5 common mistakes with an early tax return
The 2019 tax season kicks off on January 28 - the IRS is ready to accept electronic or paper 2018 tax returns. Here are some good reasons to file your returns earlier than April and five common mistakes to avoid.
Why submit tax returns earlier? Fox Business suggests looking at it from a different angle: why leave the tax burden on your shoulders until April, and then spend a crazy week trying to do everything at once? Plus, early registration can discourage scammers trying to file false returns in your name - and if you're entitled to a tax refund, why not get it ASAP?
Notwithstanding all of the above, take care not to negate the benefits of early tax refunds - to do this, learn five pitfalls that are easy to fall into when filing early.
1. You did not submit the required form.
Tax forms are not always simple, and it is not always obvious which ones you need to get before you submit.
Taxpayers with multiple income sources need a W-2 or Form 1099 to cover every source from which you received at least $ 600 during the year. If the IRS receives the corresponding copy without your presentation, at best it will end up with a delay in processing the documents, at worst, there may be fines and even an audit. Also, remember that even if you did not receive your Form 1099 directly from your source of income, you must still report that income.
Typically, W-2, 1098, and 1099 forms employees and self-employed contractors must receive by January 31, although some 1099 forms last until February February 15, and even longer for K-1. Examine all the forms that can be applied in your case and make sure you get everything you need before you apply.
Do not forget about incoming and outgoing forms, especially if you are classifying income. Many loans and deductions require the provision of a separate form to show evidence of eligibility and calculate the necessary amounts.
2. You ignored the requirements of the “health form” 1095
If during the 2018 tax year you purchased health insurance on the stock exchange, do not be deceived by the published changes in the recent Law on the Reduction of Taxes and 2017 Jobs of the Year. You will still receive an 1095 form, where you need to provide proof of medical insurance coverage for the 2018 year. An individual mandate requiring medical insurance coverage was excluded from the new legislation, but the changes will take effect only for the 2019 tax year (documents for which will be submitted already in 2020 year).
In 2017, the IRS announced that refunds would be declined unless the taxpayer confirms the health insurance coverage in tax form. Coverage in the form will have to specify.
3. You have not rechecked information
Have you signed your form? All exactly counted? Have you downloaded the correct annual forms and instructions? In fact, when you are in a hurry, it is very easy to forget about the simplest things. Before sending, review your form and, if possible, take a few minutes for an additional quiet check before sending a request. It is difficult to check something qualitatively immediately upon completion.
4. You incorrectly filed a corrected form.
Suppose you found a mathematical error in your form, or you realized that you forgot to add an 1099 form, after an early registration. Should you correct the errors immediately and submit the form immediately? Not at all. The IRS will correct your math errors and inform you of any missing forms.
However, you must file an amended return for changes in filing status, changes in income, or deductions / changes in credit. Do not start over with a new 1040 Form - use Form 1040X, indicating only the appropriate changes. Modified declarations must be submitted in paper form only - electronic registration is not allowed.
5. You did not consider 2019 of the year on 2018 taxes.
Several transactions that can be performed in 2019 can affect your 2018 tax returns. For example, you have a tax filing deadline (April 15, 2019). Until this date, you can still make an individual pension contribution and calculate it in 2018, provided that you have correctly identified this contribution to the previous year. If you have already filed tax forms for 2018, you will have to correct the declaration and send it again in order to add a contribution there that affects the previous reporting period.
What else do you need to know?
There are many good reasons to file tax returns earlier, but don’t sacrifice accuracy for speed. Make sure you have all the necessary forms and that all transactions that will affect the tax year 2018 have already been completed. Please read the tax form carefully before signing it and sending it to the IRS.
Nobody wants to spend a lot of time on taxes, but think of it as an investment. Double-check all documents, and then you are more likely to avoid submitting a revised declaration and possible IRS verification.
Remember that the failure to pay taxes, penalties and fines that you owe to the state can adversely affect your credit rating.
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