Tax day 101: top mistakes to avoid on your tax return
With tax day approaching, here are some common tax-return mistakes that Americans make. A key stumbling block: the 'making work pay' credit.
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10. Mixing up where things are deductible. Income from US Treasury securities, such as Treasury bonds, is tax-exempt at the state level, but not at the federal level. Municipal bonds are exempt from federal taxes.Skip to next paragraph
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11. Forgetting to keep your own copy. Photocopy your return or make a second printout for your own records. (The computer-oriented can also scan it and save it as a digital document – but store it securely, such as on a flash-memory drive that you keep locked up.)
12. Failing to sign and date the return. If you file jointly, both individuals must sign. And if you owe money, remember to enclose payment. (If you pay by check, adding a memo "For Form 1040, tax year 2009" can help ensure that your payment gets properly credited.)
13. Forgetting a state tax refund from 2008. If your state sent you a tax refund during the 2009 calendar year, the IRS wants to see that reported as income (there's a line for it on Form 1040). Remember the flip side of this coin, too: If you itemize deductions, you can deduct tax payments you sent to the state during 2009.
14. Not adding enough paperwork with your state income-tax return. Some forms from your federal return may be required as add-ons. If you had capital gains, for example, you may need to enclose the federal Schedule D with your state return.
15. Sending your return to the wrong address. If you file by mail, the IRS recommends that you using a peel-off label they provide (you can hand-correct any mistakes on that label). Or you can check where to file on the IRS website at http://www.irs.gov/file/index.html. To join the growing ranks who file electronically, you can also learn about "e-filing" at www.irs.gov.
Also in Tax Day 101:
Part 1: Top mistakes to avoid on your tax return