How Tax Mistakes Can Increase Your Debt

Many people find themselves living paycheck to paycheck. This situation is quite common among individuals in every level of society. It seems that the more we make the more we spend and the end result is a very slim margin of surplus money. A single unforeseen expense can destabilize a person's financial situation and set in motion a chain of events. Payment of the unexpected bill would make it impossible to meet all of the current expenses which often leads to the use of additional credit. Debts continue to grow and the margin of surplus money is even smaller. To avoid this situation it is wise to trim expenses and increase the amount of surplus money. A perfect opportunity to accomplish these goals comes around every year at tax time.

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Although paying taxes is an unavoidable reality you can take measures to ensure that you are not paying more than you should. Perhaps the easiest and most productive method is simply to guard against making common mistakes while you are filling out your forms.

• Errors in math. Always make sure and double check your calculations.
• Incorrect address. If the address is listed improperly than the government would have no way of forwarding a refund check. If you move make sure and provide a forwarding address.
• If you owe money the checks should be made payable to the US Treasury.
• Provide accurate social security numbers. This also includes the social security numbers for your spouse and children. A failure to adequately provide the numbers in each requested location can result in confusion during processing.
• Signature and date. A failure to sign and date the tax return will result in a refusal by the government to process it.
• Affix proper postage. A failure to apply adequate postage will result in the forms being returned to your home address. If you waited until the last minute to mail your returns this could end up causing late fees.
• Failure to keep copies. Keeping copies of the information for your own files is important if there is ever a question in the future.

Guarding against common tax mistakes will help ensure that you do not pay any more than you have to. In fact, these precautions may even help you receive a refund to increase your surplus margin. For specific questions please contact your tax advisor

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About the author:

Mark Carney is a professional consultant with First American Debt Consolidation and Loans, a debt consolidation service specializing in financial education, credit counseling, and debt management services nationwide.