Tax mistakes, cause pencils have erasers: Tax Tip

In 2021, taxpayers self-prepared returns were about 67 million. Please keep the following points in mind before you file your tax returns.

Filing ahead of the filing date – You are one of those who like to be on time. But be mindful of the fact, there are many 1099's (brokerage documents) that fly in February end, you don't want to under report and get a penalty. It's ideal to revisit your past year tax years to see income/ deductions are missing. Also, each tax year is different from the prior one.

Names, Social Security, new addresses mis-typed, or missed - As simple as this sounds, sometimes typing in those numbers can lead to mistakes. If you have addition to family before 31st Dec of the tax year, they are eligible for filing. In case you have new address please update.

Letters are probably the only way IRS and state communicate with taxpayers, they need to have a current accessible address.

Filing status: There are five statuses to file your tax return, please chose as per regulations. For e.g.: If you are high net worth individual, you may be tempted to save taxes to file married filing separately even though you are happily married. Please check IRS/state guidelines on this as well. More than anything please see if this is actually netting out as a tax benefit for you both.

Accelerate deductions & credits: We all know tax code is confusing and the language is intriguing even for tax geeks. Therefore, when claiming new deductions and credits please be careful. Getting $500 on a refund right now and paying a penalty on that three years later might not feel good.

Bank account information: Please use the bank information to expediate your refunds or tax owed to IRS and state and be doubly sure of the numbers. This is secure and faster way to close the payment process.

Hope this helps, and for any tax questions please connect, contact@2cherrytax.com

or

Book a consultation at Book Online | 2 Cherry Tax