Updated for tax year 2017
You’ve prepared your return, and it’s ready to go. Or is it?
Before you hit submit, save yourself some potential trouble later – or even some money on your tax bill – by double-checking these three important detail.
1. Review all Social Security numbers on your tax return.
Every year, the Internal Revenue Service (IRS) reports that one of the most common mistakes is an incorrect Social Security or other tax ID number. It’s impossible to overstate how important it is that you enter your own correct Social Security number.
If you happen to make this mistake, the best case scenario is the IRS rejects your return immediately, and you have to refile. In a worst-case scenario, you are left sorting out the mess later – with much more effort.
To avoid this problem, ensure your name matches the one on your Social Security card exactly. If you’re not sure what’s listed on your card, check. The IRS and their computers will.
You should also check your spouse and dependents’ names and Social Security numbers.
2. Find one more deduction!
Every ten dollars in tax deductions you find can mean a few more dollars in your pocket. Taking the time to review your return could help you discover or remember just one more deduction. That is especially true if you itemize deductions, or have a real estate rental or small business.
Here are some common, easy deductions to look for:
- Business mileage: Count trips to the office supply store, traveling to meet with clients and so on.
- Tuition deduction: Reduce your taxable income by up to $4,000 of any tuition you paid for higher education – even if your income is too high to qualify for education tax credits.
- Depreciation: If you have a real estate rental or business, look at last year’s return to see if you have assets for which you should claim depreciation.
- Noncash contributions: Don’t forget the donations you made of household goods, clothes or even a vehicle.
- Retirement contributions: If you made deductible retirement plan contributions, don’t forget to enter them on your return.
- Home office deduction: If you qualify to take a deduction for home office expenses, this is a great tax break! To keep it easy, try the new simplified method for the home office deduction.
3. Avoid penalties for not maintaining health insurance coverage all year
Check your return to see if you are paying a penalty for the “shared responsibility provision” of the Affordable Care Act. This penalty increased considerably for 2016.
Generally, the penalty is either $695 per uninsured adult and $347.50 per uninsured child (up to a maximum of $2,085 for your household) or 2.5 percent of household income above the tax filing threshold – whichever is greater. That can create a significant tax bill!
What you really don’t want to do is pay a penalty if you don’t need to. There are many exceptions to avoid paying the penalty. For example, if you don’t have health insurance because you can’t afford it, you may qualify for an exception.
If you’re not sure what’s available to you, go through the ACA section of TaxAct one more time, and make sure to answer all questions correctly.
To claim an exemption, use Form 8965. Some exemptions, such as the religious objection exemption, require you to apply for the exemption through a federal or state exchange.