Common Tax Return Errors
Amherst, NH Resident is Careful to Avoid These Mistakes
Filing before you have all your tax documentation is a common mistake. Without this necessary paperwork finalized, some of the numbers in your tax return may not be accurate. The 2021 Child Tax Credit statements were mailed at the beginning of the year to families that received this money. If the money on this statement and that reported on your tax return are not in sync, this will require a manual review by the IRS. Math errors in your tax return can be a red flag for an audit. It is important to make sure that your calculations and figures are correct prior to filing.
An Amherst resident had been audited in the past because of some mistakes on his tax return. Wanting to avoid this, he was looking to understand some of the most common tax return errors.
Claiming Income for Gig Work
A common mistake tax filers make is neglecting to claim income made through gig work or a side hustle. You will need to pay taxes on this additional income. However, if you keep track of expenses associated with this work that you incur out of pocket these can be deducted from your tax bill. This is especially important because gig workers are often responsible for additional self-employment taxes.
Unemployment Income Needs to Be Reported
If you collected unemployment at any time during the calendar year, this additional income needs to be reported on your taxes. The requirement for reporting this money is necessary at both the federal and state level.
Contributions to 529 and HSA Plans
Neglecting to report contributions to a 529 or HSA plan can wind up costing you more on your taxes. Many states offer a tax savings for contributors to a 529 and HSA contributions are deductible for everyone with a high deductible health plan. The tax credit for HSAs was up to $3,600 for individuals and $7,200 for families.
The Amherst resident now has a better understanding of the common mistakes made on tax returns. To avoid any mistakes this year, he did opt to have his filing done by the team at Merrimack Tax Associates.