Category Archives: AMT

Can I file MY taxes on January 30th?

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Who Can File Starting Jan. 30?

The IRS anticipates that the vast majority of all taxpayers can file starting Jan. 30, regardless of whether they file electronically or on paper. The IRS will be able to accept tax returns affected by the late Alternative Minimum Tax (AMT) patch as well as the three major “extender” provisions for people claiming the state and local sales tax deduction, higher education tuition and fees deduction and educator expenses deduction.

Who Can’t File Until Later?

There are several forms affected by the late legislation that require more extensive programming and testing of IRS systems. The IRS hopes to begin accepting tax returns including these tax forms between late February and into March; a specific date will be announced in the near future.

The key forms that require more extensive programming changes include Form 5695 (Residential Energy Credits), Form 4562 (Depreciation and Amortization) and Form 3800 (General Business Credit). A full listing of the forms that won’t be accepted until later is available on IRS.gov.

As part of this effort, the IRS will be working closely with the tax software industry and tax professional community to minimize delays and ensure as smooth a tax season as possible under the circumstances.

2012 Taxpayer Relief Act Protects Key Individual Tax Breaks

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RIA Special Study

On Jan. 1, 2013, Congress passed the American Taxpayer Relief Act (2012 Taxpayer Relief Act), which the President has vowed to sign as soon as it is ready for his signature. The 2012 Taxpayer Relief Act will prevent many of the tax hikes that were scheduled to go into effect this year and retain many favorable tax breaks that were scheduled to expire, but will also increase income taxes for some high-income individuals and slightly increase transfer tax rates from 2012 levels. Further, it extends a host of expired and expiring tax breaks for businesses and individuals.

This Special Study explains the key individual tax breaks, including a continuation of the Bush-era tax rates for most taxpayers and a permanent AMT “patch,” that are provided in the 2012 Taxpayer Relief Act.

Elimination of EGTRRA Sunsetting

 

The provisions in the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA, P.L. 107-16), other than those made permanent or extended by subsequent legislation, were set to sunset and no longer apply to tax or limitation years beginning after 2010. (Sec. 901 of EGTRRA) However, the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 (the 2010 Tax Relief Act, P.L. 111-312) extended the EGTRRA provisions for two additional years. Thus, under pre-2012 Taxpayer Relief Act law, beginning in 2013, the EGTRRA sunset (as extended) would have wiped out a host of favorable tax rules, such as: favorable income tax rate structure for individuals; marriage penalty relief; and liberal education-related deduction rules.

New law. The 2012 Taxpayer Relief Act eliminates the provision in EGTRRA that calls for its provisions to sunset. Accordingly the provisions in EGTRRA are made permanent and no longer automatically sunset in future years. (Sec. 901 of EGTRRA, as amended by Act Sec. 101(a)(1))

Reduced Individual Tax Rates Except

for Higher-Income Taxpayers

 

Under EGTRRA, the income tax rates for individuals were 10%, 15%, 25%, 28%, 33% and 35% for tax years beginning in 2010. In addition, the size of the 15% tax bracket for joint filers and qualified surviving spouses was 200% of the 15% tax bracket for individual filers (in the so-called marriage penalty relief). The 2010 Tax Relief Act extended the lower tax rate schedules for individuals so that they remained at 10%, 15%, 25%, 28%, 33% and 35% for two additional years, through 2012. In addition, the size of the 15% tax bracket for joint filers and qualified surviving spouses remained at 200% of the 15% tax bracket for individual filers through 2012.

Under pre-2012 Taxpayer Relief Act law, for tax years beginning after Dec. 31, 2012, the rates were scheduled to rise to 15%, 28%, 31%, 36% and 39.6%; and the 15% tax bracket for joint filers and qualified surviving spouses was scheduled to drop to 167% of the 15% tax bracket for individual filers.

