New Report: Filing Mistakes Cost Taxpayers $1 Billion a Year
To individuals who are not tax professionals, navigating the world of itemized deductions is a confusing, cloudy process of rules, loopholes, opportunities and landmines. As such, taxpayers do not take advantage of the opportunities afforded them by the law, and end up overpaying by a collective $1 billion in federal taxes, according to a new report issued by the General Accounting Office.
"One of the big mistakes that people make is that all of a sudden they rush to get their tax returns finished and they aren't careful in organizing their records so they overlook things," said Toni Bardi, an enrolled agent.
The GAO report indicates that as many as 2.2 million taxpayers used the standard deduction where an itemized deduction would have saved them more money.
What were the biggest areas that were overlooked? Mortgage interest and points were the biggest areas. Other areas included charitable contributions, state and local income taxes, and property taxes, according to the report.
Self-prepared versus professionally prepared was not an issue - about half of the returns in question were prepared by professional tax preparers.
The GAO estimates that for tax year 1998, the year that was surveyed, the average overpayment amounted to $438 per taxpayer. During that year, approximately 70% of all returns used the standard deduction.
Voice of the Editor
Which isn’t completely true. I mean, occasionally I drop by when I manage to sneak out of the nonstop frat party over at Going Concern, but I’m mostly a wallflower over there. I’m happy to say that I’ve been given express permission (or explicit orders, if you like) to wander over here to AccountingWEB more often.
Why is that, you might ask? My job is to replace the irreplaceable Gail Perry as Editor-in-Chief. What does that mean? I don’t really know! I think it’ll be fun getting a feel for things, throwing in my own thoughts here and there, and listening to the discussions you’re having about the accounting profession.