Oh those costly tax errors. Ever since 1914 when the 16th Amendment was added to the Constitution making federal income tax permanent, ever since then people have been paying the price, and paying interest and penalties on that price whenever their pens or pencils malfunctioned. At least, that’s the way the taxpayer saw it.

Back in the old days, all anyone had to add-up their taxes with was a pen or pencil. It was all added together using long hand. It wasn’t even until the 1960’s that the calculator came out, even though it seems like calculators have been around forever.

Of course in the 1980’s, computers started becoming more of a household item and doing your taxes started getting easier and more accurate. Computers, like the calculator, made it faster and more accurate to add-up the numbers. But this didn’t stop the errors. Let’s face it, making errors on your taxes is not simply a matter of crunching the numbers wrong. There are other things that will precipitate errors on your tax returns.

So how do you make sure that you get it right the first time? Remember, if you get it wrong, there will be penalties and interest due. So how do you avoid such costly errors?

Hire a Tax Consultant

Ah, the tried and true method. A method almost as old as tax law itself. Hire someone else to do it for you, a skilled and licensed professional.

Tax consultants can be highly educated CPAs, or they can just be licensed tax consultants. They may have 4 years of college and a bachelor’s degree or even their masters or PhD. So which should you use? Well, if you have just one job, don’t make an exorbitant amount of money and don’t have a very complicated tax burden, meaning you don’t have lots of deductions like extra real estate properties and investment funds, if you are just a regular Joe who needs his taxes filed on time, then any regular tax consultant will do. They can crunch the numbers you need to get your taxes filed and get the standard deductions and tax credits you are due, like deductions for the interest on your home mortgage, tax credits for you and your children, all the straightforward deductions that any qualified tax consultant can file for you.

So why not hire the very best tax consultant? Well, if your taxes are pretty straightforward, there is just no need to hire a PhD, and most importantly, pay PhD rates. Neither do you need to hire a tax attorney. Tax attorneys are very expensive and only for the wealthy. You quite simply do not pay that kind of money unless there is even more money to be saved.

And make sure the information you give your tax consultant is all correct. You can still make errors. If the information you give to your tax consultant has errors in it, there are going to be errors on your tax return. Your tax consultant is not omnipresent. He is not all-seeing, and he can only do your taxes as best as he sees the numbers involved.

Use a Computer Program

Nowadays, with computers and the internet, it is possible to do your taxes easily and accurately all by yourself. Again, if your taxes are not going to be overly complicated, if you have deductions but nothing out of the ordinary, then there is no reason you cannot do them yourself. If you don’t have property in a foreign country that you just sold at a loss or need to know how much you can deduct or amortize on your new luxury yacht, if all you need to deduct are the standard items (and even some more complicated ones), then computer programs like Quicken or Turbo Tax can do the job for you. All you really need is your information, get your bank account statements out, all the paperwork you have from your mortgage company and any retirement funds you may have, anything you feel is relevant, and Turbo Tax will guide you through the process. It really is as easy as 1-2-3. Computer software like Turbo Tax will add it all up for you, tell you how much you owe, or may be getting back, and even submit it to the IRS for you through the internet. It really is that easy.

Doing your taxes these days still seems daunting, but that’s just the leftover feelings from days gone by. Once you get started with a computer software program you really will see how easy it is.
Computer software like Turbo Tax is also very affordable. For the standard edition, you won’t pay more than $50. That’s still cheaper than a tax consultant, and not even a bad wage for you for a few hours work. Get computer software to help you do your taxes, and stop making costly errors.

Common Mistakes You can Avoid

Filing on paper. If you still file your taxes by the old-style, paper form, you’re just asking to make mistakes. As discussed earlier, get some type of computer software like Turbo Tax or Quicken. These software add up the numbers for you and they don’t make calculation errors.

You just weren’t organized. If you’re the type who ends up in a room with papers strewn all over the floor, you’re asking for trouble. Come to the table with everything in order. Make sure all your ducks are in a row, all your papers in order, and that you have everything you need. Get everything ready several days before. Haste makes waste.

You did not contribute to a retirement account like an IRA. Don’t think that missing out on a tax deduction is not considered a tax error. It’s a big error when you miss out on an opportunity to save money on your taxes as well as set up a fund for your retirement. Yes, forgetting to set up and IRA and take full advantage of the deductions that go along with it, yes, that is a big-time TAX ERROR.

Incorrect or missing Social Security numbers. What a dumb mistake, but a big one. Seems like not such a big error, but without your correct Social Security number, how is the IRS going to file your taxes. How are you going to get your refund? And if you owe money, you’re going to be late. Say Hello to penalties and interest. All for getting a few simple numbers wrong. Big mistake.
Dumb mistakes. Prove everything you file. Even the simplest of mistakes can mean not receiving your refund, or being late and incurring penalties and even interest if your payment is late. So be sure to avoid simple mistakes like getting your math right, making sure you write down your correct bank information if you are requesting direct deposit, and even down to not forgetting to sign your name.

All these things, whether they’re the bigger ones like hiring a tax consultant, or more economical solutions like using tax software to make sure you get it right, or even right down to the smallest of things like just remembering to sign your name. Any or all of these can help you get as close as possible to eliminating any errors when filing your tax return.