This was originally published on Monday, March 5, 2018, in the Pacific Daily News. Click here to subscribe to the PDN.
Mistakes are common, but making a mistake on your taxes could cost you some hefty fees. Here are some mistakes to avoid:
File. Always file, even if you have to ask for an extension. This year’s extension deadline is Oct. 15, 2018. If you cannot afford the taxes you owe, you still should file. Not paying on time and not filing impose very stiff penalties. If you can’t pay right away, apply for an “offer in compromise” or ask to make monthly payments with an installment plan. Contact Revenue and Taxation or the IRS right away to inform them you can’t pay and try to pay as much as you can when you file, because penalties and interest are accessed to the amount owed.
Social Security numbers. Check and double-check that your Social Security numbers are correct on your tax filing. Look for transposed numbers and ensure your numbers are legible.
Names. Make sure the names on your tax filing are spelled exactly as they are on the corresponding Social Security cards. If you have a common name or someone in your family has the same name, be sure you indicate the correct title (junior, senior, etc.)
Filling status. Some people will accidentally choose the wrong status. The IRS applies different income tax rates and awards different deductions and credits depending on your filing status: single; married filing jointly; married filing separately; head of household; or qualifying widow or widower. Married couples filing jointly are entitled to twice the deductions than someone filing as single. Those who are married and filling jointly are subject to different rules than those who file separately. If you are single, do not use head of household. To ensure you are filling with the correct status, visit the IRS website, www.irs.gov.
Wrong forms. There are three different tax forms: 1040, 1040A and the 1040EZ. Your situation will dictate which form you use. For example, if you are itemizing your deductions, you cannot use the EZ version because you need to attach a Schedule A.
Math. Double-check your math. Be careful when you add and subtract. Look at the correct table. Print out several copies of your tax form and use a pencil to work the math. Once you are satisfied with the results, transfer it to your final form using a pen.
Credits and deductions. Follow instructions carefully when figuring out credits and deductions. Many mistakes are made figuring out if a credit or deduction applies to them. If you are not sure, talk to an accountant or tax preparer.
Mailing address. If you are getting a tax refund, be sure you use the correct mailing address. It would be terrible to miss out on your return because your address was wrong. If you are able to file online, be sure you put the correct bank account and routing number.
Michael Camacho is president and chief executive officer of Personal Finance Center. He has more than 25 years of experience in retail banking and at financial institutions in Guam and Hawaii. If there is a topic you’d like Michael to cover, please email him at firstname.lastname@example.org and read past columns at the Money Matters blog at www.moneymattersguam.wordpress.com.