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Common Tax-Filing Mistakes You Can Make…

February 7, 2013

Since I’ve been a tax guy for about 25 years and owner of Gunwel Associates Inc “Nashville’s Complete Tax & Bookkeeping Firm” I’ve never been a fan of do it yourself tax software. I’ve seen too many mistake. Even though tax preparation software helps you make fewer mistakes on your returns…just one slip in entering information on your computer could end up costing you, either in the form of a larger tax bill or a smaller refund. And even if a mistake — either on your computer or paper forms — doesn’t cost you cash, it could delay the receipt of any refund you’re expecting. To get exactly what you should from the Internal Revenue Service, as quickly as possible, look for these tax-filing pitfalls. A few are new, thanks to recent law changes. Others are perennial problems taxpayers face each filing season. With little care, you can avoid them all.

  • Pay your Roth conversion taxes. A lot of taxpayers have taken advantage of the tax law change than now allows anyone, regardless of income, to convert a traditional individual retirement account to a Roth IRA. But if you made such a change in 2010 when this conversion was first allowed, you have a tax task to take care of on your 2012 return. A special provision allowed individual who moved their money into a Roth IRS in 2010 to spread the taxes due on converted amounts equally over the 2011 and 2012 tax years. The first half of those conversion taxes was due with your 2011 tax return. Make sure you pay the rest of the taxes with your 2012 return.
  • Homebuyer tax credit complications. Since its creation, the first-time homebuyer credit went through significant changes. It started as a $7,500 interest-free loan from Uncle Sam, changed into a true credit of up to $8,000 for a first-time buyer and added a $6,500 tax credit for a previous homeowner moving up to another house. All the revisions to eligible buyer guidelines, purchase time frames, income thresholds, home price restrictions and payback requirements are a tax-filing minefield. If you’re not careful, a mistake here could end up costing you the credit or at least slowing down the processing of your return. If you’re paying back the original $7,500 tax credit, the IRS has made the repayment process a bit simpler by eliminating in many cases the requirement that taxpayers file Form 5405. Now some individuals who are repaying the credit can just write the repayment amount they are including with their taxes directly on Form 1040.
  • Math miscalculations. The most common error on tax returns, year after year, is bad math. Mistakes in arithmetic or in transferring figures from one schedule to another will get you an immediate correction notice. Math mistakes also can reduce your tax refund or result in you owing more tax than you thought. When IRS examiners find a discrepancy, they’ll definitely let you know and, in many cases, will correct your mistake and re-figure your taxes for you. Don’t give them the chance. Make sure your math entries are right.
  • Direct deposit dangers. Taxpayers can have a refund directly deposited into multiple bank accounts. This option is a great way to save your refund money, but the more numbers you enter on a tax form, the more chances you have to enter them incorrectly. And a wrong account or routing number could cause you to lose your refund entirely. You can divide your refund into thee accounts by filing Form 8888 along with your individual return. It’s not a difficult document to complete, but if you put in wrong account numbers, your refund could end up in someone else’s account or be sent back to the IRS. Either way, you might not be able to retrieve your refund because there is no IRS procedure for replacing lost electronically transferred funds. Incorrect account numbers aren’t just a problem when a refund is split multiple ways. Even if your refund is going to just one account, make sure you enter your account and bank routing numbers correctly.
  • Complete charitable contributions. Did you give to charitable groups last year? All types of donations, from cash to cars, could be valuable tax deductions, so make sure you count them all when you file. Be sure to follow the donation tax rules, the most important being that you give to a qualified organization — that is, one that has tax-exempt status with the IRS, Also be careful when calculating any gifts of clothing and household items. Tax law now requires that these donations be in good or better condition or the deduction is disallowed.

Lots of things can go wrong when filing your taxes and that is why I like to say come you us at Gunwel Associates. Our job is not to make mistakes and file your return with complete accuracy. We’ve been great at doing so for many years. Let us know if you need any help as that is why we are here. Give us a call today at 615-730-9444 and visit our website at You work hard for your money, let us work smart to help you keep it. See you soon!

3 Comments leave one →
  1. April 9, 2013 6:16 am

    thanks for this!!!

  2. May 13, 2013 7:48 pm

    Interesting story! Thanks! I am pleased with your work!

  3. July 23, 2013 10:38 am

    Cool post! I am so glad to be here. Thanks for this theme! I think this post is very interesting.

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