Due to the recession, cash flow is crucial for small businesses, sole proprietors, and individuals. Though the infusion of capital from your tax refund likely won't save your business it can be a welcome influx for any strapped organizations. Plus, it's your money anyway -- don't risk delaying getting it back by making these mistakes.
The wheels of the Internal Revenue Service grind slowly, methodically, and relentlessly. That can make the time from filing to tax refund seem endless, but the delay will become unbearable if you stumble over several simple steps in your filing. According to the IRS, these are 9 of the most common errors that delay processing of tax returns.
- Recovery Rebate Credit -- Many returns filed in 2009 have errors involving the Recovery Rebate Credit, a credit for people who did not receive a stimulus payment in 2008 or who did not receive the maximum amount. To avoid delays in tax refunds, it is critical that taxpayers know whether they received a payment in 2008 and the correct amount of that stimulus payment. For people using a paper tax return, the stimulus payment amount will be required when completing the related worksheet. For people using tax software, the stimulus payment amount will be needed as part of the return preparation process.
- Incorrect Or Missing Social Security Numbers -- When entering SSNs for anyone listed on your tax return, be sure they are entered exactly as they appear on the social security cards. Incorrect or transposed numbers will cause delays in the processing of your return.
- Incorrect Or Misspelling Of Dependent's Last Name -- When entering a dependent's last name on your tax return, ensure they are entered exactly as they appear on the social security cards. Incorrect or misspelling of dependent's last name will cause delays in processing of your return.
- Filing Status Errors -- Make sure you choose the correct filing status for your situation.
- Math Errors -- When preparing paper returns you should review all addition and subtraction to ensure it is correct. Remember, when you file electronically, the software takes care of the math for you!
- Computation Errors -- Take your time. Many taxpayers are making mistakes when figuring the taxable income, withholding and estimated tax payments, Earned Income Credit, Standard Deduction for age 65 or over or blind, the taxable amount of social security benefits, and child and dependent care credit.
- Incorrect Bank Account Numbers For Direct Deposit -- If you are due a refund and requested direct deposit, did you check your financial institution routing and account numbers?
- Forgetting To Sign And Date The Return -- An unsigned tax return is like an unsigned check - it is invalid.
- Incorrect Adjusted Gross Income Information -- Taxpayers filing electronically must sign the return electronically using a personal identification number. To verify their identity taxpayers will be prompted to enter their AGI from their originally filed 2007 federal income tax return or their prior year PIN if they used one to file electronically last year. Taxpayers should not use an AGI amount from an amended return, Form 1040X, or a math error correction made by IRS.