COMMON TAX MISTAKES TO AVOID
Common tax mistakes to avoid. Small errors lead to expensive tax bills. Tax software–of the old fashioned paper forms and calculations–won’t help much when the numbers that human beings use in the first place are flawed. Finding and entering tax information often isn’t always easy. “That part of the process requires reading comprehension and critical thinking skills, made more complicated by a specialized vocabulary,” said Lynn Henley, and accountant in Pacifica, California. And mistakes are possible when you do it all yourself. A new client of Minnie Lau, a San Francisco accountant, recently made a misfire in declaring the cost basis of some employer-issued stock, thanks to a fumble involving the interplay between tax software and a brokerage statement. Ms. Lau fixed the return, and the client got back $14,000. Software can take you on a path of aimless numbers. Many tax returns are an annual reckoning of elemental life choices: whom, if anyone, you marry, who depends on you, where and how you work, what you’re stashing away for later, the causes that move you. Common tax mistakes to avoid.
Talking regularly about all these things with a human being is healthy, especially if anything has changed. And while some tax software makes one off communication with a pro possible, it isn’t the same as establishing a relationship. Professionals who truly know you can prevent the errors that may arise when a computer leads you on a mad dash through contextless figures. Scrambling on April 14th to figure out what counts as a donation isn’t ideal.
When a family member dies, why add taxes to the burden ? In the year after the death of a life partner, grief alone–the sheer wight of it–could be reason enough to hand the tax task off to a professional. How to treat income before and after the date of death, which tax return any income belongs on, deciphering the tax implications of the will (if any), figuring out what value to set ofr the cost of inherited assets, and on and on.