Each year millions of Americans file their tax returns. The income generated by IRS department of government of American is the largest in the whole world. It is not easy to streamline the entire operation and still keep it simple. Every time a taxpayer files his/her tax return there are changes that it will have few errors in it in spite of it being checked by the taxpayer. Few such common errors are listed below; however with little more caution these errors could have been avoided.
Mathematical Errors: Mathematical errors are mainly caused due to oversight and rush on part of the taxpayer while preparing the return. As more and more taxpayers use the online filing system to file their returns these kinds of errors are getting minimised as the software has a auto check feature which will point of any such errors instantly. Paper returns still remain prone to these errors.
Computation of Gross Income: These errors are different from Mathematical errors as they involve incorrect computation of income or tax liability on behalf of taxpayer. There are certain parameters which govern what would be your Gross income. If a taxpayer overlooks any one of such parameter it could result in a gross income figure which is not correct and hence would form wrong basis for further tax calculations.
Computation of credits and Payments: There are number of schemes which offer tax relief to taxpayers in form of Tax credits. Each one of these scheme has different mechanism to compute exact amount of tax credit. Often people make mistakes while they compute there tax credits which results in either claiming too much or too little than you should have.
Error in Social Security Number: This is yet another common error which taxpayers often make while filing their tax returns. They either completely miss to report or wrong report their own, their spouses or their dependents social security numbers. At the time of filing tax returns. These kinds of errors lead to delay in processing their returns, tax refunds and claims.
Filing under wrong status: Each year many taxpayers select wrong status in form 1040. One must correctly choose the right filing status in order to gain maximum out of tax rebates. Wrong filing status often leads to higher tax liability.
Wong Bank Account numbers for Direct Deposits: At times people also provide wrong account number for receiving their tax refunds under the direct deposit scheme. This causes further inconvenience and delay in receiving tax refunds.
Do not apply for Extensions: Many taxpayers over shoot the tax filing deadline and also do not file for extensions. To top it up they further go ahead and also file their delayed tax returns without any extensions. These make things complicated for both the tax authorities and the taxpayer.