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USA Today put together a really good, common sense list of things to avoid or not forget when it comes to filing your taxes. Wanted to share this list here in depth and open it up for discussion and feedback to hopefully help those filing their taxes, or if anyone thinks of ones to add to the list that they didn't include.
I particularly think #5, #7 and #8 are the most important (at least they were for me). Keep in mind tax software should catch a good amount of these. But not always. I found that out the hard way this year.. TurboTax found more deductions for me than H&R Block, and it wasn't by a small margin. So it pays to pay attention to the little details. Here's the list.
1. Don't miss this new credit.
This one refers to a new credit for dependents. It's a nonrefundable tax credit worth up to $500 for each qualifying person and begins to phase out at $200,000 in adjusted gross income. ($400,000 for joint filers).
2. Not filing a return.
Even if you earned less than the necessary amount to file a federal return, they say it is still worth it to file, as you could qualify to claim a refundable credit and you may still have a refund owed to you.
3. Picking the wrong filing.
This one is just saying you might want to consider 'head of household' filing status over 'single' if you have dependents as your standard deduction should be higher that way. It's apparently a common mistake made by many.
4. Filing without all documents.
Forgetting or failing to have all your documents in order and ready to go when you file could (and probably will) result in you having to file an amended return. At best, its a waste of time. At worst, you could be put on the radar for an audit.
5. Forgetting big life events.
This one is broad and can change quite a bit, tax debt or credit wise. Make sure to keep in mind big changes, like having a kid, buying a house or making more or less money on the year. Having a child will mean dependent credits and status filing changes. Buying a house could and should come with certain credits or write-offs. And if your income changed a good deal from last year, you will likely be dealing with different tax brackets for a section of your income.
6. Entering incorrect info.
This is a similar situation to #4 but less dramatic. Still, the IRS is very picky. If you are filing your taxes electronically via software and you input anything wrong, even if its just a missed decimal or a slightly misspelled name, your return can be rejected and you will have to file again, which can be a real pain.
7. Missing Earned Income Tax Credit.
This one is important enough I figure it's best to just take the full article exert:
Every year, almost a quarter of taxpayers miss out on this valuable credit worth up to $6,431 in 2018. It’s forgotten so much that the IRS has dedicated an awareness day for the credit.
“This is a huge credit for low and middle-class taxpayers,” says Lisa Greene-Lewis, a certified public accountant and tax expert at TurboTax. “People usually think they make too much money to qualify.”
But changes in life circumstances – such as a job loss or a spouse staying home with a newborn – may be enough to make you eligible for the credit this year.
8. Paying someone to do your taxes.
Don't pay a tax accountant to file your taxes if you are like a majority of Americans and only have a w-2 to file. That's simple enough and can be done for free from TurboTax, H&R Block or any number of filing services. If you need to file a more complicated return, I would still advise trying to file electronically yourself. The fees are much cheaper than going to a brick-and-mortar store and you can pay a little extra and get audit protection. (That's what I did this year.)
9. Not claiming a child.
Sometimes children are raised by someone other than their parent, and they can sometimes fail to file as 'head of household' as a result. This article points out the example of grandmother taking care of a child but forgetting to file with that status.
10. Missing the other education credit.
The common education credit every student is usually aware of and claims is the American Opportunity Credit. But the lesser known and utilized one is the Lifetime Learning Credit, which can be worth up to $2,000 per tax return and can be claimed by college students and/or those doing many kinds of continued education or certification.