"Tax law is subject to interpretation based on factual situations," said Sanford Warren, a tax accounting instructor at Millsaps College in Jackson, Miss. "Always establish the facts first and then ask the questions."
Warren and fellow former Internal Revenue Service official Richard Davis, an accounting professor at Susquehanna University in Selinsgrove, Pa., have compiled lists of the top mistakes and myths encountered year in and year out by taxpayers.
Social Security numbers are the coin of the realm, according to the IRS. They establish a taxpayer's identity and those of any dependents. Taxpayers often transpose numbers or forget to let the Social Security Administration know when a woman marries and changes her name, which can lead to a computer mismatch that raises a red flag at the IRS.
People also frequently fail to put a child's Social Security number on the forms, which is needed to claim a dependent exemption, a child care credit or the earned income tax credit.
Last year, out of roughly 125 million returns, the IRS got nearly 1.7 million with a Social Security mistake. "That's the top math error we see," agency spokesman Don Roberts said. The IRS will notify taxpayers about the mistake and allow it to be corrected over the phone, but it can slow down a refund.
Another frequent tax error is forgetting to sign and date the tax return. If a joint return is being filed, both spouses must sign even if one had no income to report.
And some tax myths include:
- People who owe zero taxes don't need to file. Not necessarily, because workers who had taxes withheld from their paychecks may be due a refund.
- The IRS can go back many years to audit my returns.The statute of limitations is three years, unless fraud is involved.
- Child support payments are tax deductible. Not so. Alimony payments are, however, and the recipient has to declare them as income.
This year's filing deadline of midnight April 17 is fast approaching, and millions of people have yet to file. So, put everything in perspective and get your calculations up to par.
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