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What Tax Experts Tell You Not to Do On Your Taxes

Doing your taxes can be stressful enough without you making things worse.

And odds are good that if you aren’t careful this year, you will make a mistake, or a lot of them, on your taxes. In a study released last year by the Government Accountability Office, only 2 out of 19 tax preparers surveyed in undercover site visits calculated the correct refund amount. One preparer calculated that a taxpayer was due $3,718 more than he or she was supposed to receive.

Overall, preparer-filed returns showed an error rate of 60 percent, while self-prepared returns showed a 50 percent error rate, according to the GAO.

Of course, there are an innumerable things that could go wrong when you file your taxes. You could put down the wrong Social Security number or take deductions you aren’t entitled to. But many mistakes aren’t quite so obvious. So when you’re doing your taxes this year, keep in mind these common reasons errors get made.

Charitable contributions. It seems easy enough. You donate money to a good cause, you get a tax deduction. Not so fast.

“You should also be sure you have accurate records of the donations and confirm that the recipient is a qualified charity,” says Ben Sullivan, a certified financial planner with Palisades Hudson Financial Group in Scarsdale, New York. He is also an enrolled agent, which means he is federally authorized to represent taxpayers before the IRS, such as during an audit. It’s a big deal in tax preparation circles.

Moreover, Sullivan says, “Donations to businesses on Kickstarter, to help an individual in need, or to a political campaign are never deductible.”

He adds: “If you received any tickets, goods or services in exchange for the donation, you can only deduct the amount paid in excess of the value you received.”

Foreign investments. A good deal of people don’t have to worry about this, but if you’re wealthy, and you have that Swiss bank account, hopefully you have the money to hire someone competent to do your taxes.

“The penalties for getting these filings wrong can be steep,” Sullivan says. “For instance, if you have a foreign bank or financial account and fail to file a report of foreign bank and financial accounts, commonly referred to as an FBAR or FinCEN 114, the penalties can reach up to $10,000.”

If the IRS believes you willfully ignored the form, the penalties can “increase to the greater of $100,000 or 50 percent of the balance in the unreported account,” he explains.

State refunds. Did you receive money after filing your state taxes last year? And then when preparing your taxes, did you add that to the income you received last year?

“A lot of people forget to add their state refunds on their federal taxes,” says Anthony LoCascio, an enrolled agent who owns Anthony LoCascio consulting LLC, a Clinton, New Jersey-based financial planning firm.

And in case you’re wondering: If you received a federal tax refund last year, you don’t put that money down as income.

Real estate taxes. Tread carefully here. Your house can be home to plenty of tax errors, such as taking too much or little space when calculating your home-office tax deduction or claiming an incorrect amount for the mortgage-interest tax deduction.

But new homeowners especially trip up with real estate taxes, according to Sullivan.

“If you bought a home during the tax year, you likely paid real estate taxes during the closing and should remember to deduct this amount on your return in addition to any other real estate taxes you paid,” he says.

Casino winnings. Do you play the lottery? Or maybe you sometimes go to the casino? “In South Florida, where I live, we have a lot of Seminole Casinos, and when you win, the casino gives you a statement to report your winnings,” says Meredith Tucker, a certified public accountant and executive at Kaufman Rossin, an accounting firm headquartered in Miami. “What folks sometimes don’t realize is that you’re allowed to deduct losses.”

So if you won $5,000, but it took $3,000 of betting money, be sure to note that. On the other hand, what if you just lose $5,000 and win nothing? Can you report that to the IRS?

“Uh, no,” Tucker says.

Rushing. As in, don’t do it. That, after all, is how most mistakes are made, no matter what you’re doing in life. Some of the more common mistakes, according to the IRS website, include misspellings of names, doing math incorrectly and even giving out incorrect banking information. It’s a great idea to get your refund via direct deposit, but not if you give out the wrong account number.

A lot of people mail in unsigned tax forms, which, according to the IRS, is like sending them an unsigned check.

If you don’t think you can finish your taxes on time, file Form 4868, Tucker says. “That’s the extension form,” she says. “I think there’s a misperception that if you file an extension on your taxes, that it’s a stigma or red flag with the IRS, and you’re more liable to be examined and audited.”

If you file an extension, Tucker says, you’ll have until October 15 to do your taxes right. “If you rush to prepare a return or make mistakes, you could leave money on the table,” she says, adding that if you know you’ll owe taxes and have the money to pay, mail the IRS what you think you need to send — and then use the extra months, weeks or days to calculate your taxes properly.

