5 things that will MESS UP your taxes in 2022
The year is fast approaching its end. Thus, taxpayers who are serious about filing accurate taxes are already ramping up tax planning efforts. Even if you are not doing anything about your 2022 taxes, still, very soon, you will be joining the race of tax filers getting ready to file.
In view of this, taxpayers, both individuals and corporate, could be caught up in tax mistakes that can mess up their taxes. Knowing and avoiding such mistakes is your only way out. Therefore, what are the 5 things that can potentially mess up your 2022 taxes?
1. Lack of Bookkeeping.
Filing an inaccurate tax return can mess up your life. Some taxpayers get harsh penalties plus interest, creating a huge financial void for the rest of the year. But to file an accurate return, you need to have all information about your finances and business dealings. Bookkeeping will help you have this information.
Therefore, without bookkeeping, you have a high chance of filing an inaccurate tax return, which messes up your life. If you run a business, you must have bookkeeping. As an individual taxpayer, you can also have your own form of bookkeeping, and you must keep your records safe both online and physically.
Is your 2022 bookkeeping up to date? If yes, you are on the right path and can file an accurate return next year. But if you do not have bookkeeping, time is running out for you. You can contact my team at any time to start doing your monthly bookkeeping. It costs less and has tons of benefits for your business!
2. Ignoring contractor details when filing information returns.
The IRS has always been comparing information returns for various taxpayers to detect tax evasion. For example, if you were hired by Company A to paint their office interior, their information returns may contain copies of invoices or contracts that tie your two businesses together.
Once the IRS notices this, they will look for your return to see if you also filed these details in your information returns. Remember, this is all done electronically using an Information Returns Processing (IRP) System. Therefore, you have slim to no chances of escaping this. If you are caught, the IRS can start legal proceedings against you, which could spook businesses you deal with, including your customers.
3. Claiming huge deductions.
This mainly affects individual taxpayers who try to cheat the tax system. Such individuals do not claim the standard deduction. Instead, they choose to itemize. In some cases, their hired “tax pros” are the ones who advise them to do this, intending to get a higher cut for their services.
Either way, claiming too many deductions will raise suspicions. This prompts the IRS to carry out a further investigation or analysis of your return, intending to make sure that you claimed what you deserved.
If errors are discovered, an in-depth analysis of your return is carried out, and this usually results in an audit. An IRS audit can get you in trouble in many ways. However, if this happens to you, you can count on me to help through my tax representation services. Contact me as soon as you receive this notice. I have helped tons of other taxpayers who were being audited.
4. Failure to correct a mistake in your original tax return.
Once your paper return is filed, or be it an electronic one, you cannot change the details thereon. Therefore, as soon as you realize you made a mistake in your original return, it is within your rights to amend it.
You can file an amended tax return by using a special form called the 1040-X. However, some taxpayers may choose to leave everything to chance and ignore filing the amended return. But doing so will get you in trouble. It will mess up your life, depending on the size of the error in your original return.
5. Not paying attention to various tax changes.
This is vital, given so many tax changes that are still coming up for tax year 2022. We have moved past COVID (in terms of receiving government relief) and are back to normal days, except for the marauding inflation.
Being back to normal days means no more advanced Child Tax Credit (CTC). It also means no more enhanced Child and Dependent Care Credit, the Earned Income Tax Credit (EITC), and more.
If you ignore all these changes and implement expired rules in your 2022 taxes, you will be penalized.
Conclusion
Often, taxpayers contemplate if the IRS will catch a filing mistake and punish them. My advice to you is never to think about that. Once you think you made a mistake, take the necessary steps, such as filing an amended tax return or speaking to a tax professional like myself.
Currently, I am taking tax planning clients. You can join them, too, because it is an important step to ensure that your tax return will be accurate and you also save more money on your taxes. It’s simple, taxpayers who plan their taxes seldom get punished for tax mistakes, and they save the most money on taxes. Contact me now for tax planning.
Frequently Asked Questions
- What happens if a mistake is made on taxes?
You can file an amended tax return immediately to avoid being penalized. If you don’t, and depending on the mistake, the IRS may reject your return, which could result in penalties and interest.
- Will the IRS catch my mistake?
Yes, the IRS will catch your mistakes. They are even beefing up their technology to ensure efficiency when delivering their service.
- Can you correct taxes after filing?
Yes, you can do so by filing an amended return using a special form called the 1040-X.
