Making mistakes on tax returns needlessly costs people money. You may miss out on a larger refund than you claimed, wind up owing more taxes – plus interest and penalties – or even worse, invite an IRS audit. The best defense against these bad results is a good offense – namely, avoiding errors on your return.
Most Common Mistakes on Tax Returns
Here are the most common mistakes taxpayers make:
1. They blow the basics.
Make sure you choose the correct filing status for your situation. For example, if you’re unmarried, you may file as single. But you could qualify for more favorable tax rates and other items if you meet the requirements for being a head of household or a qualifying widow(er) with a dependent child. And, under the right circumstances, married couples may pay less tax overall if they file separately rather than jointly. Claim all the dependents you’re entitled to (e.g., a parent living in a nursing home if you meet dependency requirements). Make sure your name and those of your dependents are spelled correctly and that Social Security numbers are correct.
2. They don’t enter income as it’s been reported to them (and the IRS).
Wages, dividends, bank interest, proceeds from property sales and other income that you received (and that was reported on an information return, such as a W-2, 1099, K-1, etc.) should be entered carefully. The government’s computers are looking for this income. If you dispute what’s been reported to you, contact the business that made the payment (e.g., your employer) and request a correction. (See 10 Things You Should Know About 1099s.)
3. They enter items on the wrong line.
Be careful that your entries appear where you intend them to. Don’t put your tax-free IRA rollover on the line meant for taxable IRA distributions, for instance.
4. They automatically claim the standard deduction.
While itemizing requires more effort – and receipts and other proof – than relying on the standard deduction, you could be costing yourself money by automatically taking the standard deduction. Check which alternative gives you the greater write-off. Note: If you’re married but file separately and your spouse itemizes deductions, you must also itemize; you can’t take the standard deduction in this case.
5. They don’t take write-offs you’re entitled to.
Some may fear that a certain deduction is an audit red flag and shy away from it. For example, there continues to be a belief that claiming a home office deduction can trigger a tax audit, but this is probably not true given the fact that the IRS created a simplified deduction alternative to writing off actual expenses. As long as you meet tax-law requirements for a deduction, it’s wise to take it. Another reason for failing to take write-offs is that you’re overlooking some because you don’t think you qualify. For example, a self-employed individual may not think to check eligibility for the earned income tax credit, believing that it’s only for low-income employees (see 10 Tax Deductions & Benefits for the Self-Employed). Or you may have failed to qualify for a break last year and assume you don’t qualify this year, even though cost-of-living adjustments to certain eligibility thresholds have changed so that you’re now eligible.
6. They don’t check for typos.
It’s easy to transpose a number or leave out a digit, a mistake that can distort the information you’re reporting. For example, you and your spouse contributed $7,200 to your IRAs but you inadvertently entered $2,700 as the deduction on your return, cheating yourself out of a $4,500 deduction (which costs you $1,125 more in taxes if you’re in the 25% tax bracket).
7. They report negative numbers incorrectly.
If you have to enter an item as a negative number, do so with brackets; don’t use the minus symbol. This ensures that IRS computers read the negative entry correctly.
8. They don’t bother telling the IRS how to handle their refund.
If you are due a refund because you overpaid your taxes, be proactive about what you want the government to do. If you don’t do anything, the U.S. Treasury sends you a check, which can take weeks. To receive your refund much faster, add your bank account information (account number; routing number) so it will be deposited directly into your account. Or you can opt to split your refund – toward next year’s estimated taxes or as contributions to various accounts (e.g., IRAs). The instructions to Form 8888 explain the accounts to which refunds can be transferred: an account at a bank, credit union, brokerage firm or mutual fund; an IRA, Roth IRA or myRA; a health savings account (HSA) or Archer MSA; a Coverdell education savings account (ESA); or a TreasuryDirect online account to buy U.S. Savings Bonds, Series I.
