In the United States, tax season is a complicated task for many people. Every year, millions of Americans worry about completing their tax returns, and small mistakes often lead to unnecessary trouble and tax consequences.
1. Make sure all income is recorded accuratelyIncome is the most basic and important part of tax reporting. Many taxpayers make mistakes by omitting or misreporting income. Therefore, making sure all sources of income are accurately recorded is the first step to avoid mistakes.
According to US tax law, almost all types of income need to be reported, including but not limited to:
Wages and salaries: Income from employers is usually reported on Form W-2. Make sure to check all Form W-2s you receive to confirm that your income amount and taxes are correct.
Freelance income: If you are self-employed or a freelancer, you need to fill out Form 1099-MISC or 1099-NEC. These forms are used to report any non-employment income paid by clients.
Investment income: Dividends, capital gains, stock sales income, etc. are usually reported through 1099-DIV, 1099-B or 1099-INT forms. Make sure the amounts on these forms match your actual income.
Other income: Including rental income from rental properties, bonuses, retirement benefits, unemployment compensation, etc., also need to be reported truthfully on the tax return.
For employees, W-2 forms should be issued by employers before the end of January each year. Self-employed people should receive all 1099 forms, usually between January or February. Before filing your taxes, carefully check the income amounts and taxes on these forms to make sure they match your records.
Many people overlook the reporting of non-cash income. For example, gifts or rewards from a client, if their value exceeds a certain amount (such as $600), also need to be reported when filing your taxes. This type of income is often misunderstood as a "gift", but tax law requires them to be reported as income.
In the United States, tax filing status is a key factor in calculating taxes. Incorrectly selecting a filing status can result in an increased tax burden or an incorrect filing. Tax filing status affects whether you can enjoy certain tax benefits, the amount of the standard deduction, and the applicable tax rate.
The US tax law stipulates five tax filing statuses, and you need to choose the most appropriate status based on your own situation:
Single: Applicable to unmarried people who have no family support responsibilities.
Married Filing Jointly: Applicable to married couples filing taxes together.
Married Filing Separately: Applicable to married couples filing taxes separately, but may result in the loss of some tax benefits.
Head of Household: Applicable to single people who have the support of at least one family member (such as children or relatives).
Qualifying Widow(er) with Dependent Child: Applicable to families with widows and dependent children, they can enjoy tax treatment similar to married filing jointly.
If you choose the wrong tax filing status, it may not only lead to unnecessary tax burden, but also make you lose some important tax benefits. One of the most common mistakes is that married people choose "single" status or "married filing separately" status, missing out on the higher standard deduction for joint filing.
If you are not sure which filing status to choose, especially in a complex family or income structure, it is best to consult a tax expert to confirm the most advantageous filing method.
In the US tax law, you can choose itemized deductions based on actual expenses, or directly choose the standard deduction. Choosing the right deduction method is crucial to reducing your tax burden. However, many people tend to overlook certain deductions or make incorrect calculations.
When you itemize deductions, you need to itemize and provide proof of your expenses. Common itemized deductions include:
Mortgage Interest: You can usually deduct interest paid on your mortgage.
Medical and Dental Expenses: If your medical expenses exceed 7.5% of your gross income, you can deduct the excess.
Charitable Donations: If you donate to a qualified charity, you can deduct the donation amount from your taxable income.
State and Local Taxes (SALT): You can deduct state and local income taxes, sales taxes, and property taxes, but there is a $10,000 limit.
The standard deduction is a fixed amount, and you don't have to itemize your expenses. If your itemized deductions total less than the standard deduction, it is usually easier and more cost-effective to take the standard deduction.
Make sure you only itemize expenses that qualify under IRS rules. Some expenses may not be deductible for medical expenses, charitable donations, and other deductions. Making the wrong deduction may result in an audit and fines.
Many tax software tools can automatically compare the standard deduction and itemized deductions for you to help you choose the best option. Using these tools can reduce calculation errors and ensure compliance with deductions.
The U.S. tax code includes a variety of tax benefits, such as tax credits, which directly reduce the amount of tax you owe. Tax credits are different from deductions, which directly reduce the amount of your tax bill. Making sure you fully understand and take advantage of these tax benefits when filing your taxes is an important step to avoid mistakes.
Child Tax Credit: Up to $2,000 tax credit for each qualifying child. In 2024, higher-income families may lose this credit.
Earned Income Tax Credit (EITC): For low- and middle-income families, the EITC can significantly reduce taxes.
Education tax credits, such as the American Opportunity Tax Credit and Lifetime Learning Credit, can help pay for education costs.
Many tax credits have income limits or other conditions. Incorrectly reporting eligibility or income levels can result in a tax audit or a reduction in the credit. Therefore, it is important to confirm that you qualify for each credit when you file, and keep the relevant supporting documents.
Don't claim the same tax credit twice. If you have already claimed a tax credit, such as the Child Tax Credit or EITC, be sure to check that you have reported it correctly to avoid errors caused by multiple claims.
There are many fields on the tax form, and filling out these fields incorrectly can cause your return to fail or delay. Make sure that each information is filled out correctly, especially key data such as name, address, and Social Security Number (SSN).
The Social Security Numbers for each taxpayer and dependent must be correct. If the numbers are incorrect or do not match IRS records, your return may be returned or delayed.
If you choose to get an electronic refund, make sure your bank account information is correct. If your address is incorrect, your refund check or notice may be sent to the wrong address, causing delays.
Always double-check your tax forms when filling them out, especially when calculating taxes, deductions, and tax credits. Small mistakes can lead to big problems. Many tax software can make these calculations automatically, reducing the potential for errors when entering them manually.
If your tax situation is complex or you are concerned that you cannot complete your tax return accurately, it is a wise choice to seek help from a professional tax advisor. A tax expert can provide you with tailored advice to help you ensure that your return is correct and optimize your tax planning.
Choose a qualified tax professional, such as a certified public accountant (CPA), tax attorney, or IRS-approved tax agent. Working with an expert can help you avoid misunderstandings on complex tax issues.
Many people rush to file their tax returns before the tax filing deadline, which is often a peak time for mistakes. By preparing in advance, you can have more time to check and confirm the information on the form and reduce the occurrence of errors.
By following the expert advice above, you can avoid common tax filing mistakes and ensure the accuracy of your tax filing. Whether it is recording income correctly, choosing the right tax filing status, or taking advantage of various tax benefits, meticulousness and caution will help you complete your tax filing smoothly and avoid unnecessary trouble. If you are confused or unsure, consulting a tax expert is also the best way to ensure a successful tax filing.
