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.
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.
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.