Easy Tips to File Your Tax Return Correctly

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If you're like many Americans, receiving your tax refund is important—maybe even critically important—to your financial wellbeing. Internal Revenue Service (IRS) statistics from October 2020 indicate that the average tax refund was roughly $2,476, but any number of taxpayer mistakes can delay that refund for an extended period of time—perhaps even permanently.

Some mistakes can mean you'll end up owing the IRS money.

Taking your time with your 1040 tax return and knowing what you should look out for when filing it can help you avoid delays and penalties. Here are some tips and details to consider as you file your taxes.

Plan Ahead for Paying IRS Debt

If you owe the IRS money, you should settle that debt as soon as possible. The penalty for failing to pay any taxes you might owe is 0.5% per month of the amount of your tax debt. If you can't simply pay your entire tax bill by April 15, then you have a couple of options. You should pay as much as you can when you file your return to minimize any penalties you incur. Once you've paid as much as you can upfront, consider these strategies:

  • Pay your taxes with a credit card or by taking a personal loan. The overall interest rate could be less than the penalties and interest you'd pay the IRS.
  • Ask the IRS for an installment agreement—a monthly payment plan you establish with the IRS. You can set up an IRS payment plan to reduce the financial consequences if you don't think you can pay off your balance within a few months.

No matter your strategy or when you plan to file, you should prepare a rough draft of your tax return as soon as possible. This will provide you with an idea of how much you owe.

An extension of time to file doesn't delay your payment due date. That's still April 15, but you'll have until October 15 to actually file your return.

Double-Check Your Math

If you're preparing your tax return yourself, check your math and your other tax return information as well, such as Social Security numbers. Entering erroneous information will delay your refund until the IRS straightens the situation out and determines how much of a refund you have coming to you—or how much you'll owe.

The same goes for claiming tax deductions or credits that you don't actually qualify for, even though you might think you do. It's usually a good idea to check with a professional before you claim them just to be sure if you're preparing your return yourself.

You can spare yourself a great deal of aggravation by simply purchasing tax preparation software. Most of these programs will walk you through your tax situation step-by-step—breaking down each scenario into simple questions. Enter your information and answers into the program and the software will prepare your return and e-file it for you.

Ask for Help

You must fill out the "Third Party Designee" section on your tax return if you enlist someone's help to prepare your tax return and you want that individual to discuss your tax return with the IRS on your behalf. Your tax professional can then talk with the IRS about any questions or concerns the agency might have about your return.

Third-party designations expire one year from the due date of your tax return, so if you want to use the same person's help next year, you'll have to fill out a new "Third Party Designee" form.

If the person who helped you with your return was a tax professional and you paid them, they must fill out the section of your return that asks for their identifying information. They must also sign and date your return and provide their Social Security or Taxpayer ID number. Friends, relatives, and volunteers don't have to complete this section or provide this information as long as you don't pay them to help you.

Be Sure to Sign Everything

Surprisingly enough, a lot of people forget to sign their tax returns, and this is vitally important. You're required to sign your return because your signature indicates that you're effectively declaring under penalty of perjury that the information contained in it is true and accurate.

You can't cross out the perjury statement just above the signature line. If you refuse to sign or otherwise tamper with the perjury statement, your tax return will not be processed.

You must also enter a date on your tax return, and the date should be the day you actually sign it. Telling the IRS your occupation and telephone number is optional, however.

Staple Your Tax Return Properly

Staple one copy of each of your W-2 statements to the front of your tax return if you're mailing in a paper copy. If you must file other schedules and statements with your return, sort them from lowest to highest using the attachment sequence number. You can find this number in the upper right corner of the form.

Staple everything together and mail it to the correct IRS Service Center. The service center will depend on a variety of factors, such as your state of residence and whether you're also submitting a payment. The IRS offers a list of its mailing addresses on their website.

Of course, you can skip all this if you e-file your return instead, as nearly 152 million taxpayers did by October 2020 for the 2019 tax season, according to the IRS. The IRS also provides a list of e-filing options online.

Increase Your Tax Withholding

Consider increasing your income tax withholding if it turns out that you owe the IRS money when you complete your return. This won't fix your situation for the current year, but it can help you avoid having the same problem next year. You can simply fill out a new Form W-4 and give it to your employer, or, if you're self-employed, you can simply increase your quarterly estimated tax payments.

Some Tax Credits Will Delay Your Refund

Even if you do everything right, your refund could be slightly delayed if you claim the earned income tax credit or the additional child tax credit. The Protecting Americans from Tax Hikes (PATH) Act prohibits the IRS from issuing these refunds before mid-February. If you file your taxes before then, your return will likely be delayed.

The idea is to give IRS time to ensure that all claims for these refundable tax credits are legitimate and not fraudulent—another good reason to double-check and ensure that you qualify.