As a follow up to our earlier post of A Dozen Common Tax Mistakes, today we get to the top six that we have experienced with clients over the last two decades.

As a quick review of from number 12 to 7, are:

• Missing Extension
• Incorrect Basis
• Not Filing when needed
• Medical Deductions
• Rounding Deductions
• Missing Duplicate Social Security Withholding

Now on to our experienced top six, again in Letterman-like format:

6.  Under Withholding: Very frequent and costly, under withholding sometimes occurs with very little tax payer changes; If you are uncertain on your amount owed, attempt to confirm you have at least paid in 110% of your prior years taxes as this will help you avoid penalties.

5.  Not Filing Soon After Extension: While an extension is easy to file and recommended, if you owe taxes the extension does not stop penalties, so it is always a good idea to file soon after your extension in order to lessen penalties, if any.

4. Stock Option Exercise Data Incorrectly Entered: After executing a sale of stock options, SRO, or even restricted stock, you will receive a company related tax form. We have found due to the variety of reporting methods by various different public companies this information is often mis-entered on tax returns. It is not usually a tough fix, but it’s easiest if entered correctly with the primary return.

3. Loss Carry Over: We often times see losses from prior years left out and therefore not receiving full benefit. Be sure to carry those losses forward, either passive or active.

2. Filing Too Quickly: For many of us, it is hard to believe, but indeed some do file too soon and then receive a corrected statement of some type. Completing your taxes in late February is fine, but we recommend holding your personal/1040 until late March in order to wait out any corrected tax statements.

And finally, the one item we see the most, that has caused many grief, including our own personal situations:

1. Missing Interest: The most frequent item we see causing tax payer grief is the missing interest on a tax payers return. It could be an incorrect address change, forgotten account, or even a closed account that generated tax reporting early in the prior tax year, but missing interest reporting ranks as our number one problem for tax payers. Again an easy fix, but most times results in tax penalties and additional payments.

We hope you enjoyed our Dirty Dozen Tax Mistakes and thank you for your time. Also a  couple of useful tax related sites are as follows, the IRS Forms site, and a great site for estimating your taxes.

Thanks again for your time and Have a Great Day!

Photo by:  Phillip Ingram