Haste makes waste: It's an adage that best describes the fate that often befalls last-minute taxpayers, who, in a mad dash to meet the IRS deadline, make filing flubs that result in smaller refund checks or shelling out more to the government than they owe.
Tax Tips for Procrastinators: The Top 8 Last-Minute Filing Blunders
Your filing status impacts the whole rest of your tax return -- so make sure to get it right. "The wrong filing status can significantly impact the amount of a tax refund or tax liability," Mark Steber, chief tax officer of Jackson Hewitt Tax Service, tells DailyFinance. The choices are: single; married filing jointly; married filing separately, head of household; or qualifying widow(er) with dependent child. If you're unclear on what your filing status should be, consult a tax professional, Steber advises.
When filing a paper return, be conscious that missing, incorrect or illegible Social Security numbers can delay or reduce a tax refund, says Gregg Wind, a CPA and the owner of Wind & Stern LLP in Los Angeles.
"When you file a paper return, the numbers to check most carefully on the tax return are the identification numbers, usually Social Security numbers, for each person listed. These include the taxpayer, spouse, dependents and people listed in relation to claims for the Child and Dependent Care Credit or Earned Income Tax Credit."
Taxpayers filing paper returns should also double-check that they've correctly calculated the refund or balance due, and have used the right figure from the tax table, he says.
"Bad math" is a common issue on paper returns, and those mistakes can seriously reduce your refund, or cause you to pay more to the IRS than you have to. "So when keying in your information, go slowly and check it when completed -- even when using a professional," Steber says.
Last-minute tax filers often end up unwittingly shortchanging themselves.
For one, many people assume that itemizing their deductions -- be it property taxes, mortgage interest or charitable contributions -- is the best way to reduce their tax bill. It might not be, Wind says. Don't automatically dismiss the standard deduction, particularly if your home is paid off or if you live in a state with no income tax.
"Single people who claim the standard deduction get to reduce their taxable income by $5,800, while couples can reduce it by $11,600," he says. So depending on your circumstances, "going with the standard deduction may be better for your bottom line."
Taxpayers who do itemize also forget to claim items. "There are literally thousands of tax credits, deductions and benefits available, but you need to know where to look to claim them," Steber says. "Take some time to think about changes in your life that occurred during 2011: Did you start to provide most, if not all, of the care for an elderly parent as a dependent? Did you take a new job? Did you buy a home? All of these situations, and many others, can add up to more dollars on a tax refund, if you are eligible."
What's more, sometimes lemons -- like stocks you own that tanked -- can be turned into lemonade -- i.e., tax deductions. "In many cases, you can carry forward losses from prior years to this year's tax return," Winds says, "so don't forget about them."
If you need more time to work on your taxes, you can apply for an automatic extension, which gives you until Oct. 15, 2012, to file your return. But that doesn't mean you can also delay paying your taxes if you owe the IRS -- a fact that trips up many filers. "People are always surprised to learn that an extension of time to file is not an extension of time to pay," Steber says. "If you owe, you still must pay all or most of your taxes by April 17, 2012, or work with the IRS to establish a payment plan."
You must claim all income you received in 2011, even if you worked in a position for only one day, Steber says.
Also, if you discover that you're missing a W-2 -- let's say you moved, or your employer went out of business -- "track it down because the IRS will expect to see a record of that income," he says.
If you didn't get a W-2 or Form 1099 from one of your jobs, be aware: That income is still taxable, so you should report it on your return.
Here's a common taxpayer mistake: "Blindly reporting prior-year state tax deductions as income in the current year," Wind says. Even if the state taxing authorities notified you of your refund, they have no idea whether that refund is taxable.
If you didn't deduct that state refund last year, that income may be partially or completely nontaxable this year, he says. For example, "you may have used the standard deduction for federal purposes and itemized on your state return, or used the sales tax tables rather than state taxes paid in the prior year. If that's the case, you might be overstating your taxable income by simply reporting your entire state tax refund as current-year income," Wind says.
It might sound like a no-brainer, but don't forget to sign and date the return. And keep in mind that if you're married, "both spouses must sign a joint return, even if only one had income. Anyone paid to prepare a return must also sign it," Wind says.
Cashing out or taking a loan on your 401(k) are two viable options if you're in need of funds. But, before you do so, here's a few things to know about the possible impacts on your taxes of an early withdrawal from your 401(k).
The IRS considers unemployment compensation to be taxable income—which you must report on your federal tax return. State unemployment divisions issue an IRS Form 1099-G to each individual who receives unemployment benefits during the year.
Say you happily filed your tax return by the end of February and were the envy of all your friends, but in June you realized you forgot to include income from last summer's freelance job. Don’t worry, all you need to do is file an amended return using Form 1040X.