5 Common Business Tax-Filing Mistakes To Avoid At Your Startup

Filing your tax return involves handling the necessary paperwork and calculating your income and expenses before submitting it to the IRS. Then, you get a notice telling you that you made a mistake while filing tax returns. This is a common issue among most taxpayers. It is especially true when you are preparing to file business taxes. Tax laws and regulations are complex, making filing taxes pretty complicated, whether it’s your first time or you’ve been doing it for years.

The most surprising thing is that most mistakes people make when filing tax returns are simple. While these mistakes can hardly result in an audit, they can cost you a lot of money. If you’re looking to receive your COVID-19 auto insurance refunds, tax-filing mistakes can delay the processing and disbursement of your tax refunds. These mistakes can make you end up with more taxes to pay due to the interest charges and penalty fees. Here are some of the most common tax-filing mistakes that you should avoid when filing your taxes:

Misspelled Or Different Names

The most common, surprisingly simple, mistake that most people make when filing taxes is misspelling names. Misspelling any name listed on your tax return can make the IRS kick out your claim or slow down the processing of your tax return. This includes your name and the names of your dependents. Besides the names, most taxpayers often misspell their social security numbers when filing tax returns.

This problem is usually experienced by women who change their surnames after marrying. This causes a mismatch in the names indicated on your tax returns and those that the Social Security

Administration has on record, resulting in issues processing your tax returns. To avoid these problems, ensure that you update your name with the Social Security Administration after you marry or get a divorce. Ensure your names and your spouse’s and kid’s names are also correctly spelled, plus the correct social security numbers when filing tax returns.

Math Miscalculations

Math mistakes are another most common error made on tax returns. This is usually the first thing checked on your tax returns, and the errors can range from simple to more complex arithmetic calculations. Making mistakes when transferring figures between different schedules can also lead to an immediate correction notice. It could also make you pay more taxes than you should or even reduce your tax returns.

Double-check your math entries to ensure they’re correct to avoid making math errors on your tax returns. This can come in handy, especially if you’re filing paper tax returns. Another effective way to minimize math errors is using a tax return prep software program to file your tax return. Apart from making your math calculations more accurate, tax-filing software helps automate and simplify the entire process, so you don’t have to do the complex calculations yourself.

Filing Status Errors

Most taxpayers also make the mistake of choosing the wrong filing status on their returns. You have five filing status options to choose from when filing returns: married filing separately, single, married filing jointly, qualifying widow or widower with dependent children, and head of household. Each status has a unique definition for tax purposes. Hence, it could affect your tax bill in a significant way.

Therefore, ensure you understand each status, so you can choose the most appropriate filing status for your specific situation. For instance, you may consider choosing the “married filing separately” filing status if you’re married and you want to file separate tax returns with your spouse. However, you should be aware of how taxpayer filing status affects your return. Using tax filing software can help you avoid mistakes with your filing status. You can also use the Interactive Tax Assistant (ITA) tool to determine the correct status, especially if several statuses apply.

Errors In Figuring Tax Deductions And Credits

Computational errors are mistakes that you or your tax professional makes when figuring tax deductions or credits. These deductions and credits can include earned income tax credit, Energy Tax Credits Recovery Rebate Credit, Child Tax Credit, Dependent Care Credit, and withholding and estimated tax payments.

The number of deductions and credits available to choose from can be pretty overwhelming. This can make a deduction or credit appear appropriate when, in reality, you’re restricted from making a claim or phased out because of your income. Thus, ensure you carefully read the instructions on your form or seek the help of a tax preparer or professional whenever you’re unsure about credit or deduction. The Interactive Tax Assistant tool can also help establish whether you’re eligible for tax deductions or credits. You can also use it to calculate the deductions and credits you qualify for and confirm that they appear in the right places before submitting your final return.

Now that you know some of the most common mistakes taxpayers make when filing their tax returns, you can find ways to avoid them. Filing accurate tax returns on time can help avoid overpaying taxes and ensure you receive the appropriate refund. On top of avoiding the above-mentioned tax-filing mistakes, ensure you sign and date your tax return before submitting it to the IRS. If you’re filing jointly with your spouse, ensure that both of you sign the return.