Tax season is in full swing and while most are focused on meeting the April 15th Tax Day deadline, it is important to note that accuracy also plays a role in meeting that deadline. Filing errors can cause taxpayers to experience their refund being delayed, unnecessary IRS notices and even penalties. Here are some common accuracy related mistakes and how to avoid them.
Incorrect Personal Information
Errors in Social Security numbers, legal names, or direct‑deposit account details are among the most common reasons for tax return rejections. Verify every field, especially after a name change or bank account switch to match Social Security Administration and bank records exactly. An example of this could be someone who has recently married but has not yet changed their last name with the Social Security Administration.
Missing or Misreported Income
The IRS matches your return to information statements (think Form W-2, Form 1099-NEC; Brokerage 1099s, Crypto 1099s). Omitting even small interest or dividend amounts can trigger further IRS review if these information returns do not match up with your tax return. If you sold securities or traded cryptocurrency, take the extra time to reconcile proceeds, basis, and wash‑sale adjustments before filing.
Overlooking Deductions and Credits
Frequent misses include education credits, energy‑efficient home credits, and the Child Tax Credit when eligibility is overlooked. On the other hand, claiming ineligible deductions also invites IRS scrutiny. The eligibility and calculations for some of these examples can become complex rather quickly. Do it yourself taxpayers should rely on credible software. You can also seek guidance from a competent tax professional to confirm eligibility and documentation needed to support taking the deduction.
Filing Status Errors
Selecting the wrong filing status, such as Head of Household without a qualifying dependent, can materially change tax liability and credit phaseouts. Reevaluate your filing status when life events occur such as marriage, divorce, kids turning 18, etc.
Final Review
Accuracy matters. You should take time to review your return, verify income documents and confirm eligibility for deductions and credits. If your situation is complex such as multiple income streams, business ownership or significant investment activity, you may consider working with a CPA or enrolled agent. A little due diligence on the front end can help prevent costly mistakes and wasted time later.
Kyle W. Noack, CPA/CFP® is the Chief Executive Officer for Keller & Associates CPAs, PLLC and Keller Wealth Advisors.
Published in the Victoria Advocate.