuable double-check. If you don’t want to seek the advice and expense of a live tax professional you can always use a product like TurboTax.
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10. Not Setting Up for Next Year
One of the best times to prepare for the next tax season is immediately after filing for the current year. Reflect on any challenges faced and set up systems to streamline next year's process.
Tip: Organize a filing system for tax documents you'll receive throughout the year and consider making quarterly estimated tax payments if applicable.
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In conclusion, while the six-month extension offers relief to those unable to file by the original deadline, it's essential to approach the October deadline with diligence and care. By being aware of common pitfalls and actively taking steps to avoid them, taxpayers can navigate this extended tax season with confidence and precision.
The most convenient, inexpensive and best way to avoid these 10 mistakes is to use a program like TurboTax. TurboTax walks you through the process step by step ensuring that you get the maximum refund you’re entitled.
In addition to saving money and receiving the best return possible TurboTax also saves your information so you always have a back and can file next year in half the time.
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