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Common Tax Filing Errors – Did You Know? (2/3)

Every year, many taxpayers make mistakes on their returns that cause IRS processing delays. Some common errors may also result in paying too much or too little tax. A miscalculation in either direction can be costly, since the IRS may assess penalties for underpayment.

The following mistakes often cause filers to pay the wrong amount of tax:

Math Mistakes:
Even mathematicians sometimes make errors in simple addition and subtraction, and some of the calculations required for 1040 schedules can be complicated. Thoroughly double-check every bit of math on your return.

Incorrect Filing Status (Single, Married Filing Jointly, etc.):
The IRS will not accept a return showing a filing status that you are not eligible to claim. If you qualify for more than one status (for example, filing jointly or separately if you are married), the option you choose may significantly change your tax. The difference can be especially great for single taxpayers who qualify to file as a head of household. Make sure that you have not chosen a filing designation that causes you to pay more tax than you owe.

To avoid costly mistakes, the IRS recommends having a tax professional prepare or check your return and file it electronically. A tax pro might also help you claim deductions and credits that you would otherwise miss.

Common Tax Filing Errors – Did You Know? (1/3)

Every year, many taxpayers make mistakes on their returns that cause IRS processing delays. Some common errors may also result in paying too much or too little tax. A miscalculation in either direction can be costly, since the IRS may assess penalties for underpayment.

The following mistakes may not change your tax, but they can cause processing problems. The IRS may even withhold your refund until the errors are corrected.

Missing or Inaccurate Social Security Number (SSN):
Even when filing electronically, many people mistype their SSNs and do not catch the error. If the SSN on your return does not match the number on your Social Security card, the IRS may not be able to process your return.

Misspelled Name:
Take your time when filling in every blank on your return, even your name. A misspelling or illegible writing can prevent proper processing.

Incorrect Bank Account or Routing Number:
Getting your return filed electronically and requesting direct deposit is the fastest way to get your refund, IF you provide accurate information. An error in your banking info can cause big headaches.

Missing Signature:
Remember that in most cases, couples filing jointly must both sign their return.

To avoid costly mistakes, the IRS recommends having a tax professional prepare or check your return and file it electronically. A tax pro might also help you claim deductions and credits that you would otherwise miss.

IRS Has Begun Sending Stimulus Payments to Eligible Americans – Did You Know?

The IRS started sending out a third round of Economic Impact Payments (EIP3s, also called stimulus payments) shortly after the American Rescue Plan became law on March 11. The vast majority of eligible Americans will receive their payments automatically, usually by direct deposit. If a person entitled to an EIP3 has not provided current banking information to the IRS, their payment will be sent by mail as a check or prepaid debit card.

In general, EIP3s are larger than previous EIPs sent in 2020 and 2021. The standard payment amount is $1,400 per person, plus $1,400 for each dependent. For example, an eligible married couple with two dependent children will receive 4 X $1,400 = $5,600. People qualify to receive EIP3s if they are U.S. citizens or resident non-citizens, have valid Social Security Numbers (SSNs), cannot be claimed as someone else's dependent, and have adjusted gross income (AGIs) below the limit.

For single tax filers, the AGI limit to receive the full EIP3 amount is $75,000. Single taxpayers with AGIs of $80,000 or above will not receive an EIP3, while those with incomes between $75,000 and $80,000 (the "phase-out" range) will receive reduced payments.

Joint tax filers qualify for the full EIP3 amount if their AGI is $150,000 or less, with the phase-out range going from $150,000 to $160,000. For Head of Household (HoH) tax filers, the AGI limit for a full EIP3 is $112,500, with the phase-out range ending at $120,000. As with Single individuals, HoH and joint filers with AGIs above the phase-out range will not receive EIP3s.

You can use the IRS Get My Payment portal (link below) to check on the status of your EIP3. This tool can often provide the precise date when your payment will be deposited or mailed. Because payments are calculated and sent automatically, contacting the IRS will not speed up the process. Beware of scammers who claim that they can get your stimulus payment faster.

IRS Get My Payment portal: https://www.irs.gov/coronavirus/get-my-payment

IRS Projects Delivery Schedule for 2020 Tax Refunds & Tracking

With the processing of 2020 federal tax returns now underway, the IRS has issued information about the likely timetable for refunds to be issued. Here are some key points to keep in mind:

- The IRS began processing returns on February 12, 2021.

- The fastest way to receive your refund is to have your return filed electronically and request the refund by direct deposit to your bank account.

- The IRS expects about 90% of taxpayers who file electronically with direct deposit to receive their refunds within 21 days, provided there are no problems with their returns.

- Many taxpayers who file promptly and qualify for the Earned Income Tax Credit (EITC) or the Additional Child Tax Credit (ACTC) will receive their refunds in early March.

- Those who file paper returns and/or request their refunds by check may experience longer wait times for their refunds.

- Refunds will also be delayed if the IRS must request additional information from taxpayers due to issues with their returns.

Typically, as soon as 24 hours after your federal return is e-filed, you may track the status of your refund by using the IRS Where's My Refund portal, at http://irs.gov/refunds. In many cases, the portal can provide a personalized refund delivery date.