It’s that time of year again: tax season.
No one enjoys doing their taxes, and that is likely why many of us leave this tedious task to the last…possible…moment. As Tax Day approaches, millions of Americans are likely scrambling to track down all of their important documents to meet the April 15 deadline. But as with anything in life, the more you rush, the more likely you are to make mistakes. When it comes to your taxes, these mistakes can result in monetary penalties, delays in getting a refund, and even an increased chance of being audited. Below are four easily avoidable mistakes people make at tax time.
Not filing when you could get a refund
No matter what your income level, filing your taxes is important. This is particularly true if you are a low-income earner, as you may be entitled to a refund from the government through the earned income credit.
Not taking advantage of professional advice
Our tax law is complicated. That’s why speaking with a tax professional can help ensure you are maximizing your tax refund or minimizing your tax bill. This is especially important for those with various deductions, businesses or complicated estates. Whether it is itemizing expenses or taking advantage of tax credits, do not leave your taxes to chance.
Not taking the time to organize paperwork
Getting all of your important documents together is not only important because it ensures you are properly filing your taxes, but it particularly comes in handy in the event you get audited by the IRS. Instead of doing this at the last minute, take the time to save documents throughout the year so you are ready when April 15 arrives. Create folders for tax documents you know you need at the end of each year. Now is the time to create these folders for your 2020 taxes, as you see the materials needed to file for 2019. They may be digital folders or paper or both.
Not handling other “legal” matters
Since you are getting your financial house in order for tax season, it is a great opportunity to assess your other legal needs – like estate planning. Wills, trusts, life insurance, healthcare proxies, and powers of attorney are just some of the valuable tools available to you. Planning for your incapacity and your family’s future when you are gone is just as critical, and leaving the results to chance can cause more stress on already grieving loved ones.
Getting ready for tax season is important, and it reminds us of the importance of having all of our financial affairs in order. Do not leave this important task for later, as life is unpredictable. If you have questions about how to get started on your estate plan or need assistance updating an existing plan, contact one of our experienced estate administration attorneys at Davis Law Group.