Earn 1.60% APY on your money with an Alliant High-Rate Savings Account.
Get upfront pricing, guaranteed savings, and a discounted rate on your auto loan. Members save an average of $3,383 off MSRP.
Earn top dollar with rates up to 2.70%APY.
Earn rewards, get cash back or take advantage of a low standard variable rate.
Return to The Money Mentor Blog
By Pam Leibfried
Filing taxes can be stressful, and nobody wants to make a mistake that will cause the IRS to take a closer look or audit your return. Below are a few tax filing tips to help you avoid some of the most common mistakes you might make when you’re filing your own taxes.
If you file on paper and mail in your tax return, the IRS says you’re 20 times more likely to make an error. Filing electronically can help you avoid mistakes — tax software will flag common errors and prompt you for missing information — and it also means that you’re likely to get your refund much faster.
Even the best and most accurate typist sometimes makes an error, so always double-check your return to make sure that your personal information, Social Security number and the info from your 1099(s) and W2(s) is correct. If you have your refund direct deposited into your bank account, make sure your account number and the routing number of your bank or credit union are correct.
If you’re a college student, be sure to coordinate with your parents before you file. If they’re claiming you as a dependent on their tax return, you can’t claim an exemption for yourself on your tax return. And if you file first and claim the exemption for yourself, the cost to your parents could be steep — they might miss out on tuition credits and the exemption they can claim for you as their dependent.
The ACA requires Americans to have minimum essential healthcare coverage (or qualify for a health coverage exemption). Assuming you were employed and covered by your workplace coverage for the entire year, all you need to do when you file is make sure that you check the box that confirms you had healthcare coverage for all of 2016. You’ll need to keep any coverage confirmation forms your employer sends you in case you’re ever audited, but you don’t need to include them with your return.
If you itemize, you probably know that you can deduct your state and local income taxes. But if you live in a state with no state income taxes — or if you just don’t pay much in state income taxes — you can instead deduct the state and local sales taxes you paid.
Pro tip: Even if you live in a state that has state income tax, a large purchase like a new car or boat could mean that deducting sales taxes would be a better deal for you, so be sure to do the math before you finalize your itemized deductions.
If your income exceeds certain thresholds, your deductions could be reduced. These reductions kick in when your adjusted gross income (AGI) is more than $259,400 for singles, $311,300 for married filing jointly, $285,350 for head of household or $155,650 for married filing separately. When you reach these limits, you’ll have to reduce your deductions by three percent of the amount by which your AGI exceeds that threshold.
If you contributed less than the maximum amount allowed to your Health Savings Account (HSA), traditional Individual Retirement Account (IRA), SEP-IRA or Solo 401(k) in 2016, you have until April 18, 2017, to make additional contributions for the 2016 tax year. For example, if you max out a traditional IRA in the 25 percent tax bracket, your $5,500 IRA contribution could boost your 2016 tax refund (or reduce your tax bill) by over $1,000.
Pro tip: Be sure that you let your plan provider know that the contribution you are making should be applied to the 2016 tax year so they don’t mistakenly apply it to your 2017 contribution limits.
If you have a MyRA retirement account that you didn’t already max out, the IRS now gives you the option to have your tax refund direct deposited into your MyRA account to boost your retirement savings.
If you’re filing a paper return, be sure to sign it before you drop it in the mail. If filing electronically, you’ll need to “sign” your return using a PIN. The IRS will not process your return, or send your refund, if your return is unsigned, whether by pen or by keystroke.
Have your refund direct deposited into your checking account. You’ll get your money faster, and you won’t have to worry about your refund being intercepted or lost in the mail.
Pam Leibfried is a marketing content specialist whose love of words led to a writing and editing career. After a brief stint teaching English, she transitioned to corporate communications and spent 20 years at The Nielsen Company before joining Alliant’s content development team. Early in her work life, Pam’s friend Matt explained the benefits of a 401(k) and her dad encouraged her to start a Roth IRA. Their good counsel prompted her to prioritize retirement savings, which just might enable her to retire early so she can read more and live out the slogan on her fave T-shirt: “I have a retirement plan: I plan on quilting!”