New law. For tax years beginning after 2012, the income tax rates for most individuals will stay at 10%, 15%, 25%, 28%, 33% and 35% (instead of moving to 15%, 28%, 31%, 36% and 39.6% as would have occurred under the EGTRRA sunset). However, a 39.6% rate will apply for income above a certain threshold (specifically, income in excess of the “applicable threshold” over the dollar amount at which the 35% bracket begins). The applicable threshold is $450,000 for joint filers and surviving spouses; $425,000 for heads of household; $400,000 for single filers; and $225,000 (one-half of the otherwise applicable amount for joint filers) for married taxpayers filing separately. These dollar amounts are inflation-adjusted for tax years after 2013. (Code Sec. 1(i)(2) and Code Sec. 1(i)(3) , as amended by Act Sec. 101(b)(1))

In addition, with the elimination of the EGTRRA sunset, the size of the 15% tax bracket for joint filers and qualified surviving spouses remains at 200% of the 15% tax bracket for individual filers. (Code Sec. 1(i)(1))

Reduced Capital Gains & Qualified Dividends Rate

Except for Higher-Income Taxpayers

 

Under Sec. 303 of the Jobs and Growth Tax Relief Reconciliation Act of 2003 (JGTRRA, P.L. 108-27), as modified by Sec. 102 of P.L. 109-222, favorable tax treatment is provided for long-term capital gain and qualified dividends. However, JGTRRA provided that this treatment ended after 2010.

Capital gain. For tax years beginning in 2010, for both regular tax and alternative minimum tax (AMT) purposes, the maximum rate of tax on the adjusted net capital gain of an individual is 15%. If the adjusted net capital gain would otherwise be taxed at a rate below 25% if it were ordinary income, it is taxed at a 0% rate. That part of net capital gain attributable to unrecaptured section 1250 gain (i.e., gain attributable to real estate depreciation) is taxed at a maximum rate of 25%. Net capital gain attributable to collectibles gain and section 1202 gain is taxed at a maximum rate of 28%. The 2010 Tax Relief Act provided that net capital gain was to be taxed at a maximum rate of 0/15% for two additional years, through 2012. A qualified dividend paid to individuals was taxed at the same rates as adjusted net capital gain through 2012.

Thus, under pre-2012 Taxpayer Relief Act law, for tax years beginning after Dec. 31, 2012, the maximum rate of tax on an individual’s adjusted net capital gain was to be 20%. Any adjusted net capital gain which otherwise would be taxed at the 15% rate was to be taxed at a 10% rate. In addition, any gain from the sale or exchange of property held more than five years that would otherwise have been taxed at the 10% capital gain rate would be taxed at an 8% rate. Any gain from the sale or exchange of property acquired after 2000 and held for more than five years, that would otherwise have been taxed at a 20% rate was to be taxed at an 18% rate. Net capital gain attributable to unrecaptured section 1250 gain was to continue to be taxed a maximum rate of 25%. Net capital gain attributable to collectibles gain and section 1202 gain was to continue to be taxed at a maximum rate of 28%.

Qualified dividend income. For tax years beginning in 2010, for both the regular tax and AMT purposes, an individual’s qualified dividend income was taxed at the same rates that apply to net capital gain. Thus, an individual’s qualified dividend income was taxed at a 15% and (for qualified dividend income which otherwise would be taxed at a 10% or 15% rate if the special rates did not apply) at a zero rate. The amount of a taxpayer’s unrecaptured Code Sec. 1250 gain taxed at a maximum 25% rate is limited to the taxpayer’s net capital gain determined without regard to the taxpayer’s qualified dividend income. (In addition, a taxpayer must hold stock for at least 61 days during the 121-day period beginning 60 days before the ex-dividend date in order for dividends on the stock to qualify as qualified dividend income.) The 2010 Tax Relief Act extended for two years, through 2012, the rules excluding qualified dividend income from net capital gain in computing unrecaptured Code Sec. 1250 gain taxed at a 25% rate; and the holding period rule for determining when dividends on stock qualify as qualified dividend income.

