Spring is in the air, which can only mean one thing: tax season is coming to a close. Accountants, CPA’s, and financial advisers of all sorts work countless hours during this time of year to make sure their customers get the most out of their returns. While those in finance take pride in their work, it is largely the responsibility of the client to make sure that the information they share with the financial adviser is accurate. One small discrepancy in your reporting could greatly affect how much you owe or how much you get back.
When filing taxes, one of the biggest mistakes people make is under-reporting their income. Whether you work the 9 to 5 office life or collect freelance checks from multiple clients, or both, it is important that you accurately report every penny you earned within the fiscal year.
If the Internal Revenue Service finds an inconsistency in your reports, they will follow up with you in the form of a notice. The notice will indicate whether your tax liability has increased or decreased. If your tax liability increases, you will then owe more money to the IRS.
In some cases, the type of job you work can affect your tax liability. If you work a service job and earn tips, you are legally obligated to report said tips when filing taxes. If you are in the military or a member of the clergy, you may be required to fill out a different type of tax form.
To ensure your tax reports are accurate, wait until all of your W-2 forms come in, if you worked multiple jobs the previous fiscal year. Keep a record of every penny you earned from beginning to end of the fiscal year, as well as a record of work-related expenses. File early so in the event of an accidental misreport, you can make corrections as soon as possible.
From a moral standpoint, you should also never under-report your earnings due to the fact that once you file your taxes, it puts everyone involved at risk. The financial adviser who helped you file your taxes will also be held accountable for any inaccuracies in your reports, putting their jobs and credibility at risk.
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