Common Tax filing mistakes - Series 1 of 2

The most common error on tax returns is mathematical.  There are one of the most easily detected by government agencies and can reduce your tax refund or result in you owing more tax than you thought.

Even though you can have a refund directly deposited into multiple bank accounts, it is not necessarily the best option.  The more numbers you enter on a tax form, the more chances you have to enter them incorrectly. A wrong account or routing number could cause you to lose your refund entirely.  At present there is no IRS procedure for replacing lost electronically transferred funds.

Do no forget to report a required form.  If you had a side job this year, for amounts $600 or more you should receive a Form 1099-MISC detailing the extra earnings.   If you had savings and investment accounts, you should have received Form 1099-INT and Form 1099 DIV statements for amounts over $ 10.  Copies of these forms are reported to the IRS.  Therefore, if they are not included with your tax return, you could also owe penalties and interest on the unreported earnings.

Make sure you choose the correct filing status for your situation. You have five options, and each could make a difference in your ultimate tax bill.

Verify Social Security Number for accuracy.  Make sure the names associated with the Social Security numbers match Social Security Administration records.

Common Tax documents required for your Income Tax Return

These statements come from employers, banks, stockbrokers and other institutions.  These documents may come electronically, so be sure to check your email and appropriate website for these reports as well.   

Each Employer you worked for during any part of 2012 should provide you with a W2.  They should be mailed by January 31st. 

Employers who hire Subcontractors and certain Self-employed individuals to work for them should provide a 1099MISC to those who earned $600 or more.  As with a W2, you should get a separate 1099MISC from each employer. 

Mortgage interest may be tax-deductible.  Your lender is required to provide you with a statement if you paid at least $600 interest.  It may or may not be on an official IRS 1098 Mortgage Interest form.

Interest on bank accounts, certificate of deposits, savings bonds, and reinvested earnings are taxable income and included on the 1099-INT.  The institution must send you one if the interest earned is more than $ 10

The 1099-DIV reports earnings from individual stocks and mutual funds.  The institution must send you one if the dividends and capital gains distributed are over $ 10.

Mutual fund companies or brokers distribute Brokerage Statements when you sell stocks, bonds, or mutual funds.  The 1099-B reports the sale of these items. 

States issue to taxpayers who got a refund of state or local taxes last year will get a 1099-G.   It may or may not be considered taxable income.