Avoid these common tax errors and audit triggers
No business wants to have its tax returns examined any more closely than necessary. Below are some of the most common errors businesses make when filing their taxes. Be sure you steer clear of these potential red flags. Preliminary Information, Filing Status, and Exemptions
Include the correct Social Security number for you and your dependents.
If you plan to be out of the country on vacation on April 15, don’t assume you’re entitled to an automatic filing extension. You must request an extension on Form 4868.
Gross Income If you’re reporting any income differently than it was reported to you on Form 1099, be sure to note the amount of income from the 1099 on your return then adjust it attaching your own statement explaining the adjustment.
If you rolled over a regular IRA to a Roth IRA, include one-quarter of the resulting income on your return (unless you already opted to include it all the year your rolled over.).
Adjusted Gross Income You can’t make an IRA contribution for one year after April 15 of the next year, even if you receive a filing extension.
You can’t take a deduction for an IRA rollover.
You can’t base IRA contributions on unearned income (such as dividends, interest, rents from rental property).
Don’t deduct IRA contributions you made between January 1 and April 16 of the new year, which you treated as the previous year’s contributions (deductible on the previous year’s return).
You can’t convert your regular IRA to a Roth IRA if your income is over a threshold amount.
Don’t deduct any Roth IRA contributions.
Deductions and Tax Computation Don’t deduct the previous year’s state and local taxes you paid in the current year (for example, don’t deduct your fourth-quarter state estimated tax payment for 2008 made in 2009).
Don’t take a deduction for your commuting expenses.
Make sure to look under the correct column for your filing status when you look up your tax liability in the tax tables.
Other Taxes If you had self-employment income of $400 or more, be sure to figure self-employment tax. You must include in self-employment income directors fees and income from a partnership or limited liability company.
If you exercised an incentive stock option in 2001 or owned private activity bonds, check to see whether you owe any alternative minimum tax.
Payments Make sure you attach your Form W-2s (and any 1099s showing tax withholding) to your return.
Recheck your math.
Be sure to sign your return. If you file jointly, both spouses must sign the return.
If your return is more than five pages, add extra postage to ensure proper delivery to the IRS.
If you apply for an extension, don’t forget to include a check for any estimated balance due.
Send your estimated taxes separately from your income tax return.
Copyright (c) 2010 Studio One Networks. All rights reserved.