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Avoiding common tax mistakes can save you headaches later

Poet Alexander Pope famously said "to err is human, to forgive divine." Unfortunately, we may all be human, but the IRS is not a benevolent deity wishing to absolve. Millions of us make tiny errors when doing our tax returns, and those can end up costing us big in the long run in the form of fines, penalties, overpayment, underpayment, misapplied funds and more.

Understanding what common mistakes are made, however, and being on the lookout for them as we prepare our taxes, can reap huge dividends in terms of preventing headaches and financial ramifications.

Always check your calendar...

Filing after the deadline - without first requesting an extension - could have serious consequences. Extensions are almost always granted, and only involve submitting a form. Take advantage of the opportunity if you know that your tax return won't be finished in time. Having an extension can save you from the automatic application of penalties and interest that kick in if you miss the deadline. Penalties can go as high as 25 percent of your payment amount, and can be hugely significant to your bottom line. It might be possible to have those reversed later, but regardless, it will involve significantly more effort than simply requesting the extension in the first place.

...And your math

Math errors are found in millions of returns each year, and some returns are riddled with them. In some cases, these might not be a big deal, and could only involve a difference of a few dollars. In other instances, however, an addition error or transposing of two numbers can result in discrepancies affecting millions of dollars. Math errors can cost you both time and money now and in the future; returns full of mistakes are much more likely to spark an audit than properly completed ones. Carelessness could end up costing you in terms of effort and energy for months if you have to go through the audit process.

Bottom line: Never ignore the IRS

Some people prepare their returns, discover that they owe significant taxes and then take no additional action. They don't file the return, and then end up making the situation much worse by ignoring repeated IRS requests for payment or attempts to contact them to resolve the matter. Even Al Capone couldn't escape the IRS. Their dogged persistence is legendary, as is their reach. No good will come from ignoring them.

If you find yourself in tax trouble, face the problem head on with the help of an experienced local tax attorney. An attorney's guidance can help you negotiate payment plans, convince the IRS to waive penalties or interest, face with possible criminal implications and move forward.

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