Tax time mistakes to avoid

March 11, 2013 8:32:33 PM PDT
Tax season is underway. If you have not filed for your refund, you'll want to be sure to avoid the biggest tax time mistakes. So what are they?

The biggest tax mistake is not new, failing to report all your income, but Houston accountants tell us the IRS has come a long way in finding unreported income.

"If you receive income from anybody, it is getting reported by electronic media to the IRS and they immediately cross-check that information against the tax return you file," CPA Jim Trippon said.

Trippon says if you fail to report income, the IRS will send you a letter asking about the missing income and expecting you to pay the tax on it, plus penalties.

Another problem: numbers that don't add up.

"They use estimated numbers, particularly if it is income they are reporting. The IRS matches W-2s and 1099s and various interest forms, and so you have to get the exact number in there," CPA Bob Martin said.

Martin says taxpayers also miss out on refunds by taking standard deductions when they should itemize.

"For example, if they bought a car during the year, when you add that sales tax in and add with charitable contributions and other deductions, they could very well end up with a much larger deduction and a larger refund or they will owe less money in tax," Martin explained.

Another problem is fraudulent returns -- when someone uses your social security number to file a return.

"If you are going to file your tax return electronically, try and do it early before some criminal can beat you to it," Trippon said.

And yes, we are still early in the tax season. Last year, there were thousands of fraudulent returns filed. The IRS has a fraud department that will investigate this if it happens to you.

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