Almost every civilian would agree that preparing taxes is one of the most difficult tasks they have to perform. We often trivialize the importance of getting our papers in order, which can cost us a lot of precious time and effort towards the end. If you wish to sail smoothly through the coming tax season, here are some common mistakes that you should avoid during the process. Keep such tax tips and advice in mind and manage taxes without any hassles.
- Ignoring the health coverage
While managing taxes, people often tend to ignore the importance of their health coverage. It is imperative according to the shared responsibility provision that you and your family have the minimum coverage to qualify for a health coverage exemption. If not, you will have to make individual shared responsibility payments for the exact period for which you didn’t have coverage or an exemption. So, you must ensure that you have a health coverage throughout the entire year.
- Not using tax preparation software
Tax preparation is a skill which everyone doesn’t possess. Often people try to manage their own taxes in a bid to save money rather than hire a tax expert who would do justice to this task. Instead of preparing taxes by yourself, either hire a tax preparer or opt for tax preparation software such as TurboTax to help you in this endeavor. TurboTax guarantees 100% accurate calculations and readily reimburses its users if they lose money due to erroneous calculations by TurboTax. So, you can use TurboTax or similar tax preparation tools to help you file your tax returns effectively.
- Revealing your identity
Every taxpayer is given an Identity Protection (IP) Pin. The IP Pin is a six-digit number that is assigned to eligible taxpayers for preventing fraudulent returns from being filed under the taxpayer’s Social Security Number. So, in case you receive your IP Pin, ensure that you do not divulge this to anyone since this can lead to malicious entities trying to make fraudulent claims against your name. Also, this IP Pin changes every year, so keep track of this pin and do not share it. Revealing your IP Pin is one of the biggest mistakes a taxpayer can make. So, a fair tax tip and advice would be to not reveal your IP Pin and safeguard your identity.
- Cluttering your assets
People fail to realize that their assets other than cash can be of great use while filing their taxes. So, do not leave your assets in a clutter. Decluttering your assets is one of the easiest tax tips and advice you would receive, and it helps you manage your funds effectively. Before you start with the tax preparation process, segregate the items that are of no use for you but are in good condition. Certain items like books, electronics, clothing, household items, etc. are accepted by charitable organizations instead of cash. In such cases, the deduction depends upon the item’s real market value. If the noncash items account for more than $500, then fill up the form 8283, the Noncash Charitable Contributions.