Making a tax mistake slows processing, reduces the amount of the tax refund, increases the amount owed and increases the chances of getting audited. Your clients need help with taxes, so give them the tools they need to ensure they get maximum savings and reduce the risk of audit or the need to amend taxes by following these four tips.
Proofread for Errors
One of the most common reasons for a tax mistake is basic typos when completing tax forms. Filing out tax forms is complex, so mistakes are easy to make, even on something as simple as name or Social Security number. Urge your clients to proofread their returns after they are completed and examine every field carefully, including name, Social Security number, filing status, signature, date and bank account number to verify that all their information is correct. This is especially important for new clients or clients who have recently moved, gotten married or had some other major life change.
Keep Track of Charitable Expenses
Charitable expenses are a fantastic way to save on taxes or increase a tax refund, but they can quickly turn into a tax mistake if your clients fail to keep track of their charitable deductions. Tell your clients to keep receipts and documentation for any donations to prevent overstating charitable expenses or getting audited. This is especially important on larger donations that create red flags at the IRS, but even small donations are useless if there isn't proper documentation to back them up.
Don’t Overlook Medical Expenses
If you have a client with high medical costs, instruct them to keep track of all their medical expenses. While most taxpayers have a difficult time reaching the high minimums for deducting medical expenses, many older individuals do, but they often fail to report these to the IRS. Having your clients keep all their medical expenses helps you determine if they are eligible to save some extra cash and prevents this common tax mistake among older citizens.
Recheck Business Deductions
Business deductions, especially those for the self-employed, have several tax mistake pitfalls and increase the chances of getting audited, so help your clients do it right. If your client has unreimbursed business expenses through their work, tell them to keep all receipts and a record of the company’s reimbursement policy. Similarly, if you have a client who is self-employed with a home office, keep them up to date on the strict guidelines for deducting home office costs.
With you in their corner to help with taxes, your clients are sure to make fewer tax mistakes. Whoever your clients are, always ensure they provide you with up to date and accurate information on every aspect of their lives, so you can get them the refund they deserve.
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