April brings blooming flowers, budding trees, and dreaded tax time. If you’re one of the millions who hasn’t yet prepared their 2014 or prior returns, don’t panic. There’s still time, though yes, the clock is ticking. As you ponder your return, here’s a look at some common mistakes, and how you can avoid them.
Get the basics right
The Internal Revenue Service says the most common mistakes on tax returns are the easiest to avoid. Make sure your name and Social Security number, and those of your dependents, are listed correctly. If you’re not ready to file your return by the April 15th deadline, make sure to have an extension filed for the federal and state. Contact one of our offices to get an extension filed before the deadline.
Another common error: neglecting to sign and date the return. And if you’re filing jointly, both spouses must sign.
Math errors are also common
With so many easy-to-use software programs, it’s probably a good idea to use one if you aren’t having a professional prepare your return. If you are computer-phobic and would rather do it manually, at least use a calculator to check your math. And when those two options don’t pan out, contact one of our offices to set up an appointment today and let us help take care of those issues.
Don’t miss credit and deduction opportunities
One of this year’s common mistakes could cost you a few bucks. An overlooked credit this year is for energy-conscious improvements made in one’s home. For example, if you installed some new windows, a credit of up to $200 is available. If you’re paying for a child’s college education, there are many credits and deductions for which you may be eligible. In any given tax year, you may be better served by either the Hope or Lifetime Learning Credits, or by the Tuitions and Fees deduction. Run the numbers to see which is best for you. With the growing number and complicated hoops to jump through to qualify, let us help you claim those credits and deductions.
Add up medical deductions
You can deduct your medical expenses if they add up to more than 10 percent (7.5 percent if you were born prior to January 1, 1949) of your adjusted gross income. If you’re retired and paying for your own health insurance or paying those unexpected but large medical bills out of pocket, there’s a good chance you’ll be able to take the deduction.
Long-term care insurance can also be deducted and is often overlooked. “Additionally, if there is a parent in assisted living, a portion of the cost of assisted living or nursing care is deductible as a medical expense. Ask the assisted living facility director what portion of the monthly cost is for room and board and what part is considered nursing care.”
Some other items you shouldn’t forget: Medicare Part B premiums, fees for stop-smoking programs, fees for physician-prescribed weight-loss programs to treat an existing disease, equipment such as wheelchairs and hearing aids and transportation costs. The list goes on with over 70+ allowable qualifications for medical expenses. With the help of one of our tax preparers, we can make sure that any medical costs incurred by you will be calculated and potentially used to lower your tax liability.
Deduct cost of helping parents
If you’re providing more than 50 percent of the support for a parent, even if the parent is not living with you, you can claim that parent as a dependent. If you do claim your parent, make sure your parent isn’t filing a return and claiming him or herself. And if several siblings are each helping to support your parents, check out IRS Form 2120. This form allows siblings to determine on a year-by-year basis which sibling can claim the parents as dependents, even if the individual sibling didn’t provide more than 50 percent of the support.