More than 150 million tax returns should be submitted to the Internal Revenue Service this year. It is likely that some may have errors. Do not let him be you.
Every year, tax professionals generally find the same common mistakes, with varying consequences.
This year is particularly thorny as taxpayers are also facing a new filing landscape after the tax law introduced major changes. These include increased lump sum deductions, doubling child tax credit and capping national and local tax deductions.
These changes could facilitate triggering. It is therefore useful to read the new tax law, to slow down and review your tax return before filing it.
Here are 10 mistakes to avoid:
1. Do not miss this new credit
Tax professionals fear that Americans will not pass the new tax credit for dependents introduced by the tax law. The non-refundable tax credit is worth up to $ 500 for each eligible person and begins to disappear gradually to reach an adjusted gross income of $ 200,000 ($ 400,000 for joint filers).
The dependent must have earned less than $ 4,150 in gross income last year, while you provided more than half of his or her financial support. A dependent may be a child 17 years of age or older, a family member or a family member who has lived with you throughout the year.
2. Do not file a return
Some Americans are not required to file a federal tax return because they do not earn enough income. These income thresholds vary by status and age. But even if you do not have to file a tax return because of low income, do it anyway, says Kathy Pickering, Executive Director of the H & R Block Tax Institute.
3. Choose the wrong ranking status
Attention single parents: you can choose the status of head of household rather than that of single. The head of the household benefits from a higher standard deduction and a lower tax rate. To qualify, you must:
– be single on the last day of the taxation year
– Contribute to more than half of the financial support of your home
– Do your children live with you more than six months a year?
– For separated or divorcing couples, it's usually best to file separately as a marriage, rather than filing separately, says Pickering.
"I know it can be difficult to work with a separated spouse to declare taxes, but choosing a separate marriage is unfortunately the most punitive filing status," she said. This is because the status excludes you from certain credits and deductions.
If you want to change your status after filing your taxes, you must file a modified paper return.
4. Ranking without all documents
Make sure you have all your W-2's from each employer, 1099 forms showing other income and other documents to claim certain credits or deductions, such as a statement of expenses Tuition for the American Opportunity Credit, which relates to the expenses of the first four years of the year. higher education up to $ 2,500 per student. If you hurry to file your taxes and forget about a document, you will have to file an amended return.
"These can not be filed online, so it's very painful," says Mark Jaeger, TaxAct Tax Development Manager. "You have to fill out the documents and send them, which takes another six to eight weeks."
5. Forgetting the great events of life
Think of the ups and downs of your life last year, such as getting married or divorced, having a baby or becoming a widow, getting a promotion or losing your job. All of this can affect your taxes. They can move you to a higher or lower tax bracket, change your reporting status, qualify you or disqualify you for new credits or deductions.
For example, if you have a pay raise or your spouse returns to work, the extra income could affect the amount you can claim from the US Opportunity Loan, which begins to gradually disappear by $ 160,000 for common depositors and n & # 39; Is not available for couples earning $ 180,000 or more.
6. Entering incorrect information
A typo can cause a lot of headaches. In some cases, the IRS will reject an electronic tax return immediately after it is submitted if a social security number or misspelled name does not match its data. You can easily correct the information and send it back.
But if you enter the wrong bank account number for your direct deposit, the IRS will not know it until your bank has accepted the deposit. In this case, the IRS will send a paper check, but it will be six to eight weeks later, says Jaeger.
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Similarly, if you enter an incorrect income amount (you forget the zero), you will not be able to correct it until you receive the IRS, which will not receive information about your employer's income before the month of March.
7. Lost tax credit
Every year, almost a quarter of taxpayers do not have access to this credit worth up to $ 6,431 in 2018. It is so forgotten that the IRS has dedicated a day of credit awareness.
"This is a huge credit for lower and middle class taxpayers," says Lisa Greene-Lewis, Chartered Accountant and Tax Specialist at TurboTax. "People generally think that they are earning too much money to qualify.
However, changes in the circumstances of life, such as a loss of employment or the maintenance of the spouse at home with a newborn, may be enough to make you eligible for credit this year.
8. Pay someone to make your taxes
Forget the tax accountant if you have an easy tax return. You probably have a simple one if you:
– Take the standard deduction
– Receive a W-2 statement rather than a 1099 form for your income
– Apply for the tax credit on earned income or child tax credits
– have limited interest and dividend income
– Most major tax preparation software, such as TurboTax and H & R Block, offer a free file service.
9. Do not claim a child
Who can claim the child? The right answer can become complicated if someone other than the child's parents supports it.
For example, only one grandparent whose grandchild lives with them can apply for head of household status and claim a child tax credit. In some cases, the grandparent may also be eligible for the earned income tax credit.
10. Missing the other credit for studies
Many taxpayers may be familiar with the American Opportunity Credit for Higher Education Expenditures. But there is another credit for other education expenses. This is the lifetime learning credit, worth up to $ 2,000 per tax return.
"This program can cover expenses even if you are not enrolled in a four-year degree program, such as training for a job certification," says Pickering.
Janna Herron, United States Today
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