5 Tax Mistakes for Last-Minutes Filers to Avoid

Racing against the clock to finish your tax return? Avoid these common tax-filing errors.

Apr 13, 2014 at 12:00PM

Preparing and filing taxes is about as fun as a root canal for most people, which probably explains why so many of us put it off. Procrastinators are racing against the clock to meet next week's April 15 filing deadline. But the more you rush, the more likely you are to make mistakes that can cost you in the forms of penalties or even an audit. Here are some errors to avoid.

1. Omitting income
Failing to disclose income is a common error for last-minute filers. The IRS requires you to claim all income made in 2013, regardless of whether you received a W-2 or 1099 from an employer. If the IRS realizes you owe more money, you'll be on the hook for the extra tax plus penalties and interest. So even if you only worked that extra job for one week, the income is still subject to taxes, and you need to claim it.

2. Missing deductions and credits
When rushing to file, you are more likely to overlook deductions and credits that could save you hundreds of dollars on your tax bill. According to H&R Block, one in five filers who prepare their own taxes lose out on an average of $460 due to mistakes. Taking the time to figure out what you qualify for will ensure you don't leave deductions and credits on the table.

3. Incorrect numbers 
We often accidentally transpose numbers when rushed. Make sure to double check your Social Security number so that you haven't mistakenly rearranged digits. And if you've opted for a direct deposit of your refund, make sure your bank routing and account numbers are accurate. 

4. Not filing an extension
It's better to file an extension than to submit a tax return chock-full of mistakes. Opting for an extension will give you time to carefully review your options and make sure you aren't omitting deductions or making errors that can cost you later. IRS Form 4868 gives filers an automatic six-month extension on their tax returns and can be filed online.

5. Misinterpreting extension rules
But filing an extension doesn't mean that you don't have to send in a check on April 15 if you owe taxes. An extension is an extension on filing the return, not on paying Uncle Sam. So even if you delay filing your return until October, you still need to pay whatever you owe on April 15 or face penalties.

Foolish takeaway
If you are feeling overwhelmed because you've waited until the last minute to do your taxes, strongly consider asking for an extension. Doing so will give you the time to file correctly and minimize your errors. Seek help from a tax professional if you're still in doubt.

Take advantage of this little-known tax "loophole"
Recent tax increases have affected nearly every American taxpayer. But with the right planning, you can take steps to take control of your taxes and potentially even lower your tax bill. In our brand-new special report "The IRS Is Daring You to Make This Investment Now!," you'll learn about the simple strategy to take advantage of a little-known IRS rule. Don't miss out on advice that could help you cut taxes for decades to come. Click here to learn more.

Nicole Seghetti has no position in any stocks mentioned. Follow her on Twitter @NicoleSeghetti. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

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David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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