BUSINESS CENT$
6 Common Tax Filing
Mistakes to Avoid
(From January 2017 Issue)
Written by Mark Jaeger, TaxAct Director of Tax Development..
(BPT) - It's probably safe to say handing cash to Uncle Sam does not top the list of your favorite things. When it comes to filing taxes, making a small mistake can mean paying more taxes than you need to or forking over cash to cover penalties.
Fortunately, there's an easy way to make sure your tax return is mistake-free: just take a little extra time to double check your work. Here's a closer look at the six most common tax-filing errors and tips to help you avoid making them.
1. Mistake: Not reporting all income. Reporting your income is easy if your employer sends you a wage statement (called Form W-2) documenting what you made throughout the year. But what about the money you earned from any freelance work? Unfortunately, many people forget to report extra income from side jobs such as photography shoots, design projects and Easy shops.
How to avoid the error: Depending on how much you earned, you may receive an "information return" called Form 1099 from the institution that paid you. There are numerous 1099 forms that report different types of income earned during the year, but in some cases you may not receive the document. For example, if you earn less than $600 as a freelance writer, the institution is not required to send you Form 1099-MISC. However, you still need to include the amount earned in your total annual income so it's important to keep your own records of each transaction.
"To help accurately report your income, review last year's return and match your income sources item by item," says TaxAct Director of tax development, Mark Jaeger. "If you discover you haven't received a 1099 for your work, last year's return will serve as a reminder to ask about it. Keep in mind, all freelance or side-gig income is reported on Schedule C as part of your Form 1040."
"If you're due a refund, you'll get it quicker if you e-file and choose direct deposit."