Avoiding mistakes can make tax time less stressful and help ensure more savings on taxes. H&R Block's National Tax Advice Day,is all about providing unique, free advice to help taxpayers find the most deductions possible and get more money back -- faster than ever!
Between now and April 15th, millions of Americans will scramble to pull together receipts, bank statements and a host of other documents in order to complete their annual tax returns on time.
Yet even the most organized among us can overlook important tax details in the rush to complete our tax returns. And these mistakes can be costly. That's why it's important to be wary of five common filing mistakes:
Mistake #1: Failing to Claim Above-the-Line Deductions & Credits
Sometimes taxpayers don't realize that they qualify for tax credits and deductions that can help lower taxable income. As a result, they can miss out on potentially significant savings. The Earned Income Tax Credit, Child Care Tax Credit, various education tax deductions and IRA-contribution deductions are all available even if the taxpayer doesn't itemize. Once the allowable items have been identified, it's important to calculate and enter the credit and deduction amounts correctly on the return.
Mistake #2: Not Itemizing Deductions
Some people automatically take the standard deduction instead of looking closely to see if it's more advantageous to itemize. According to the General Accounting Office (GAO), more than two million taxpayers use the standard deduction even though they could save more in taxes by itemizing. For example, nearly one million people fail to itemize mortgage interest. This results in an overpayment of more than $470 million in taxes, according to a 2002 GAO report.
In addition to mortgage interest, taxpayers should consider itemizing the following deductions:
- Medical expenses (health insurance premiums, prescriptions and other qualified medical expenses)
- State and local income tax and personal property tax
- Charitable contributions (to churches and other non-profit organizations)
- Out-of-pocket job expenses not reimbursed by employers
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