What Are the Most Common Business Tax Return Errors?
As you rush to complete your business and personal tax returns on time, it is easy to make mistakes. One way to avoid errors is to use one of the tax return preparation software services, but even that is no guarantee of complete accuracy. Before you send in a return, read through this list to avoid common tax return mistakes.
Check the Due Date
Missing the due date for your business tax return will prove costly because fines and penalties begin on the due date. Not all business tax returns are due on April 15. In fact, there are several due dates for different types of business tax returns. And due dates change every year. This article gives you the most up-to-date business tax due dates.
Sole proprietor and single-member LLC returns on Schedule C are due on the same day as the personal tax return due date, April 15. Partnership and multiple-member LLC tax returns are due on March 15. Corporate tax returns are due the 15th day of the fourth month after the end of the corporation's fiscal year.
7 Key Business Tax Return Errors
The IRS sees these errors most often on tax returns including business tax returns:
- Incorrect or missing social security numbers or employer ID numbers: Make sure the number is correct and that it is the right number for your business type.
- A misspelled name: Make sure the name on your tax return is the same as on your social security card or taxpayer ID number.
- Incorrect filing status (filing head of household instead of filing single is a common error).
- Computation errors in figuring the taxable income, withholding, estimated tax payments, and common credits and deductions.
- Withholding and estimated tax payments entered on the wrong line.
- Math errors that cause problems with tax amounts.
- Failing to sign and date the return: Make sure you and your spouse both sign if it is a joint return.
Other common tax return filing mistakes include:
- Illegible or missing name or address.
- Checking more than one filing status or checking no filing status.
- Incorrect or missing income, deductions and credits, or putting that information on the wrong line.
- Failing to put brackets (parentheses) to show negative amounts.
- Failing to figure the tax correctly from the tax tables.
- Failing to attach any 1099-MISC forms received for income regardless of whether income tax was withheld.
- Failing to attach all necessary schedules (including Schedule C) in order of sequence.
- Failing to send the return to the correct IRS location.
- Forgetting to put a postage stamp on the envelope.
- Forgetting to make a check payable to "United States Treasury" and to include name, address, taxpayer ID, daytime phone, tax form, and tax year on the payment.
- Forgetting to include a financial institution routing and account number for a refund direct deposit.
The IRS has a complete list of tax return errors and how to avoid them in Tax Topic 303, available online.
How to Fix Those Common Tax Return Errors
If the errors are simple, such as a small calculation error, you can wait for the IRS to fix them. However, if the errors are more substantial, you will need to file an amended tax return. The form you use for this return depends on your business type.
You have three years from the time you filed the return to file the amended return (you may not e-file amended returns), but if your mistake results in your owing money to the IRS, you should file as soon as possible. If you have questions concerning the error, or if it involves a missing tax payment or underpayment, contact the IRS directly and explain the problem.