Everyone in Maryland would agree that tax season can be pretty stressful for individuals and businesses and that stress and urgency result in blunders because of people trying to rush. Such haste often leads to unnecessary penalties and audits.
To avoid such immense stress and pressure, consider letting a CPA in Columbia, MD, take care of tax preparation. Let us have a look at some common mistakes that need to be avoided when preparing taxes.
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Incorrect Personal Information
A pretty common mistake that people make quite frequently is providing inaccurate personal information such as name, social security number, and status of filing, which results in the processing getting delayed. People who recently altered names because of divorce or marriage need to be more conscious of it.
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Mathematical Errors
Making mathematical errors is pretty standard, too. The degree of error can vary from simple additional mistakes to errors in tax calculation, particularly for people who do calculations manually. It is recommended that software be used for tax preparation that automatically calculates.
If a person prefers to do it manually, it is better to double-check or let someone else review it after completion.
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Incorrect Filing Status
People need to be more conscious when choosing filing status because the wrong pick can pretty significantly impact the eligibility for deductions and credits and tax liability.
Each status, such as married filing separately, married filing jointly, single, and qualifying widower, has different requirements, which is why it is vital to make sure to select the filing status that reflects the situation more precisely.
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Overlooking Income
It is very much necessary to report all sources of income, including sources such as freelancing, dividends, rental income, and interest, because failing to report a source will trigger an audit. Make sure to have all essential forms, such as 1099s and W-2s, before starting a tax return.
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Missing Deductions and Credits
Credits and deductions play a significant role in minimizing overall tax liabilities, but surprisingly, many taxpayers overlook such benefits, resulting in unnecessary burdens. Standard deductions that are often ignored include medical expenses, interest on student loans, and contributions to charity. Some common credits include EITC and CTC.
It is better to do thorough research and apply all possible deductions and credits to maximize savings.
Consider getting help from a CPA!
People often overlook the importance of hiring a CPA to take care of everything related to taxes because of the initial cost.
Still, in the long run, the vast number of benefits that a CPA brings for the business or an individual through savings and reducing stress surpasses the cost of hiring a certified public accountant by a considerable margin.
