Common tax goofs...and how to avoid them
Here are some simple tips that could save you time, aggravation and... oh right, money.
By Jessica Seid, CNNMoney.com staff writer

NEW YORK (CNNMoney.com) - With tax day just a few weeks away, there is no better time to cross your t's and dot your i's.

Unfortunately, many people mix up their i's and t's, forget the dots and make common tax blunders that could easily be avoided with a little extra time and some help troubleshooting.

Even before the big numbers are calculated, it can be the details that often trip up taxpayers. So before you get cracking, here are some simple do's and don'ts that could literally pay off on tax day.

Dos and don'ts

Do e-file. "The best way to avoid mistakes is to use computer software to prepare a return and to file a return electronically," said a spokesman from the Internal Revenue Service. And "not only do you make fewer mistakes to start with but the mistakes that are made can be remedied more quickly."

Kathy Burlison, the director of tax implementation at H&R Block, says e-filing is "quicker and you'll be notified of an error within 24 to 48 hours. Then you can easily correct the mistake and resubmit the return. Remember, e-filed returns are 99 percent accurate versus 81 percent for paper returns."

Don't omit income. "The biggest mistake people make is forgetting to report interest on a savings account," said David Starr, a certified public accountant and a partner at the accounting firm Starr, Darcy & Starr in Englewood, New Jersey. He suggests looking back at previous years to make sure all of your 1099s and other documentation are accounted for.

Keep in mind that all income, including interest, dividends, wages and even gambling winnings must be reported to the IRS and the tax agency will notice pretty quickly if it's not on your tax return.

Don't forget to write off either your state and local income or sales tax. If you bought a big-ticket item last year, such as a car, boat, plasma TV or new furniture then you might want to do choose to deduct your sales tax instead of your income tax.

This deduction will mainly benefit taxpayers with a state or local sales tax but no income tax -- in Alaska, Florida, Nevada, South Dakota, Texas, Washington and Wyoming -- but it may also give a larger deduction to any taxpayer who paid more in sales taxes than income taxes. Use the IRS tables to figure your deduction (Publication 600, available at irs.gov).

Do save. Funding an IRA may lower your tax bill. The IRA limit for 2005 is $1,000 higher than it was in 2004. The amount you, and your spouse if filing jointly, may be able to deduct as an IRA contribution increased to $4,000 ($4,500 if you were age 50 or older at the end of 2005). You can make Roth or traditional IRA deposits for 2005 as late as April 17.

Don't let the EITC go uncollected. The Earned Income Tax Credit (EITC) sometimes called the Earned Income Credit (EIC), is a refundable federal income tax credit for low-income working individuals and families. The maximum amount of adjusted gross income (AGI) you can have and still get the credit has increased this year and an estimated 25 percent of people who qualify don't take advantage of the credit, according to IRS data. To qualify, taxpayers must meet certain requirements and file a tax return, even if they did not earn enough income to be obligated to file a tax return, for more information check irs.gov.

Do claim all of your dependents. That includes children born during 2005 and elderly parents who may not live with you. Alternatively, parents filing separately cannot claim the same child as a dependent. Also, children can no longer be claimed as dependents if they are over the age of 18 or 24 if they are a full-time student.

If you are divorced and have custody of your children you should file as head of household, not single. If "you checked single when you really meant to check head of household, you would be losing a lot of deductions and credits," according to Denise Sposato, a spokeswoman for H&R Block. Plus, you would not be entitled to claim the child tax credit and could be at risk of being audited.

And don't forget to...

Check your numbers! It's common mistake to add an or leave off a zero or transpose numbers and that can drastically affect your results.

Include your (correct) Social Security number. It should be on each page of the return so that if a page is misplaced by the IRS it can be reattached. Also include on the return the Social Security numbers for all dependents and write your Social Security number, the form number, and the tax year on the face of any checks made out to the U.S. Treasury.

Remember John Hancock. Make sure to sign and date your return and if you are filing a joint return, be sure that your spouse also signs as required.

Deadlines, deadlines, deadlines! April 17 is the deadline for making an IRA contribution and it's also the last day to file your return or request an extension.

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For sneaky accountant tricks, click here.

Click here for 10 ways to save on your taxes.

Ready to blow your refund? Click hereTop of page

 
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Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.