Wednesday marks the beginning of tax season, when most Americans can submit their returns to Uncle Sam.
The IRS had originally planned to kick things off on Jan. 22, but the fiscal cliff debate forced the agency to push the official start date back eight days.
Certain taxpayers will still need to wait to file, however. Tax returns claiming the American Opportunity Tax Credit or the Lifetime Learning Credit, two popular education credits, won't be processed until mid-February. Other filers with more complex returns, including those claiming residential energy credits and general business credits, will need to wait until late February or March for their returns to be processed.
If you're a victim of identity theft, you may also have to wait for your refund. The IRS has been struggling to keep up with surging tax fraud, and identity theft victims often experienced delays of at least 180 days last tax season, according to the Taxpayer Advocate Service. This year, to fight fraud, the IRS has increased the number of identity theft-screening filters, hoping to stop fraudulent returns before they are issued.
Otherwise, you can generally expect to receive a refund within three weeks after the IRS receives your return. Last year, more than 110 million taxpayers collected an average refund of $2,803 a piece.
Tax experts have come up with the top five most common mistakes, as well as the top five tips for side-stepping them.
- Math Errors. Remember to always check -- and double check -- your math. Your math error may end up working in your favor, resulting in an IRS correction that nets you more money than expected. However, it can just as likely cost you money -- not to mention interest payments, penalties, etc.
- Incorrect personal information. At the very least, making such mistakes with your personal information can slow down your payment as you wait for the IRS to sort it out. And filling out the wrong social security numbers, or forgetting to fill them in completely, can have the IRS disallowing certain tax breaks tied to your taxpayer identification number.
- Forgetting unearned income. When it comes to reporting income, be sure to figure any taxes you do owe correctly. If you're subject to the alternative minimum tax, keep an eye on box 9 of the 1099-INT form. Another box of interest is 1b (qualified dividends) of the 1099-DIV form, which are eligible for lower capital gains tax rates.
- Not filing on time. The IRS reports that up to 20 percent of Americans wait until the last week to file. Just something to think about as you rush around on tax day trying to get everything done. But make sure you do get everything in on time. Because once you are late with your taxes, you've opened a Pandora's box that can get worse with each passing day -- literally. While you can file for a six-month extension using Form 4868, you still need to file that form and pay any tax you owe by the regular filing deadline.
Forgetting to sign your return. According to the IRS, 1 million people each year forget to take that one final, simple step.
For more information, visit the Internal Revenue Service website.
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