Tax Season 2022: Declaration Mistakes That Will Cost You Too Much

The Internal Revenue Service (IRS) is waiting millions of tax returns during the 2022 tax season. And with budget cuts, staffing shortages, and ongoing pandemic concerns, the agency doesn't have the time or resources to scrutinize everyone's income. But this does not mean that you are not threatened with an audit, warns MSN. According to Jackson Hewitt, in 2019, more than 771 000 people.

Rush jobs are when most mistakes happen, and those mistakes can cost money this tax season. The Sun.

Late filing of tax returns

The first mistake you want to avoid in this tax season is a delay in registration and payment of taxes.

The penalty for non-payment is 5% of the taxes you owe for each month you are late.

If you owe tax, the penalty for non-payment is 0,5% of the amount owed.

Time, forgetfulness and procrastination are common enemies for most adults.

In fact, according to researcher and speaker Piers Steel, 95% of us procrastinate to some degree.

However, there are tricks to help you pay your taxes on time.

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The first thing you could do is promise yourself a reward after you complete them.

The type of reward is up to you, but some ideas might include a dinner party, a cheat meal, or shopping.

You can also ask a friend, family member, or neighbor to check on you until taxes are paid.

Selecting the wrong submission status

The next thing you want to avoid is choosing the wrong declaration status.

You can file a declaration as lonely, head of household, married, applying jointly, or widower.

However, choosing the wrong status can be a costly mistake.

For example, if you qualify for head of household status but apply as a single person, you may be in a higher tax band and pay more.

That's why it's important to set aside time to pay your taxes.

If you don't think you'll have enough time to pay your taxes this season, then you might want to see how much a tax specialist costs.

In addition, you can request an extension.

Making the wrong decision about comparing detail and standard deduction

Finally, the last mistake you don't want to make on your 2021 tax return is the wrong deduction method.

The goal is to choose the deduction method that will save you the most money, which will depend on how much deductible expenses you have.

Tax programs like Tax Law or TurboTax are great tools to help you make an informed decision.

After all, life can get pretty stressful, but you don't want to cut your taxes.

There are many professionals, resources, tax software and organizational tools to help you pay your taxes correctly and on time.

2 types of deductions that threaten an audit

Experts warn these 2 deductions could subject you to an IRS audit

Taxpayers seek to claim deductions from their tax returns. Deductions reduce your taxable income, which can mean you owe less to the tax system or even receive more money in tax refunds. Unfortunately, some people try to fraudulently claim deductions they are not entitled to, which is why the IRS pays special attention to deductions.

“Writing off disproportionately large amounts compared to your income tends to result in red flags,” explains Sarah York, IRS Registered Agent and Keeper Tax in-house tax examiner. According to Samantha Havrilak, personal finance expert and co-founder of How To Fire, excessive deductions that you are not eligible for can lead to an audit.

Two deductions in particular are more likely to come to the attention of the Internal Revenue Service. According to Dmitro Sergeev, tax professional and co-owner of PDFLiner, one of them is the home office deduction. “If you use part of your home for business, you can deduct the business use costs of your home. Home office deductions are available for homeowners and renters. They apply to all types of houses, - explains on his IRS website. Charles Corcello, IRS agent and president of TaxCure LLC, confirms that he has seen "higher rates of checks with home office withholding claims." After all, there are certain requirements to qualify for it. According to the IRS, part of your home must be regularly and exclusively used for business, and be the primary location of your business for this write-off.

You must also specify which part of your home is an office, which can cause additional problems. “The home office deduction is a good example of a write-off that people tend to abuse, so the IRS is more likely to flag it if it seems excessive — Yorke previously said. best life. "For example, if you claim that your office takes up 80 percent of your home, that's probably too much."

But if you qualify for a home office or automatic expense deduction, you must still take it. Dana Ronald, tax expert and CEO of the Tax Crisis Institute, says taxpayers may end up getting tax refunds without being able to claim all of their deductions. And the most commonly missed expenses are work-related and home office deductions, as well as student loan interest, charitable contributions and medical expenses, she says.