Most Common Mistakes People Make On Their Taxes
While the internet has information from A to Z, accounting and tax are both challenging to understand and time-consuming topics. Tax calculations and accounting for even a small business with bare minimum transactions can be complex and necessitate special training and taxation expertise. An accountant is an individual or entity responsible for assisting your company in compiling financial statements, filing tax returns, identifying tax savings, and analyzing any tax issues that may arise.
However, lapses in accounting data and faults in financial reporting are serious offenses that can result in harsh penalties and long-lasting sanctions for unpaid back taxes. They are seen as an offense similar to tax-dodging.
To help you avoid some basic errors that could prove costly, Phoenix Business Services Inc. has compiled a list of the most common mistakes people make when dealing with taxes.
1. Attempting DIY solutions for the filing of tax returns
First, people attempt DIY solutions hoping to avoid fees paid to a tax professional to do it for them. While we understand the sentiment, taking on complex projects like tax preparation and filing is not intelligent. With assistance from a professional, you can avoid audits and extra payments to IRS. Make sure to get a reliable tax person that can advise on all the different deductions you may miss
2. Not getting the 1099B for stock sales
Another misstep we see far too often is clients not getting a 1099B for stoke sales simply because they don’t think they need to include this on their taxes. This is a mistake as If there is a profit from stock sales, there will be tax due, and the IRS will eventually send a letter with the amount due. To avoid this hassle, make sure to get all the proper documents to include on the tax return
3. Not checking with dependents to see if they already filed their taxes
Finally, many clients just assume their dependent will not file a tax return because they supported them all year. This is a common mistake that can cause wasted time and effort.
If your dependent has already filed, the IRS will reject the return and disallow the dependent credit, which changes the refund amount or tax amount due. Remember to always double-check with each person so duplication doesn’t happen. Also, if the dependent is fully supported by the taxpayer, make sure they don’t file a tax return for themselves.
To avoid these mistakes, reach out to the best bookkeepers and tax preparers in Lancaster, California. We provide individual tax preparation and keep up-to-date with the changing tax laws. We also inquire about your changing life events, such as the birth of a child, a new business, a new home, or inheritance, and adhere to ethical standards and codes of professional conduct established by governmental bodies and peer organizations.
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