(KVEO) — With the May 17 tax deadline less than a month away, the Internal Revenue Service has released 10 ways to steer clear of typical tax return errors.
Here’s what you need to know:
USE ELECTRONIC FILING
Filing electronically, whether through IRS Free File or other e-file service providers, is a way to cut the chances for many tax return mistakes and maximize deductions to reduce money owed. The tax software automatically applies the latest tax laws, checks for available credits or deductions, does the calculations and asks taxpayers for all required information.
REPORT ALL TAXABLE INCOME
Have all income documents on hand before starting the tax return. Examples are Forms W-2, 1099-MISC or 1099-NEC. Underreporting income may lead to penalties and interest.
Get names and Social Security numbers right
Enter each dependent’s Social Security number and individual’s name on a tax return exactly as printed on the Social Security card. If a dependent or spouse does not have and is not eligible to get an SSN, list the Individual Tax Identification Number (ITIN) instead.
Learn about filing status
The Interactive Tax Assistant can help choose the correct status, especially if more than one filing status applies. Tax software, including IRS Free File, also helps prevent mistakes with filing status.
Correctly answer the virtual currency question
The 2020 Form 1040 asks whether at any time during 2020 a person received, sold, sent, exchanged or otherwise acquired any financial interest in any virtual currency. If a taxpayer’s only transactions involving virtual currency were purchases of virtual currency, they are not required to answer “yes.”
Mail paper returns to the right address
Paper filers should check the right address for where to file or on form instructions to avoid processing delays.
Use the right routing and account numbers
Requesting direct deposit of a federal refund into multiple accounts is convenient and allows the taxpayer to access their money faster. Incorrect numbers can cause a refund to be delayed or deposited into the wrong account. Taxpayers can also use their refund to purchase U.S. Savings Bonds.
Sign and date the return
If filing a joint return, both spouses must sign and date the return. E-filers can sign using a self-selected personal identification number (PIN).
Keep a copy
When ready to file, taxpayers should make a copy of their signed return and all schedules for their records.
Request an extension, if needed
Taxpayers who cannot meet the May 17 deadline can request an automatic filing extension to Oct. 15 and prevent late filing penalties. Use Free File or Form 4868. But keep in mind that while an extension grants additional time to file, tax payments are still due May 17.