9. They don’t pay their taxes properly.
If you owe taxes, make sure that a payment is properly credited to you. Whether filing electronically or by paper, include Form 1040-V with your check. Alternatively, you can pay through the government’s free payment sites (EFTPS.gov or DirectPay!) or by credit/debit card through an IRS-approved payment provider. Those without a bank account or credit card can use PayNearMe to pay by cash at a retailer that’s partnered with the IRS, such as a 7-Eleven. You can also ask for an installment payment agreement if you can’t pay your bill all at once.
10. They don’t file.
The biggest mistake of all is not filing or filing late. Late-filing penalties mount up considerably over time. If you don’t think you’ll be able to make the filing deadline for 2016 returns – April 18, 2017 – just ask for a filing extension by this date. For example, file Form 4868 electronically to gain another six months to October 16, 2017; other ways to get an extension are explained in the instructions to this form. Don’t let your inability to pay your taxes keep you from filing; at least you minimize or avoid late-filing penalties. (For more, see When You Can't Pay Your Taxes on Time.)
The Bottom Line
Take the time to check and double-check your return to avoid mistakes. Then make sure you keep a copy of your return, along with proof of filing (an acknowledgment that your e-filed return has been accepted by the IRS or a certified receipt for a paper return sent by mail). Having this proof will protect you from any claims by the IRS that you filed late, or not at all. And the information on this return will help you prepare your return for next year!
Amid news that gasoline prices will rise in coming weeks, the price of a gallon of regular, on average, has hit $3 in California. The state now has the highest gas prices, except for those in Hawaii. The national average is $2.31, so the price in California is 30% higher.California’s high average price is primarily due to prices that are above $3 a gallon in some of its largest cities. In San Francisco, the price has reached $3.15. In Los Angeles, it is $3.06, and in San Diego it is $3.03, according to GasBuddy.
GasBuddy reports that refineries shuttered for maintenance and a changeover to summer gas blends are among the contributors to gas prices across the United States. The effects are not uniform. In some parts of Texas, Oklahoma and Alabama, which are close to refineries on the Gulf of Mexico, prices are barely above $2 a gallon.Another reason for high gas prices in California is high taxes and levies on gas purchases. While the U.S. gas tax averages $0.494 a gallon, according to the American Petroleum Institute, the figure in California is $0.565. In Texas, the figure is $0.384.
Refinery shutdowns are intermittent. Gas taxes rarely rise. That leaves the price of oil to swing prices higher or lower. Crude prices continue to be above $50 a barrel.OPEC nations and other large producers, like Russia, meet in Texas this week. Among the most important parts of the agenda is whether they will hold the line on the production cuts set in December. If so, there is unlikely to be any relief to gas prices, and California prices are unlikely to drop much below $3.
The so-called iPhone 8 from Apple Inc. (NASDAQ: AAPL) has been largely responsible for the company’s share price boomlet over the past week or 10 days. Word that Warren Buffett’s Berkshire Hathaway Inc. (NYSE: BRK-A) had added an enormous stake in Apple didn’t hurt either.
The iPhone 8 is expected to incorporate a curved, OLED screen, sourced from Samsung, which already uses the edge-to-edge display feature on its Galaxy S7 Edge. Another rumored change, at least according to Monday’s Wall Street Journal, is that Apple is going to ditch its proprietary Lightning connector in favor of a new USB-C connector when the iPhone 8 is released.
A USB-C cable can handle power, data and video on a single cable with a single connector. The Wall Street Journal’s sources said that a USB-C port would replace the Lightning port both for recharging and connecting peripheral devices to the iPhone 8.
Is this a big deal? It could be. Remember that Apple just ditched the headphone jack on the iPhone and forced users either to use a dongle to connect existing headsets or to buy a new set of headphones. Changing again this soon would likely make for some unhappy users.
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When Apple released its new MacBook Pro laptops last year, the machine came with USB-C ports and many users complained about the high-priced dongles. Apple originally charged $25 for a Lightning-to-USB-C dongle before consumer pushback convinced the company to lower the price to $19.
For Apple purists who own the new MacBook Pro and will purchase an iPhone 8 as soon as it hits the Apple Store, a USB-C port on the phone obviates the need for a dongle to sync the computer with the phone.
