5 Tax Mistakes We Made Each Year

Tax Mistakes We Made

For the first ten years of our marriage, my husband and I filed out our taxes using a software program, which was often a frustrating experience. I’m sure we likely lost out on some of the money we could have gotten back from the government if I hadn’t done the taxes myself. Until five years ago, we typically had 5 tax mistakes we made each year.

Doing Our Taxes Ourselves

I know some people do their taxes and have no trouble, but that isn’t me. Since we’ve switched to an accountant, we’ve had larger refunds every year. Since the accountant is in the business of taxes, she knows all of the ins and outs and when the tax laws change. Even though I have to pay for a tax accountant, I happily do so each year.

Spending Our Refund Before We Got It

Have you ever been guilty of spending your tax refund before the money hit your account? I know I have. If your tax refund comes promptly, spending it before you get it often doesn’t present a problem. However, if your tax refund is delayed and you’ve already spent the money, you may find yourself in debt or struggling to pay your bills, depending on how tight your budget is.

Over the last few years, my husband and I have stopped doing this. Instead, we write down how much our tax refund is and exactly how we plan to use that money. Then we wait for the cash to hit our account before we start using the money to fulfill our plan.

Completing Bookkeeping During Tax Time

I’m self-employed, and my bookkeeping is simple. I spend roughly four to six hours doing my bookkeeping for the entire year. However, I used to complete my bookkeeping all at once, in January or February. This is the worst idea and makes the process more time-consuming.

I have started doing my bookkeeping at the end of each month, and the process is smoother and faster. Plus, I can now give my bookkeeping to the bookkeeper in early January instead of February or March.

Not Keeping Receipts

Tax Mistakes We Made

Do you keep all of the receipts needed to file your taxes? I keep all of my receipts for my business, but I drop the ball when it comes to filling out receipts for charitable donations. I find filling out the receipts for those donations to be bothersome, so I lose the tax benefit I may get from them.

Not Keeping a Separate Space for My Business

Finally, I don’t have a dedicated space for my business in my home. If I did, I would be able to deduct a portion of our monthly mortgage payment and utilities. We don’t have the room in our home to do this now, but when one of my kids grows up and moves out, I plan to take over the bedroom and have a dedicated office.

Final Thoughts

Most Americans make tax errors. The key is to recognize those errors and try to eliminate them so you can get a larger refund or owe less money each year.

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