Limited Liability Partnership in Ontario
frequent Tax Mistakes in Ontario & How to Avoid ThemNo body looks forward to filing their tax returns. The entire undertaking can be time consuming, confusing, and often stressful. In the end, you just want to avoid owing any additional money to the IRS when you file taxes at the end of the year. If you're lucky, you may even have a refund to look forward to in the end. Unfortunately, Lots of people end up leaving hundreds of dollars in refund money on the table due to simple filing error. In fact, the amount of money that taxpayers fail to claim amounts to over a billion dollars.
If you find that statistic staggering, you're not alone. At B Young & Associates Tax Service, we're committed to helping our clients file their returns error free so that they are guaranteed to get the money back that they're owed. Often, we find that people overpay taxes due to simple oversights on their returns. Here are some of the most common tax mistakes and how you can avoid them.
Failing to ItemizeFailing to itemize your deductions can be a costly mistake. This is a frequent error we see in returns of people across all income levels, even those who make a great size salary. Many times, people fail to itemize because they don't think they are eligible for any significant deductions. However, even if you are not a homeowner, there are many other deductions that you could be missing. It's tempting to automatically take the standard deduction, however, it's worth taking the time to calculate all of your deductions, no matter how small. They could add up to big savings on your tax bill.
For example, many people do not know that you may be able to deduct your state and local income taxes for your federal returns. If you live in a state like California that has high in-state income tax rates, you could be looking at a significant deduction. Other common deductions that are overlooked are student loan interest and medical expenses. You may be surprised how much your "small" deductions will add up to in the end. Your smartest bet is to let a tax professional handle your returns for you. Our team of knowledgeable associates will comb through all of your expenses throughout the year and help you get the most out of your itemized deductions.
Not Having Your Paperwork in OrderIt really pays to keep all of your records in great order during the year. Come tax time, you don't want to be searching high and low for significant receipts and documents. If you haven't done a great job of keeping your tax information together so far this year, it's never too early to start. A good way to get back on track is to pull your previous year's returns and look at the information you used to file those. That will help you create a thorough checklist of all the documents you'll need to track down before it's time to file your next returns.
Preferably, you should keep all of your important tax documentation in one place. Gather bank statements, receipts for deductible items, charitable donations, and anything else you believe your tax preparer might need. Even if you're not sure if the document is pertinent to your tax returns, it's better to have too much information than too little.
Missing Education-Related CreditsOn average, a third of all college students fail to claim higher education credits on their tax returns. Two of these possible tax breaks are credits which are even more valuable than deductions as they directly reduce your tax bill by a certain dollar amount. For instance, as of 2018 the American Opportunity Credit is worth up to $2500. Students that are enrolled in an accredited college undergraduate program at least half-time are eligible for this credit. This credit can also be claimed by the parents of these students if they are covering their college expenses. The Lifetime Learning Credit is currently set at up to $2000 for students enrolled in a higher education program. Students don't even have to be enrolled half-time to claim this credit.
Many people neglect to claim these credits because they believe they won't be eligible due to their income level, scholarships, or other factors. However, in most cases students enrolled in a higher education program will qualify for at least one of these credits. Remember that any money spent on your college tuition, student loans, or interest on student loans, may also be deductible. Talk to your trusted tax professional to make sure you are taking advantage of all the education-related credits you should be.
Failing to examine EITC QualificationsAbout twenty percent of households that are eligible for the Earned Income Tax Credit (EITC) fail to claim it. The number of filers that fail to take this credit is so high that the Internal Revenue Service has taken steps to bring more awareness to the EITC, even creating an EITC Awareness Day just to encourage more people to find out if they qualify. This is an extremely valuable credit that may be worth up to $6,444 as of 2018 for tax filers that have three or more qualifying children at home. Whether or not you are eligible the EITC will be determined by the number of children you can claim as dependents and your overall household income for the year.