Thus, under pre-2012 Taxpayer Relief Act law, for tax years beginning after Dec. 31, 2012, dividends received by an individual were to be taxed at ordinary income tax rates. The rules excluding qualified dividend income from net capital gain in computing unrecaptured Code Sec. 1250 gain taxed at a 25% rate, and the holding period rule for determining when dividends on stock qualify as qualified dividend income were to expire for tax years beginning after Dec. 31, 2012.

New law. For tax years beginning after 2012, the 2012 Taxpayer Relief Act eliminates the provision in JGTRRA that provides for its provisions to sunset. Accordingly the provisions in JGTRRA are made permanent and no longer automatically sunset in future years. (Sec. 303 of JGTRRA, as amended by Act Sec. 102(a))

For tax years beginning after 2012, the 2012 Taxpayer Relief Act provides that the top rate for capital gains and dividends will permanently rise to 20% (up from 15%) for taxpayers with incomes exceeding $400,000 ($450,000 for married taxpayers). (Code Sec. 1(h)(1), as amended by Act Sec. 102(b)) When accounting for Code Sec. 1411′s 3.8% surtax on investment-type income and gains for tax years beginning after 2012, the overall rate for higher-income taxpayers will be 23.8%.

For taxpayers whose ordinary income is generally taxed at a rate below 25%, capital gains and dividends will permanently be subject to a 0% rate. (Code Sec. 1(h)(1)(B), as amended by Act Sec. 102(c)(2)) Taxpayers who are subject to a 25%-or-greater rate on ordinary income, but whose income levels fall below the $400,000/$450,000 thresholds, will continue to be subject to a 15% rate on capital gains and dividends. The rate will be 18.8% for those subject to the 3.8% surtax (i.e, those with modified adjusted gross income (MAGI) over $250,000 for joint filers or surviving spouses, $125,000 for a married individual filing a separate return, and $200,000 in any other case).

No Phase-Out of Personal Exemptions

Except for Higher-Income Taxpayers

 

Personal exemptions generally are allowed for the taxpayer, his or her spouse, and any dependents. For tax years beginning in 2010, there was no overall reduction in the personal exemption amount based on the taxpayer’s AGI. For tax years beginning after Dec. 31, 2010, the total amount of exemptions that could be claimed by a taxpayer was to be reduced (personal exemption phaseout (PEP)) by 2% for each $2,500 (or portion thereof) by which the taxpayer’s AGI exceeds the applicable threshold. The phase-out rate was to be 2% for each $1,250 for married taxpayers filing separate returns. However, the 2010 Tax Relief Act provided that a higher-income taxpayer’s personal exemptions weren’t phased out for two additional years (for 2011 and 2012) when AGI exceeds an inflation-adjusted threshold.

New law. For tax years beginning after 2012, the Personal Exemption Phaseout (PEP), which had previously been suspended, is reinstated with a starting threshold of $300,000 for joint filers and a surviving spouse; $275,000 for heads of household; $250,000 for single filers; and $150,000 (one-half of the otherwise applicable amount for joint filers) for married taxpayers filing separately. Under the phaseout, the total amount of exemptions that can be claimed by a taxpayer subject to the limitation is reduced by 2% for each $2,500 (or portion thereof) by which the taxpayer’s AGI exceeds the applicable threshold. These dollar amounts are inflation-adjusted for tax years after 2013. (Code Sec. 151(d), as amended by Act Sec. 101(b)(2))

No 3%/80% Limitation on Itemized Deductions Except for Higher-Income Taxpayers

 

Unless he elects to claim the standard deduction, a taxpayer is allowed to deduct his itemized deductions (generally those deductions which aren’t allowed in computing adjusted gross income). For tax years beginning in 2010, there was no overall limitation on itemized deductions based on the taxpayer’s adjusted gross income (AGI), although separate limitations (floors) might apply to the particular deduction. For tax years beginning after Dec. 31, 2010, the total amount of itemized deductions was to be reduced (the “Pease limitation”) by 3% of the amount by which the taxpayer’s AGI exceeds a threshold amount, with the reduction not to exceed 80% of the otherwise allowable itemized deductions. However, the 2010 Tax Relief Act provided that the itemized deductions of higher-income taxpayers are not reduced for two additional years, through 2012.