But Apple-watcher website AppleInsider points out the obvious downside to switching the connector on the iPhone 8:
If Apple were to switch the default cable and wall adapter in the iPhone box to a Lightning to USB-C cable, users would be outraged, because they wouldn’t be able to use the cable with their existing computers, wall adapters, car adapters and other accessories that rely on the full-size USB port. The outcry from such a change would be far louder than current complaints about USB-C on the latest MacBooks. … Lightning may very well prove to be the last input port on Apple’s iOS devices, before it is replaced by wireless connectivity and contact charging and accessories, like the Smart Connector on the iPad Pro.
2017 marks the iPhone’s 10th birthday. Another major change to the connector is not likely to add to the festivities.
GAS PRICES ARE RISING
MARCH NEWSLETTER 2
In the world of smartphones, the Apple Inc. (NASDAQ: AAPL) iPhone is king, but it does have some healthy competition from Samsung and Alphabet Inc. (NASDAQ: GOOGL). Although, Google has gained ground against both of these competitors recently. This also gives Google the opportunity to solidify Android’s reputation as a premium platform.
Sales of the Pixel have been steady, but it has been somewhat hard to get a hold of one due to component shortages. But this hasn’t dampened the company’s plans to continue investing in its own smartphones.
As the iPhone 8 is planned for a release later this year, there will also be a successor to the Pixel that will continue to carry a high price tag. Google intends to keep the Pixel at a premium price, so we might not expect anything cheap coming from this tech giant.
Rick Osterloh, Vice President of Hardware at Google, told Android Pit in a briefing at Mobile World Congress:
There is an annual rhythm in the industry. So, you can count on us to follow it. You can count on a successor this year, even if you don’t hear a date from me now.
According to Engadget:
Although Google is keeping information to a premium, its typical development cycle suggests a Pixel 2 will go on sale in the fourth quarter. The current Pixel launched in October 2016 and Google has held launch events at around the same time for Nexus phones in the past.Shares of Alphabet were last seen down 0.5% at $845.67 on Friday, with a consensus analyst price target of $988.95 and a 52-week trading range of $672.66 to $867.00.
Apple traded at $139.00 a share, with a consensus price target of $142.48 and a 52-week range of $89.47 to $140.28.
GOAL IS SMOOTH
APPLE IPHONE 8 CONNECTOR
THE TOP 10 MISTAKES ON TAX RETURNS
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APPLE TO RELEAST IPHONE 8
Cybersecurity has become an increasingly important issue that companies have to address as they continue to develop new platforms and mobile apps. Hackers have been able to steal credit card and personal information from major companies like JPMorgan and Home Depot. As a result, cybersecurity has become more necessary, and instead of developing a dedicated department within a company, most opt to hire a third-party cybersecurity firm.
What is interesting here is that many investors think cybersecurity is the next area in technology that needs real consolidation.The February 28 short interest data have been compared with the previous figures, and short interest in the selected cybersecurity stocks was mixed.
FireEye Inc. (NASDAQ: FEYE) saw its short interest increase to 26.79 million shares from the previous reading of 25.01 million. Shares were last seen at $10.44, in a 52-week trading range of $10.35 to $19.17.The short interest at CyberArk Software Ltd. (NASDAQ: CYBR) increased to 1.23 million shares from the previous level of 749,675. Shares were trading at $49.83, within a 52-week range of $36.40 to $59.28.
Check Point Software Technologies Ltd.’s (NASDAQ: CHKP) short interest increased to 6.31 million shares from the previous reading of 5.64 million. Shares were trading at $98.80, in a 52-week range of $74.34 to $101.77.The number of Palo Alto Networks Inc. (NYSE: PANW) shares short dropped to 7.22 million from the previous level of 8.03 million. Shares were trading at $115.05, within a 52-week range of $113.70 to $165.69.Fortinet Inc.’s (NASDAQ: FTNT) short interest decreased slightly to 4.40 million shares from its previous reading of 4.45 million. Shares were trading at $36.67, in a 52-week trading range of $27.20 to $38.33.