What's more, the EITC is refundable. That means even if your credit amount exceeds your tax liability, you can still receive the entire credit amount. For example, if your tax liability for the year is $1000 and you qualify for a credit of $3000, you will still get a $2000 refund on top of the $1000 deduction on your tax bill. You could be leaving a lot of money on the table by not claiming the EITC, so make sure you do your research and find out if you qualify.
Not Tracking Charitable GiftsChances are you make a number of charitable donations throughout the year, however, are you doing a great job of keeping track of them? If you make a $50-dollar donation here and there you may not think to keep a record of it, but even “small” donations can add up over the course of a year. Be sure to keep a tally of all of the organizations you contribute to no matter how small you believe the donation is. If you use a tax service, your preparer will need to know the name of the organization, the date you donated, and the amount. In many cases, you should be offered a receipt for your donation, be sure to keep these with the rest of your tax paperwork and give them to your tax preparer at the end of the year. This is especially significant if the donation amount exceeds $250.
Not Double Checking Your ReturnsTo get your maximum deductions and avoid errors, it's best to have your tax returns done by a professional tax preparer. However, Lots of people still opt to do it themselves. There are Lots of different tax software programs available on the market. If you do choose to utilize one of these programs, make sure you only choose software from a trusted brand and be sure you are purchasing software that is for the correct tax year. Tax rules and regulations change regularly, so tax software can become outdated very quickly, even if you purchase it several months before your taxes are due!
Many of these businesses have the option to receive online updates if forms or rules change before you submit your taxes, and their automated system will check your return for errors prior to allowing you to file. However, even with these safeguards in place, it's still possible for errors to occur on your return. Even if your software doesn't find any errors, you should still check your returns thoroughly before submitting them. You could make entry mistakes on your reported income, social security number or other personal information that the computer software has no way of catching. If such a mistake occurs on your taxes if could result in the IRS rejecting your return or holding up your refund.
Incorrect Filing StatusThis seems like a simple detail, but a surprising number of filers choose the wrong filing status on their tax returns. This is another time when employing the help of a trusted tax professional is ideal. Many married couples don't know that there may be different tax benefits to them filing as “married filing separate” as oppose to “married filing jointly”. This includes couples that are currently separated and going through a divorce. Single filers who have dependents to claim may also qualify for “head of household” status on their returns. Claiming head of household on your returns could add up to serious savings, but Lots of people who qualify for these deductions often overlook it.
Your Trusted Tax Company for Individuals & BusinessesThe knowledgeable staff at B Young & Associates can help you with anything related to your taxes from processing an annual return to dealing with an IRS audit. If you find yourself facing a serious issue, we can help you fight IRS audit proceedings quickly. Our highly trained certified public accountants know exactly how to handle these complicated and stressful tax situations.
In addition personal tax situations, we also offer accountant and bookkeeping services for businesses of all sizes. If your business is in need of a professional bookkeeper or CPA to help keep your financial records in order, B Yong & Associates is here to help. From periodic accounting tasks to payroll, our team can ensure that your business's financial health is always in examine. We specialize in serving all types of business entities including: • C-Corp's • S-Corp's • Limited Liability Company (LLC's) • Limited Liability Partnership (LLP's) • Sole Proprietorships
Contact us today to schedule your consultation.
Our tax professionals can help you with...
income tax returns, bookkeeping, payroll, partnerships, corporations, trusts and other entities
Located in the City of Highland, California, B. Young & Associates Tax Service Inc. has been providing reliable, honest tax services since 1982. We offer year-round income tax preparation, as well as bookkeeping and payroll services.
Rest assured, our team of highly-trained, educated, and experienced staff, which includes Enrolled Agents and California Technical Education Council (CTEC) registered tax preparers, can and will provide you with the very best service available.
We can assist you with prior year taxes, letters from the IRS, out-of-state returns, business forms, electronic filing, and sales tax.
Let us help you with uncomfortable issues, so you can concentrate on what you do best. Contact us today!