As tax time rolls around, it is likely your business is scurrying to gather receipts and balance financials for clients. Tax mistakes, though, can prompt extra work for your firm and even damage your reputation. To avoid adding to the chaos of tax season, arm yourself with knowledge of the most common tax filing errors that can delay processing for both your company and your customers.
One of the most common tax mistakes that cause delays in processing revolve around changes to names or misspellings, according to the Illinois CPA Society. Check and double check the names of all tax filers and dependents before filing that electronic return to ensure the IRS does not flag it.
Incorrect Social Security Numbers
Social Security numbers are essential when identifying filers through the IRS. Simplify your accounting procedures by creating a checklist to verify the Social Security numbers of single, married, or head of household filers and their dependents. Incorrect identification numbers not only delay refunds or return processing, but they can also get the return flagged for potential identify theft.
Inaccurate Bank Deposit Information
Your customers often prefer to simplify the process of receiving a refund by opting for direct deposit. However, incorrect routing and account numbers are one of the most common tax mistakes. Ask your clients to provide a voided check or deposit slip so you can verify the account numbers before filing to avoid any confusion.
Changes in Filing Status
Ask thorough questions to determine your clients' filing status before processing income tax returns. A single filer may need to be classified as head of household, or a newly married couple may need to make changes to their status to reap tax benefits. Avoid these tax mistakes by carefully vetting your clients when gathering financial materials.
Undocumented Charitable Donations
Ensure your clients receive credits due to them by documenting all charitable donations. Even a cash gift to a local charity or a purchase of goods with proceeds donated to a national charity can minimize the amount of tax a company or individual is required to pay. Create a software program for your customers to document their donations throughout the year, or make a list of donations from the previous year to capture all potential deductions.
Avoid spending countless hours preparing tax returns only to have them sent back to you by the IRS because signatures are missing. Add markers to the pages where your clients are required to sign to reduce the risk of missing a spot on the return where a signature is required. This simple action can help you avoid one of the most common tax mistakes that delay processing by the IRS.
Simplify your accounting procedures by creating a checklist of common tax mistakes. Spotlight mistakes that have caused delays in the past to ensure your staff is meeting your clients' needs.
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