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Tuesday, February 4, 2014

WSJ: 15 Common Tax-Filing Errors

Wall Street Journal Tax Report:  Don't Make These Tax Mistakes: Fifteen Common Tax-Filing Errors That Can Cost You Dearly, by Laura Saunders:

WSJThe IRS opened its filing season Friday, and by midnight on April 15 the agency expects to hear from individual taxpayers filing nearly 150 million returns for 2013. Thanks to the growing complexity of the tax code, that is 150 million opportunities for U.S. taxpayers to shortchange either themselves or Uncle Sam by making multiple errors. ... Last year's "fiscal cliff" revisions brought the total number of tax changes since 2001 to 4,838, or more than one a day, says Mark Luscombe, principal analyst at tax publisher CCH, a division of Wolters Kluwer.

All that complexity exacts a steep price. According to Ms. Olson's latest data, individuals and businesses spend more than six billion hours a year complying with income-tax filing requirements. In 2010 that came to about $168 billion, or 15% of total revenue collected....

No matter how you tackle your taxes, here are errors to watch out for.

  1. Claiming the wrong number of dependents
  2. Failing to itemize deductions
  3. Overstating charitable gifts
  4. Forgetting to claim charitable gifts made through payroll deductions or with IRA assets
  5. Reporting incorrect net-investment-income tax
  6. Overlooking medical expenses
  7. Double-dipping on education or dependent-care benefit
  8. Deducting points on a home refinancing
  9. Not paying the penalty on an early retirement-plan withdrawal
  10. Reporting an erroneous cost basis
  11. Not checking income reports for mistakes
  12. Overpaying tax on a sale of employer stock
  13. Mishandling the previous year's state tax refund
  14. Not disclosing a foreign account
  15. Not signing the return

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