Thanks in large part to the internet, tips about what to do on your taxes and in financial matters are everywhere. Unfortunately, though,
nobody ever tells you what not to do. Fortunately, we’re stepping up to
the plate with some helpful advice on what you shouldn’t do.
Don’t Forget to Track Your Charitable Contributions
You do a good deed, like donating money or clothing to a
charity, and you get a reward come tax-time. Simple, right? In reality though,
charitable contributions and getting deductions for them is a little more
complicated than that.
You absolutely need to be keeping careful, provable track of
all of your contributions. If you make a donation, whether it’s in the form of
cash or goods, ask for a receipt. Also make sure that you are only donating to
legitimate organizations so that your donations are actually deduction-worthy.
Don’t Forget to Include Your State Refunds
If you received a state refund in any amount last year, then
you need to include it as part of your income. This rule holds true only for
state refunds; federal refunds need not be included.
The IRS knows if it paid you a state refund and, if so, how
much. Thus, it’s very easy for it to tell if you neglect to include it in your
income...and to penalize you for it. Neglecting to add this income in could
even increase your chances of getting audited. Don’t make this common but
potentially costly mistake.
Don’t Inflate Deductions
The temptation to be a little dishonest is very strong
during tax time. For example, you might inflate the amount you supposedly
donated to an organization, or you might claim your home office space is a
little larger than it is to receive a larger deduction.
Those little lies don’t seem like a big deal if you don’t
get caught, but remember, you’re playing a risky game by fibbing. Even little
lies can discredit you, cause you to have to pay penalties, open you up to an
audit, and even cause you legal trouble.
Resist the temptation to lie...even a little.
As any accountant can tell you, these aren’t the only things
you shouldn’t do on your taxes. But, it’s a pretty good list to start with. In
general, as long as you are honest and thorough at tax time, you should be
okay.
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