The Internal Revenue Service has plenty of ways to penalize you for mistakes on your tax return. Some of these potential penalties are so convoluted and complex that there may well be disagreement within the IRS on when they apply. However, most people accrue tax penalties for very simple mistakes. Here are some of the more common yet easily avoidable mistakes.
Are you expecting a tax refund this year, and if so, what do you plan to do with it? The annual survey by the National Retail Federation suggests that in 2017, almost two-thirds of taxpayers expect to receive a refund, and many of those taxpayers plan to use their refund responsibly by paying down debt.
Contributing to a retirement account can be difficult for lower income households, but one can argue that it is even more important for those families to take advantage of all the retirement savings options that are possible. One of the lesser-known options applies directly to lower-income families – the retirement savings tax credit. Note that this program is a tax credit and not a deduction, meaning that the amount you qualify for is subtracted directly from the taxes that you owe.
For many people, tax refund day is like Christmas in the spring. As they prepare their tax returns over the next few weeks, millions of Americans will hold their breath in anticipation of how much their tax refund is going to be — and then run to the mailbox every day hoping to receive their "gift" from Uncle Sam.
Soon you will be filling out your federal tax forms, and unless you are lucky enough to live in seven states, you will be filling out state tax forms as well. Are you fortunate enough to live in one of these seven states, or are you on the other end of the spectrum, dealing with some of the highest state taxes in the nation?