Common tax preparation errors continued

• Make sure to sign and date your return and enter your occupation. If you are filing a joint return, be sure that your spouse also signs as required.

• Only a portion of your social security benefits may be taxable. If your income does not exceed a certain amount, none of it may be taxable.

• Check last year's tax return to see if there are any items that carry over to this year, such as charitable contributions or capital losses that exceeded the amount you were previously able to deduct.

• If you can be claimed as a dependent on someone else's return, do not claim a personal exemption on your return. Your standard deduction may be limited as well.

• Fill out Form 8606, Nondeductible IRA Contributions, for your contributions to an IRA account, even if you don't claim any deduction for the contribution.

• Recheck your basis in the shares you sold this year, particularly shares of a mutual fund. Income and capital gains dividends that were automatically reinvested in the fund over the years increase your basis in the mutual fund and thus reduce a gain or increase a loss that you have to report. Also, any "front end" or purchase fees are still considered part of your cost basis for tax purposes, even though they reduce your investment in a mutual fund.

• Recheck that you have used the correct column in the Tax Rate Table or the right Tax Rate Schedule for your filing status.

• Don't miss deadlines: December 31—set up a Keogh plan; April 15—make your IRA contribution; April 15—file your return or request an extension.

• If you regularly get large refunds, you're having too much withheld and, in effect, giving an interest-free loan to the IRS. Changing the number of allowances you claim on a W-4 form will increase your take-home pay.

• Keep copies of all documents you send to the IRS. Use certified mail for all important correspondence to the IRS. Don't forget to keep your records in good shape so that you can find answers to any IRS questions about your return.

E-Mail Halliday@hallidaycpa.com

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