Missing tax deadlines
You might think it will never happen to you but never say never. Missing tax deadlines is one of the most common taxpayer mistakes. “With the increasing popularity of e-filing, many people wait until the last minute to submit their returns and don’t complete their email transmission until after the 11:59 p.m. deadline on April 15 (or October 15, if they are on extension),” said Gary Scheer, a registered financial consultant, certified senior advisor, author and speaker.
Start preparing for your tax filing way ahead of time, to make sure you’ve got everything covered and also plenty of time to solve any last-minute issues. This is especially valid if you are a freelancer, contract worker or business owner. “By far, the most common mistake I see is people failing to make estimated income tax payments and then getting assessed the failure to pay and sometimes even failure to file penalties by both the IRS and their state taxing authority,” said George Birrell, a certified public accountant and founder of Taxhub.
Not claiming all your income
It might seem obvious that you have to report your income from your current job when filing taxes. But some fail to include their extra earnings. It might not seem like such a big deal but Uncle Sam’s probably not gonna like it!
“Every statement of income you get in the mail at tax time also gets sent to the IRS,” explained Andy Panko, owner and financial planner at Tenon Financial LLC. “Whether you intentionally or mistakenly leave off one of the items of income, the IRS will pretty easily catch it and eventually request it from you.”
The IRS might never catch on to it but if they do, or better said, when they do, you’ll probably have to pay a substantial amount in underpayment penalties, late payment penalties and interest. Are you willing to take the risk? Read also 6 Major Life Events That Influence Your Taxes.
