How to avoid mistakes when e-filing taxes online
Sitting down with pencils, scrap paper, and income tax forms for the annual tax preparation chore is enough to give anyone a headache. Fortunately, the IRS has streamlined and simplified the process by creating an alliance (called “Free File”) with numerous tax preparation software companies, which enables taxpayers to e-file taxes online for free.
If you’re expecting a tax refund, e-filing your taxes online can get the money into your bank account in as little as 10 days through Direct Deposit (versus the average 6 weeks it can take to receive a tax refund though the paper/mail filing method). Free File is accessible through the IRS website. It eliminates a lot of the tedium and frustration that often comes with income tax filing, but you’ll still need to be careful to avoid making mistakes that can result in an erroneous or even rejected tax return.
When you e-file taxes online for free, make sure you gather all your “evidence”? such as receipts, bills, and forms sent to you by your employer, financial institutions, and so on. Make sure you also familiarize yourself with the variety of online tax preparation software available to help you e-file taxes online for free. As you enter your information into the online tax forms, pay attention to these common areas for mistakes that other taxpayers have experience when they e-file taxes online for free.
Here are some mistakes to avoid as you e-file your taxes online free:
- Make sure you enter the appropriate amount of tax exemptions (including yourself, your spouse, and any qualified dependents) because this could cost you a lot of money if claimed incorrectly.
- Check that you’ve included the taxable income from all sources for both you and your spouse (if filling jointly) where prompted ? including wages, tips, and consulting fees, as well as dividend and interest income from your bank, credit union, or other financial institution.
- If you sold stocks, bonds, mutual funds or other securities during the year, make sure you have the IRS Tax Form 1099 (Miscellaneous Income) gross sales proceeds from your financial institution. You will also need to know the original purchase price of the shares, plus any commissions or other fees that are included in your original cost basis. Be ready to provide the trade/purchase dates for each security that was sold, because it will determine whether the capital gain or loss from the sale is categorized as short-term or long-term.
- When you e-file taxes online, make sure you pay attention to any tax credits or tax deductions you may be eligible for — such as tax relief for education costs, charitable contributions, business expenses, job-related moving expenses, and medical expenses. These tax breaks can really help reduce the amount of income tax that you owe.
Don’t be afraid to take advantage of the online assistance available when you e-file taxes online for free. For help answering general Federal income tax questions, refer to the “Help and Resources” tab on the IRS website. Here you can ask the IRS general tax questions about to filing a tax return — including which tax form to use, who you can claim as a dependent, what you can deduct, when to file, where to file, and changes in tax law.
You can also enlist help by checking the Free File Alliance company’s website for customer service options (such as general online assistance or technical assistance). In order to participate, Free File Alliance companies are required to display their customer service options to customers who use their program to e-file taxes online for free.
The companies also offer free e-mail support to answer taxpayer questions and can help you avoid costly mistakes when you e-file taxes online for free.