Avoiding Tax Return Mistakes
Dana Anspach from Sensible Money shares common tax return mistakes to avoid that could save you money.
Key Takeaways
- Self-employed individuals should verify the Qualified Business Income (QBI) deduction is applied annually—one client recovered a $24,000 refund when their CPA missed this deduction on their 2021 return
- Track non-deductible IRA contributions using Form 8606 to avoid double taxation on distributions; inherited IRAs with non-deductible contributions require separate Form 8606 filings each year
- Verify that retirement account distributions (1099-R forms) are reported on your tax return—one client nearly missed reporting $100,000 in IRA withdrawals, which would have triggered an IRS notice
- Qualified charitable distributions from IRAs should reduce your taxable income by the charity-directed amount (if $20,000 withdrawn with $2,000 to charity, report only $18,000 as taxable), not the gross distribution
- Create a checklist of expected tax documents and items at the beginning of the year (1099s, mortgage interest statements, investment statements), file an extension if needed, and complete tax preparer questionnaires carefully to ensure no income sources or deductions are overlooked
Avoiding Tax Return Mistakes: In this free finStream video, Dana Anspach CFP, RMA from Sensible Money shares common tax return mistakes to avoid that could save you money. For more free videos to help you with tax planning, please visit the finStream Tax Planning Center at this link: https://www.finstream.tv/videos/tax-planning/
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