New law. For tax years beginning after 2012, the 2012 Taxpayer Relief Act provides that the “Pease“ limitation on itemized deductions, which had previously been suspended, is reinstated with a starting threshold of $300,000 for joint filers and a surviving spouse, $275,000 for heads of household, $250,000 for single filers, and $150,000 (one-half of the otherwise applicable amount for joint filers) for married taxpayers filing separately. Thus, for taxpayers subject to the “Pease” limitation, the total amount of their itemized deductions is reduced by 3% of the amount by which the taxpayer’s adjusted gross income (AGI) exceeds the threshold amount, with the reduction not to exceed 80% of the otherwise allowable itemized deductions. These dollar amounts are inflation-adjusted for tax years after 2013. (Code Sec. 68(b), as amended by Act Sec. 101(b)(2))

AMT Exemption Permanently

Increased With Indexing

 

The alternative minimum tax (AMT) is the excess, if any, of the tentative minimum tax for the year over the regular tax for the year. In arriving at the tentative minimum tax, an individual begins with taxable income, modifies it with various adjustments and preferences, and then subtracts an exemption amount (which phases out at higher income levels). The result is alternative minimum taxable income (AMTI), which is subject to an AMT rate of 26% or 28%.

Under pre-Act law, the AMT exemption amounts for tax years beginning after 2011 were: $33,750 for unmarried individuals; $45,000 for married couples filing jointly and surviving spouses; and $22,500 for married individuals filing separately.

New law. Retroactively effective for tax years beginning after 2011, the Act permanently increases the AMT exemption amounts to $50,600 for unmarried taxpayers, $78,750 for joint filers and $39,375 for married persons filing separately. In addition, for tax years beginning after 2012, it indexes these exemption amounts for inflation. (Code Sec. 55(d), as amended by Act Sec. 104)

Personal Nonrefundable Credits May Offset

AMT and Regular Tax for All Tax Years

 

Nonrefundable personal credits—other than the adoption credit, the child credit, the savers’ credit, the residential energy efficient property credit, the non-depreciable property portions of the alternative motor vehicle credit, the qualified plug-in electric vehicle credit, and the new qualified plug-in electric drive motor vehicle credit—were to be allowed for 2012 only to the extent that the individual’s regular income tax liability exceeded his tentative minimum tax, determined without regard to the minimum tax foreign tax credit.

RIA observation: Thus, under pre-Act law, many nonrefundable personal credits couldn’t offset AMT. The AMT could also indirectly limit a taxpayer’s nonrefundable personal tax credits even in situations where the taxpayer wasn’t liable for the AMT.

New law. Retroactively effective for tax years beginning after 2011, the Act permanently allows an individual to offset his entire regular tax liability and AMT liability by the nonrefundable personal credits. (Code Sec. 26(a), as amended by Act Sec. 104(c))

RIA observation: The rule allowing nonrefundable personal credits to reduce the AMT (as well as regular tax) benefits middle income individuals who: (a) have low taxable income (and thus a low regular tax), e.g., because of a large number of personal exemptions; (b) are subject to the AMT because personal exemptions (as well as the standard deduction and certain itemized deductions) generally are not allowed in computing the AMT; and (c) have substantial nonrefundable personal credits.

