Four Simple Tax Mistakes That Lead To Big IRS Problems

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The tax season may be over, but there are still thousands of Americans that are dealing with the fallout from their tax problems.  The IRS has some interesting filing statistics that have come out.  As of 5/10/2013 the IRS has received 134,349,000 tax returns, which is bad when you consider that there are over 300 million Americans that should be paying taxes, and that it is a 0.8% change from the amount they received last year.  The amount of Americans paying their taxes hasn’t just fallen; the amount of money people are getting for their refunds has also seen a drop.  In 2013 there were 101,082,000 refunds distributed to tax payers, a 1.4% drop from the 102,522,000 refunds that were given out last year.  The average refund for 2013 tax payers was just $2,651, a 2% drop from the $2,704 people got in 2012.

As you can see there has been a little bit of a drop in refunds and tax filers, and some of that may be due to some small mistakes.  When the average person thinks of why people receive audits from the IRS they think about millionaires who were plotting elaborate schemes to hide their money from the government. In reality almost the exact opposite is true. There are many people that get in trouble with the IRS because of relatively small mistakes.  When you’re putting together your 2014 tax return, make sure you avoid making some of these common filing mistakes.

Checking The Wrong Filing Status

Accidently checking off that you’re married and filing separately when you’re actually married and filing jointly can cause you a lot of IRS headaches.  The most common mistake people make is designating themselves as being the head of their household without meeting the requirements.  Being the head of a household in the eyes of the IRS requires a variety of income requirements from both you and your partner, and these rules can change from year to year.  Before you file be sure that you check the latest filing status requirements to make sure that you’ve picked the right one.

Forgetting to Sign and Date Returns

Signing and dating returns seems pretty straightforward, but you’d be surprised by how many people forget this simple step.  It may seem strange, but the IRS will not accept any tax returns that are not properly signed and dated, even if all of the information on them is correct.  Married couples should also remember that both spouses need to sign a joint tax return.

Failing To Pay Payroll Taxes

Do you have a nanny, babysitter, or maid that handles work in your home?  If so, you need to remember that you’re required to pay and report payroll taxes beyond a certain income threshold.  Some people mistakenly believe that they don’t pay their household workers enough to have to pay for a payroll tax, but you’d be surprised by how low the actual require for paying them actually is.

Claiming An Ineligible Dependent

So many people end up having IRS tax problems because they incorrectly list someone as a dependent.  When people claim a wrong dependent, it’s usually because they incorrectly label their spouse as being dependent.  Even if you’re the main breadwinner and your spouse doesn’t work, someone you’re married to can never be a dependent.  Children and relatives can be a dependent, but only if they are a U.S. citizen, U.S. resident alien, U.S. national or resident of Canada or Mexico for some part of the year.

Image License:  Some rights reserved by 401(K) 2013

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