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Here are ten tips to avoid errors when filing your 1040 returns.

  1. Math and typing errors- Using tax software or a tax firm to prepare your return greatly reduces the chances of mathematical errors, but it is still easy to transpose digits while doing data entry. Even if you have someone prepare your return, check that the numbers make sense before signing. A single typo could mean the difference between $38,000 and $83,000 in wages.
  2. Include all income- It can be tempting to leave income off of your return, but don’t do it! Unless you know for certain that it isn’t considered taxable income, you should include all sources of income on your return, regardless of the amount.
  3. Use the correct Social Security Numbers- IRS matches Social Security Numbers when they process returns. If you enter an incorrect number for a dependent, it could mean that IRS rejects the return or refuses to give you credit for that child.
  4. Include your housing allowance for self-employment taxes- The clergy housing or parsonage allowance is a great tax benefit, but only for income taxes. Unfortunately, you have to add this income back into your taxable wages when you are calculating self-employment taxes.
  5. Include additional forms if you donate more than 500 dollars of non-cash items- Donating gently used household goods is a great way to help others, but if you donate more than $500 worth of goods, it triggers additional IRS paperwork. IRS expects form 8283, Noncash Charitable Contributions, to be attached to the return.
  6. Make sure your name matches Social Security records- For those who married, went through a divorce, or are changing their name for other reasons, make sure the name you are putting on the return matches the current name listed by the Social Security Administration. A mismatch could cause problems.
  7. Use the correct direct deposit numbers- That nice refund isn’t going to help you if it never gets to the correct bank account. If opting for direct deposit, triple check that you are putting the correct account and routing numbers on your return. If you are opting for a paper check, make sure that you are listing the correct mailing address.
  8. Calculate the Health Care Premium Tax Credit- If you got Healthcare through the Marketplace and took an advanced tax credit for cheaper premiums, be careful. If the actual credit you calculate on Form 8962 is less than what you received in advances throughout the year, you may have to pay some of that back!
  9. Sign the return- Even if you file electronically, you should be signing something for your accountant or tax firm agreeing that the papers look correct and that they should be filed. If you don’t sign for your returns, the returns can’t be filed.
  10. Mail the return- For those of you who still send in a paper return to IRS, don’t forget to actually mail it! This can seem like a no-brainer, but it’s easy to forget or to let the returns sink to the bottom of a filing cabinet when you’re busy.
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Clergy Financial Resources serves as a resource for clients to help analyze the complexity of clergy tax law, church payroll & HR issues. Our professionals are committed to helping clients stay informed about tax news, developments and trends in various specialty areas.

This article is intended to provide readers with guidance in tax matters. The article does not constitute, and should not be treated as professional advice regarding the use of any particular tax technique. Every effort has been made to assure the accuracy of the information. Clergy Financial Resources and the author do not assume responsibility for any individual’s reliance upon the information provided in the article. Readers should independently verify all information before applying it to a particular fact situation, and should independently determine the impact of any particular tax planning technique. If you are seeking legal advice, you are encouraged to consult an attorney.

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