Filing taxes is a tedious, complicated and frustrating process which is why many businesses both large and small prefer to outsource the work to professionals. There are many common mistakes made during tax preparation, some of which can lead to serious legal implications. Whether you prefer to do the taxes on your own, or follow expert advice and let a tax accountant Madison do it for you, it is important to know what these common mistakes are before filing taxes.
Bad math is the most common error found on tax return every year. This includes mistakes is transferring figures in between schedules or in simple arithmetic. These mistakes can lead to your business owing the IRS more than what was projected or getting a correction notice. A good way to reduce the chances of mathematical mistakes is to use a tax software program. Even in this case, you are responsible for ensuring that the initial numbers are correct to begin with. A tax consultant with good experience is easily able to file taxes with minimal cases of mathematical errors.
Just like mathematical errors, computation errors are just as common during tax preparation. The computation errors typically occur when figuring out tax-return entries such as estimated tax payments, withholding and taxable income. Additional problems in this case include in special deductions and credits.
Different or misspelled names
Apart from numbers, names are also very important to the IRS. The names of the taxpayer and those of his spouse or children should always match the TIN on the Social Security Administration record. Failure to this can cause the IRS to slow down processing or completely kick out the tax return. This problem is often seen with new wives once they change their surnames.
Direct deposit problems
This is especially a concern when dealing with tax refunds. Tax payers have the options to have their refunds directly deposited into two or more different bank accounts. Because more numbers go into the tax for, it is easy to enter a wrong routing or account number and lose the refund. Remember that there is no procedure that the IRS has in place for replacing funds lost during electronic transfers.
Additional filing work and income
You are legally required to file tax returns for additional work or income that you do outside of your regular job or business. The same applies to unearned investment income. The IRS already knows how much extra income the tax payer has made so forgetting or neglecting to file returns for the extra income can lead to interest on unreported earnings or owing penalties. A tax consultant can help you to file taxes correctly including for additional income.
Work with a good accounting firm
All these problems put you at risk of getting into serious trouble with the IRS. Even when looking at fines and interest, it is often best to avoid the problem all together. Hiring professional firms such as Consulting Services Tax & Accounting is definitely an option worth looking into seriously.