Top Mistakes Made by Taxpayers
Not being aware of your financial situation can be burdensome, especially during tax time. Make sure that you are keeping track of receipts and filing correctly, especially if you attempt to do taxes yourself. Here are a few common mistakes that could help make life easier around tax time:1. Cashing in your Individual Retirement Account (IRA) or 401(k) to pay for a costly item. You will have to pay taxes on any money taken out of this type of retirement account if you are under the age of 59.5. Typically, this early withdrawal is taxed up to 10 percent as a penalty.
2. Not claiming charitable donations. Remember that donations to charities and nonprofits are rewarded by the Internal Revenue Service (IRS). You are allowed to claim donations of clothing, furniture, other goods and cash. You can also claim driving and other expenses incurred while volunteering.
3. Missing deductions. The most commonly missed deductions are typically things like medical deductions. You can deduce expenses once they add up to more than 7.5 percent of your total adjusted gross income. Also consider flexible spending accounts offered by employers to help offset the cost of medical expenses.
Preparing your taxes can be a challenging process and any mistakes could trigger a case with the IRS. The Guardian can help if you resolve your tax problems with the IRS.
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