Overlooking tax deductions for fear of the Internal Revenue Service is one of the common mistakes many taxpayers make, said Jeff Lawson, a CPA with Towson-based Stoy, Malone and Co. PA.
“They also report income that shouldn?t be reported,” said Lawson.
Many taxpayers also make simple math errors on their returns, said Jim Dupree, IRS spokesman for the Maryland region.
Taxpayers can avoid this by using their calculators or filing their taxes online.
“The online program does the math for you,” Dupree said.
Next to bad math, Dupree said, the most common mistakes taxpayers make are transposing their Social Security numbers and failing to date and sign their returns.
Now that many baby boomers are selling their homes and moving into condos, itemizing their deductions may no longer make sense, said Tom Ochenschlager, vice president of tax for the D.C.-based American Institute of Certified Public Accountants.
“Many of them may no longer have mortgage interest to deduct,” Ochenschlager said. “It might make sense to switch to the short form.”
The institute has also come up with a list of the most common mistakes taxpayers make. They include:
» Overpaying your Social Security taxes: If you worked two or more jobs in 2005 and your total earning exceeded $90,000, you may have overpaid your Social Security taxes.
» Unnecessarily declaring your state income tax refund as income: Do not declare your state tax refund as income on your federal return if you did not receive a tax benefit from deducting the taxes. If you took the standard deduction instead of itemizing in 2004, you don?t have to show your state tax refund as income for 2005.
» Failing to document charitable donations: For charitable donations of $250 or more, you need a receipt from the charity. A canceled check won?t do. If the gift was property rather than cash, the receipt must describe the property. When your non-cash contribution exceeds $500, you must also file IRS form 8233, Non-cash Charitable Contributions, giving details of the donation.
Credit card accepted?
» A study of 1,001 taxpayers showed that although 68 percent of taxpayers know the IRS accepts credit cards for taxes owed, just 1 percent plan to use their credit card to pay Uncle Sam.
Source: Ipsos Insight