“Some people have that fear of God put in them, that if they don’t finish their taxes by April 15, the police are going to come, but that’s not how the tax system works,” Tucker says.

More from U.S. News

9 Red Flags That Could Trigger a Tax Audit

10 Smart Ways to Spend Your Tax Refund

9 Scary Things Consumers Do With Their Money

What Tax Experts Tell You Not to Do On Your Taxes originally appeared on usnews.com

Don’t Settle for Student Loans to Pay for Online Education

Online college programs are becoming a more popular choice for prospective students, with one study finding that more than 6 million students enrolled in at least one online course in fall 2015. The popularity of these courses can be attributed in part to their flexibility with working adults' schedules, students' ability to progress more quickly through online programs and, oftentimes, cheaper tuition. [See 10 low-cost online bachelor's programs for out-of-state students.]Online degrees can be beneficial to many college students, but some studies have shown online learners complete their programs at lower rates than students at traditional brick-and-mortar campuses. Individuals with student loans but no degree comprise two-thirds of defaulted borrowers. Though these numbers are not encouraging, just like for traditional programs, there are ways to reduce how much you'll need to borrow for an online program to ensure you won't become one of these statistics. Don't just settle on borrowing student loans to cover the whole cost of your program and living expenses. Instead, start thinking about how to cut costs and cover your balance in different ways, such as the following. -- Grants and scholarships: Even though you are taking an online course, you can still apply and receive grants and scholarships. But your first step should be to complete the Free Application for Federal Student Aid, commonly referred to as the FAFSA, which will allow you to receive a Pell Grant if your expected family contribution is low enough. The EFC criteria and award amounts are adjusted annually, but the 2017-2018 academic year awards range from $606 to $5,920, which could significantly lower the amount you borrow annually. Your next step is to apply for scholarships. You can start by checking online scholarship search engines, such as the Salt Scholarship Search, College Board's BigFuture and Peterson's. But don't forget to take advantage of local organizations and your school's financial aid office. Both may offer scholarships that you can't find with a national scholarship search. [Review these 10 sites to kick off your scholarship search.]For instance, organizations like the Elks Club, Knights of Columbus or the Rotary Club typically offer scholarships annually to local students. Just because you're going to school online doesn't mean you're ineligible. Visit your local library for scholarship listings, and ask around town. You might be surprised how many local organizations offer scholarships. While these scholarships typically aren't large, every little bit counts. Each dollar you receive in a scholarship is a dollar you don't have to borrow and pay interest on. -- Work-study: Another option for online students may be work-study awards. Not all students enrolled in online programs are eligible, but students at some schools -- including, for example, SUNY Empire State College and Liberty University -- are. Work-study awards are not given upfront like scholarships and grants. In most cases, they are an offer to earn up to the awarded amount if you secure an eligible work-study job. While there is a misconception that all work-study jobs must be on campus, students can work for off-campus, nonprofit or public employers as long as the work is in the public's interest. You may be able to work for a for-profit employer if the job is relevant to your course of study. No matter who the outside employer is, it will need to have an established agreement with your college for you to receive work-study funds. Remember, to be eligible for federal financial aid, you must be enrolled and pursuing a degree or certificate. If you're not working toward a credential, Pell Grants and work-study won't be option, but you may still be able to take advantage of private scholarships -- just be sure to read the eligibility criteria carefully. [Explore what to know about financial aid in online programs.]-- Pay as you go: One of the great benefits to enrolling online is the flexible schedule, which can allow you to complete your college coursework around your responsibilities. But prospective students often overlook using their part- or full-time job earnings as an option for paying for college. Almost 80 percent of college students in 2015 worked at least part time while attending classes, according to the National Center for Education Statistics. By budgeting and thinking strategically about your college costs, you can likely reduce your dependence on student loans by paying a portion out of pocket. Many -- but not all -- online programs are less expensive than traditional programs and often have shorter payment periods. Six, eight or 10 weeks are common course durations. Because of the frequency of payments in an online setting, you may be well-placed to pay as you go and possibly avoid borrowing altogether. Attending college online and avoiding student loans may be challenging, but if you are willing to put in the effort, you can limit the amount you need to borrow. More from U.S. News Q&A: Understanding Student Loan Discharge Eligibility Student Loan Refinancing Isn't Right for All Borrowers
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