Last week we gave you the first half of a list of items that are often overlooked that cause trouble in filing a timely tax return. Here’s the second half of the list!
Name mismatch – If you’ve recently married or divorced, make sure your last name on your tax return matches the one on file at the Social Security Administration.
Inconsistent information – Most tax preparation software will check a tax return for inconsistencies. The message “Diagnostic Error!” will make you cringe. When one occurs, they must be resolved prior to filing your tax return. An example might be you filing Married Filing Separate, while your soon-to-be ex-spouse files as Married Filing Joint or Single.
No information for a common deduction – If you claim a deduction, you will need to provide support to document the claim.
Missing cost information for transactions – Brokers send out their statements with the sales transactions. You will need to also provide the cost and purchase information (cost basis) or the tax return cannot be filed.
Missing K-1 – If you have ownership of a partnership, Sub Chapter S or LLC, you should receive a Form K-1 that reports your share of the profit or loss from the business activity. Without this K-1, you cannot file your tax return.
Forms with no explanation – If you receive a tax form, but have no explanation for the form, questions arise. For instance, if you receive a retirement account distribution form, it may be deemed income. If it is part of a qualified rollover, no tax is due. An explanation is required to file your information correctly.
Hopefully, by knowing these common missing pieces of information, you can prepare to have your tax filing process a smooth one!