Tax season is drawing to a close, and as April 15 approaches, more people will have to start moving quickly to get their tax returns filed on time. That rush inevitably leads to silly mistakes, and the Internal Revenue Service is kind enough to share some of the most common errors that people make each year.
The new tax law and the resultant changes to our tax forms have opened the door to some brand-new mistakes this year, but the IRS believes that many of the same goofs it's seen for a long time will make it onto returns yet again. Here are three of the most costly errors, and some tips that will help you avoid them.
1. Don't short-change your standard deduction
Taxpayers get to enjoy a new, higher standard deduction for the 2018 tax year. Most standard deduction amounts nearly doubled from where they were in 2017, and that means that more people than ever will choose to take the standard deduction rather than itemizing. With a simple list of numbers corresponding to the available filing status options, most people will be able just to take the right number from the form itself and fill it in.
However, some people are due additional amounts on their standard deduction. If you're 65 or older, then you can add $1,600 if you're single or $1,300 if you're married. In addition, those who are blind can add the same amounts. If you're both 65 or older and blind, then you get to boost your standard deduction by double the $1,600 or $1,300 amount. The extra deduction can save you hundreds of dollars on your taxes -- but you have to remember to claim it.
2. Pick the right filing status -- and don't pick more than one
When you look at the first page of your tax return, you'll see several boxes that seem to ask about your family information. But boxes to check indicating whether you're single, married filing jointly, head of household, married filing separately, or a qualifying widow or widower aren't looking for you to check every single box that could apply. Instead, the IRS wants to know which filing status you're claiming so that it can apply the correct rules and calculations in figuring your tax.
In general, the catch-all filing statuses are single, married filing jointly, and married filing separately. Anyone who's not married can file as a single filer, and married couples can either agree to file jointly or file separately instead.
Where things get more complicated is with head of household and qualifying widow and widower status. Usually, though, if you can qualify to use one of them, they'll offer you greater tax savings over simply filing as a single person. But don't check both single and one of these other filing statuses -- instead, just choose the one that's most favorable to you.
3. Use the tax tables correctly
The tax tables are designed to make it easy to come up with your total tax due without having to do complicated math. Simply take the taxable income you calculate on your return, go to the tax tables, find the row that includes your income, and then go across the columns to find the right tax number.
The common mistake that many people make is to choose the number from the wrong column when they use the tax tables. Each column corresponds to a filing status, and the tax due can vary widely depending on which filing status you qualify to use. Be sure to double-check and make sure that you've captured the number from the correct column before you file your return.
These errors aren't hard to avoid, but it's helpful to know that you should pay some attention to the issues they cover while you're filling out your return. If you steer clear of these danger areas, you'll potentially save yourself a lot of hassle -- and a lot of money.