Saturday, January 26, 2008

Second Part of Gaffes/Errors on Tax Returns

I wanted to continue my posting about Gaffe's and Errors in regards to tax returns. There were a couple more examples I wanted to share; they are listed below:

#3 Reporting Business Income as Wages

Reported 1099 Misc as W-2 wages, is a common mistake that Taxpayers make in regards to their business returns. Secondly, they may fail to report Self-Employment Tax of 3% on their returns. Therefore the IRS will reassess the 1099 Form income and tax an additional SE tax to their return.
Taxpayers tend to fail to file an SS-8 for the IRS when they classify themselves as an Independent Contractor. Providing this form will help the IRS determine whether or not you should be treated a wage earner or an independent contractor.

#4 The Invalid Department and its aftermath:

Lastly, taxpayers misuse exemptions such as dependants on their tax returns. The IRS will disallow a dependant due to the following reasons.
*Duplicate deductions
*Incorrect or missing SSN
*Incorrect last name and SSN

However there are several adjustments that are made when taxpayers legitimately/unknowingly fail to report dependant information on their returns. Those adjustments are as followed:
*Dependant and filing status
*Child Tax Credit
*Earned Income Credit
*Child & Dependant Care Credit. i.e taken car of an elderly person (inside or outside the home) and paying their expenses.

Listed above are examples of common mistakes people make on their tax returns, willingly or unwillingly. If you have tax needs and need IRS Help,or a tax consultant there are licensed enrolled agents out there to find a resolutions such as a Offer In Compromise or an Installment Agreement to help you today!

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