Recovery Act Extenders

 

The 2012 Taxpayer Relief Act extends for five years the following items that were originally enacted as part of the American Recovery and Investment Tax Act of 2009 and that were slated to expired at the end of 2012:

  • The American Opportunity tax credit, which permits eligible taxpayers to claim a credit equal to 100% of the first $2,000 of qualified tuition and related expenses, and 25% of the next $2,000 of qualified tuition and related expenses (for a maximum tax credit of $2,500 for the first four years of post-secondary education);
  • Eased rules for qualifying for the refundable child credit; and

Various earned income tax credit (EITC) changes relating to higher EITC amounts for eligible taxpayers with three or more children, and increases in threshold phaseout amounts for singles, surviving spouses, and heads of households.

Bigger Tax Bite for Most Under Fiscal Pact

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Reprinted-By BINYAMIN APPELBAUM and CATHERINE RAMPELL | New York Times

WASHINGTON — Only the most affluent American households will pay higher income taxes this year under the terms of a deal that passed Congress on Tuesday, but most households will face higher payroll taxes because the deal does not extend a two-year-old tax break.

The legislation, which was forged in the Senate and overcame resistance in the House late Tuesday will grant most Americans an instant reversal of the income tax increases that took effect with the arrival of the new year. Only about 0.7 percent of households will be subject to an income tax increase this year, according to the Tax Policy Center, a nonpartisan research group in Washington. The increases will apply almost exclusively to households making at least half a million dollars, the center estimated in an analysis published Tuesday.

But lawmakers’ decision not to reverse a scheduled increase in the payroll tax that finances Social Security, while widely expected, still means that about 77 percent of households will pay a larger share of income to the federal government this year, according to the center’s analysis.

The tax this year will increase by two percentage points, to 6.2 percent from 4.2 percent, on all earned income up to $113,700.

Indeed, for most lower- and middle-income households, the payroll tax increase will most likely equal or exceed the value of the income tax savings. A household earning $50,000 in 2013, roughly the national median, will avoid paying about $1,000 more in income taxes — but pay about $1,000 more in payroll taxes.

Sabrina Garcia, a 35-year-old accounting assistant from Quincy, Mass., who together with her husband made about $102,000 last year, said the payroll tax increase equated to “about $200 a month for my family.”

“That’s a lot of money for us,” Ms. Garcia said. “It means we will have to cut back.” She said in an e-mail exchange that she will most likely will postpone buying a new computer. “And forget about being able to save money,” she added.

The deal will impose larger tax increases on those who make the most. It will raise taxes in two ways: by restoring limits on the amount of income affluent Americans can shelter from federal taxation, and by returning to a top marginal tax rate of 39.6 percent. The current rate is 35 percent.

For married couples filing jointly, the deduction limits apply to income above $300,000, while the top tax rate kicks in above $450,000. But both numbers are somewhat misleading, because “income” in this context is a technical term, referring only to the portion of income subject to taxation after exemptions and deductions.

Few households with actual incomes of less than half a million dollars will face a tax increase. The Tax Policy Center calculated that less than 5 percent of families earning $200,000 to $500,000 will actually pay more.

The size of those increases will be much smaller than President Obama originally proposed. The net effect, according to the center’s estimates, is that the top 1 percent of households will see an average income tax increase this year of $62,000 rather than $94,000. “The high-income people really are doing very well in this compared to what the president wanted to do,” said Roberton Williams, a senior fellow at the Tax Policy Center.

The deal passed by the Senate and the House will impose fewer limits on deductions than the White House plan. It will also tax income from dividends at a flat rate of 20 percent, rather than the same marginal rate as earned income. And there is another important point, often misunderstood: Affluent households will pay the new 39.6 percent rate only on income above $450,000. They and everyone else will still will pay lower rates on income below that threshold.

Households making $500,000 to $1 million will pay an additional $6,700 in taxes on average. Those making more than $1 million will pay an additional $123,000 on average.

Changes in the estate tax will also benefit affluent families. The tax will not apply to the first $5 million of an inheritance, extending the current exclusion rather than reverting to the $3.5 million threshold that President Obama initially favored. However, wealth above that amount will be taxed at a rate of 40 percent rather than the previous rate of 35 percent.

