8 Mistakes First Time Tax Filers Are Likely To Make

If you are going to file tax for the first time, you should work with a Pasadena tax advisor. You should avoid filing tax on your own as you might make some mistakes. However, if you want to be at the helm when it comes to your finances, the following are the mistakes you should avoid while preparing and filing tax.

Not filing tax 

You might think that you did not make much money, so you do not have to file. Whether you have to file tax or not, it depends on a number of factors. These factors include your marital status, income and age. If you are a single making $12,000 or more, you have to pay tax. If your employer is withholding income tax from your paycheck, you will have to file tax in this situation as well. However, you are eligible for a refund.

Filing without tax documents 

You might file tax before receiving all your income statements. Filing tax return as soon as possible is not a good idea. You forget to report income and file before receiving a Form 1099. After you file your tax, you receive a letter from the IRS stating that you have under-reported income and you have to pay more tax. So, receive income statements and other documents and then file your tax.

Choosing the wrong filing status

You might end up paying more tax if you are picking the wrong filing status. You are unmarried and there is a child living with you. You will get the standard deduction of $12,000. However, when you have a child depending on you, you can file with the head-of-household status. You will have to pay less tax.

Overlooking the benefits of itemizing 

You can deduct more expenses by itemizing your deductions. Following are some of the commonly itemized deductions:

• State and local taxes
• Medical expenses
• Mortgage interest
• Personal property tax
• Charitable contributions

Not reporting all of your incomes

You have a side job and you made $4500 and received your income in cash. You might omit that self-employed income as if you don't report it; you will not have to pay tax. However, you are risking penalties. You will have to pay interest on unpaid tax and there are serious consequences.

Missing education credits or tax deductions

Don't miss education credits or tax deductions if you attend college. You may qualify for lifetime learning credit, American opportunity tax credit, the student loan interest deduction or some other education credit or deduction.

Making clerical mistakes 

You need to enter the following information when you e-file:

• Your full name
• Date of birth
• SSN (Social Security Number)
• Calculations such as the total income you are reporting
• Checking account number and routing number in case you are choosing direct deposit for a refund. If you make any mistake while providing this information, the IRS will ask to correct or reject the return. The IRS can even delay your refund. It is easy to avoid all these mistakes. You just have to find a Pasadena tax advisor and let him help you.