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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 if you’re filing your own taxes.
And if you’re not sure if you should attempt to file on your own this year in light of the new, larger standard deductions, check out the handy aid we’ve created listing some of the factors to consider when deciding if you can DIY your taxes or should go to a pro.
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.
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, make sure that you check the box that confirms you had healthcare coverage for all of 2018. 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.
The Tax Cuts and Jobs Act of 2017 increased the standard deduction to $12,000 for single filers and $24,000 for married couples filing jointly. At the same time, it put caps on the amount of mortgage interest and local/state taxes that you can itemize; these limits may lower the deductions of many homeowners in high-tax states and locations with high housing costs. That means that millions of taxpayers may switch from itemizing their deductions to just taking the standard deduction. You’ll definitely want to run the numbers for both the standard deduction and itemizing to know which one will save you the most.
If you contributed less than the maximum amount allowed to your Health Savings Account (HSA), Traditional Individual Retirement Account (IRA), Roth IRA, SEP-IRA or Solo 401(k) in 2018, you have until April 15, 2019, to make additional contributions for the 2018 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 2018 tax refund (or reduce your tax bill) by over $1,300.
Pro tip: Be sure that you let your plan provider know that the contribution you are making should be applied to the 2018 tax year so they don’t mistakenly apply it to your 2019 contribution limits.
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. This is especially important this year because the recent government shutdown has resulted in backlogs at the IRS, which could delay your refund if you mail your return.
Tax Day 2018 isn’t until April 15, 2019, but you shouldn’t wait until then to file. Filing early helps to prevent fraud because once you’ve filed, a fraudster can’t file a return in your name. If you wait and a fraudster files first using your info, your refund may be delayed while the IRS figures out which of the returns is the legit one.
As you're doing your taxes, if you're not 100% sure that you're on solid ground with how to enter everything into the new tax forms and account for all the changes to tax law that are hitting this year, go to a pro. It's well worth the small expense to have peace of mind and avoid an audit or tax penalties.
When you file online, the temptation can be to think that you can just log back in to access your return, but you really need to keep a copy of every form and receipt related to your return, all together, in case you are ever audited. That means having your 1040, all your schedules and related forms, your 1099s for HSAs and interest earned, receipts for any expenses or donations you itemize, and of course, your W2 forms and forms for any non-wage income you earned that tax year. You can easily download a PDF of all your forms after you complete them, then put all the PDFs together in a password-protected folder on your computer and print out a hard copy of everything to file with your other tax paperwork.
Note: We are not tax professionals. Please consult a professional tax advisor about any questions related to your tax return.
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!”