The Obama administration did win a five-year extension of tax breaks for lower-income families, including the child tax credit and earned-income tax credit. Those credits eliminate income tax liability for many lower-income families. In many cases, the government actually makes a direct payment to the family to help offset the burden of payroll taxation — up to $1,000 a child under the child credit and up to $5,900 total under the earned income credit.

The deal will also restore unemployment benefits for about two million Americans. People who can’t find work, and have already received government checks for the standard period of 26 weeks, have been able to stay on the rolls for up to an additional 47 weeks. But financing for that program, which is aimed at the states with the highest unemployment rates, expired Saturday. Under the terms of the deal, people who are eligible will receive any missed benefits retroactively.

The deal also includes new rules for the alternative minimum tax, which threatened this year to impose higher taxes on roughly 30 million households. The tax was created in the 1960s to set a lower limit on the taxes paid by the most affluent households, but the eligibility threshold was not indexed to inflation, so it theoretically encompasses a larger share of households with each passing year. Congress has repeatedly passed short-term increases in the threshold; the deal will make those increases automatic, obviating the annual ritual.

That is small consolation for middle-income Americans like Joe Interlandi, 61, a long-haul trucker who on Tuesday was driving a load of tomatoes from Florida to Los Angeles.

Mr. Interlandi, writing from a rest stop, said he understood the need for higher taxes. He will rather pay more now than impose higher taxes on his children and grandchildren, he said.

But Mr. Interlandi, who estimated that he worked 100 hours many weeks, added that the payroll tax increase still meant he will need to spend even more time on the road. Describing things he will have to cut back on, he wrote, “Family outings like vacations, and time together.”

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An average of $1,000 more for a household at the national median income.

Deductions and Credits Going Away for 2012 Tax Returns

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Tax season is just around the corner which means LOTS of tax law changes.  A total of 58 individual and business Federal tax provisions expired at the end of 2011 and at the present time it is not clear when or if Congress will extend the expired provisions. Because these deductions and credits are tied to the “Bush Era Tax Cut”, which doesn’t expire until the end of 2012, the earliest we expect to see any action will be late December 2012.

The following list of expired or changed provisions will have the most impact to taxpayers on their 2012 Federal returns if they are not extended.

No longer applicable 2012 tax returns:

  • $250 Educator Expense Deduction
  • Tuition and Fees Deduction
  • Itemized Deduction for Sales Tax
  • All personal nonrefundable tax credits allowed when calculating Alternative Minimum Tax
  • Non-business Energy Property Tax Credit
  • 5 year depreciation for farming business machinery and equipment
  • 15 year straight line depreciation allowed for qualified leasehold restraint and retail improvements
  • Tax-free distributions from IRAs for charitable purposes
  • Contributions of capital gain real property made for conservation purposes (50% limitation applied instead of 30% limitation)

Significantly changed for 2012 tax returns:

  • Alternative Minimum Tax (AMT) exemption amounts revert to what they were in tax year 2000
    2012 AMT exemption amounts are:

    • Single/Head of Household: $33,750
    • Married Filing Joint: $45,000
    • Married Filing Separate: $22,500
  • Maximum Section 179 Deduction amount has been reduced to $139,000 for 2012
  • Bonus Depreciation percentage is reduced to 50% for 2012
  • Adoption Credit
    • Will revert to being a nonrefundable credit with any excess being allowed to be carried forward for 5 years
    • Maximum credit is reduced to $12,170 per child

With so much change and uncertainty with tax laws to come, make sure you find the right tax preparer to help you. 

Tips for choosing the right tax preparer: http://horizonplanning.com/2012/01/13/tips-for-choosing-the-right-tax-preparer/         

Avoid These 6 Common Tax Return Mistakes

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By Jim Wang | U.S.News & World Report LP – Mon, Mar 12, 2012 12:31 PM EDT

 

I never like doing my taxes. I don’t know if it’s because taxes are so complicated, or if I just have this image in my head of the IRS being this uncaring, evil entity just waiting for me to make a mistake so they can swoop in and penalize me. Tax season always makes me a little edgy. I’m usually very careful when it comes to doing my taxes; I make sure to include all the proper forms and I make sure I get all those great tax deductions. But after I file, I am left with the sinking sensation that I forgot something.

