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Twelve Common Snags to Finalizing Your Tax Return – Part 2

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!

Twelve Common Snags to Finalizing Your Tax Return – Part 1

The goal for every taxpayer is to have their return filed quickly and without error.  Here’s the first half of a handy list of items that are often overlooked and can cause all sorts of delays.

Review your tax return and return your signed eFile forms – Your tax returns can’t be filed until you have reviewed them and returned the signed eFile forms to your preparer. The sooner you do this, the sooner you’re filed.

Having proof of health insurance – You should receive a Form 1095 confirming you have health insurance. However, if your employer is one of those that received approval to send a delayed form, you still need to provide your preparer with proof of insurance before filing.

Missing W-2 and/or 1099 – One missing income form and the next thing you know, you’re paying to file an amended. Using last year’s tax return, or a tax organizer provided by your preparer, make sure all prior W-2’s and 1099’s are received and provided to your tax preparer.

Incorrect information on a W-2 or 1099 – Always double-check your forms to make sure the information is accurate – one wrong spelling of a name or one digit off on your SSN and the filing process comes to a screeching halt. Make sure 1099 income is in the correct box. Are you receiving rents and receive a 1099-MISC with the amount in the Non-Employee Compensation box? Then you face a choice – either try to get the form corrected or delay filing your tax return.

Missing or invalid Social Security Number – This one is sort of a given – if you don’t have a valid SSN, there will be no tax filing.

Dependent already claimed – Share joint custody of a child? Or, did your college student think they could file claiming themselves? Your return cannot be filed if there is a conflict in this area. Make sure it’s clear who gets to claim the dependents in your life.

Look for the second part of this article next week!