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Don't Make These Tax Mistakes Fifteen common tax-filing errors that can cost you dearly.
Source:
online.wsj.com
- Feb 6, 2014
Stephen Webster
How should you feel about this year's taxes? It's complicated.
The Internal Revenue Service opened its filing season Friday, and by midnight on April 15 the agency expects to hear from individual taxpayers filing nearly 150 million returns for 2013.
Thanks to the growing complexity of the tax code, that is 150 million opportunities for U.S. taxpayers to shortchange either themselves or Uncle Sam by making multiple errors.
For 2013, taxpayers will have to deal with a new tax on investment income, a new limit on deductions and a new phaseout of exemptions, among other provisions.
"Tax complexity confounds taxpayers and even preparers, and it's a major source of errors," says Nina Olson, the national taxpayer advocate, whose role is to be the taxpayers' voice before both Congress and the IRS. "Every year there's talk of simplifying the code, yet every year complexity seems to increase."
Consider: Last year's "fiscal cliff" revisions brought the total number of tax changes since 2001 to 4,838, or more than one a day, says Mark Luscombe, principal analyst at tax publisher CCH, a division of Wolters Kluwer. WTKWY +1.05%
All that complexity exacts a steep price. According to Ms. Olson's latest data, individuals and businesses spend more than six billion hours a year complying with income-tax filing requirements. In 2010 that came to about $168 billion, or 15% of total revenue collected.
For individuals, filing season often means choosing among options that are costly in time, money or both.
More than 50 million taxpayers prepare their own returns and run the risk of paying the IRS too much or too little. H&R Block HRB -1.25% is basing its tax-season marketing blitz this year on research it says shows that one in five self-preparers forgo an average of $460 each due to such mistakes.
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Category: IRS
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