Don’t be like me. Here is a list of six easily avoidable mistakes to keep in mind when you’re filing your return.

1. Not claiming the correct status. Your filing status is based on your status as of December 31 of that filing year. So for tax year 2011, your status is based on your status as of Dec.31, 2011, and not today. If you got married in January, both you and your spouse will file as single filers. If you got married in December, you can’t opt to file as a single filer (you can pick married filing separately or married filing jointly.) If you had a baby in February, unfortunately your little one will not be a dependent on the taxes you file in April. Picking the correct filing status is crucial because so many credits and deductions, not to mention the tax brackets, change based on your status. This can have enormous implications on your return.

2. Failing to double-check your math. When the IRS receives your return, one of the first things it does is check your arithmetic. If it’s wrong, your return will be delayed and, in the worst possible case, be subject to an audit. Simple arithmetic errors, which are completely avoidable when you file with software, aren’t as uncommon as you think. Adding 1 + 1 is easy, but adding different lines on several forms, on different pages, then subtracting them from other lines is a little trickier–especially when you’ve been flipping through IRS documentation for a few hours. Be sure to double-check all of your math before you sign and mail that return.

If you don’t trust yourself to follow the IRS’s obfuscated directions, you can always use tax-preparation software to complete your tax return and compare the final numbers.

3. Entering the wrong Social Security numbers. If you’re filing a paper return, check that the numbers you wrote for your Social Security number are clear and legible. If you’re filing an electronic return, make sure you typed in each of those numbers correctly. The IRS will compare all of these numbers with their database, including those for your spouse and dependents, to make sure people haven’t been claimed more than once on different tax returns (dependents can only appear on one return.) A common reason for someone to be audited is when divorced parents, each filing separately, claim the same person as a dependent. If they misread the number or you mistype it, you will all but guarantee additional scrutiny.

4. Forgetting to sign and date your return. If you forget to sign your tax return, the IRS won’t consider it a valid return (this includes your spouse on joint returns.) From there, it’s unclear what will happen except that the IRS will be requesting a signature from you with a supplemental letter, and your return won’t be considered “filed.”

5. Not checking for AMT. The Alternative Minimum Tax was created to make sure high-income taxpayers pay their “fair share,” but it now ensnares a lot more households than originally intended. For many, you’ll need to calculate whether you owe AMT, which disallows some deductions and credits. “Calculate whether you owe AMT” is as much fun as it sounds: You will need to recompute everything with AMT in mind and pay the higher of AMT or your normal tax liability. The IRS will do this when they get your return, and if you pick the wrong one, they’ll come for the balance, changing an otherwise healthy tax refund into a tax bill.

6. Forgetting to include forms. It’s mid-March, which means, by law, companies should have mailed you any tax-related forms you need to prepare your taxes. In theory, all your W-2s and 1099s are in your possession, so you can begin to do your taxes. It is still up to you to confirm that you received a 1099 from every entity, because letters do get lost in the mail. Or it might be sitting on the coffee table that night you came in late and never opened the letter. Either way, forgetting to include a tax form will usually result in an automatic paper audit via a CP2000 form.

If you do make a mistake, such as finding an errant 1099-INT, you should file a 1040X Amended Return as soon as possible. It’s only available by paper and it lets you list what you originally put, what it should have been, and why you are making the change. If you are making changes to multiple years, each year will need a separate Form 1040X mailed in its own envelope. Mistakes happen, especially when it comes to taxes, and the IRS is surprisingly forgiving if you catch them early and make the necessary changes.

There’s one theme among most of these boneheaded mistakes: Many can be avoided if you use tax preparation software.