Tax season can be overwhelming, especially for residents of Brooklyn, where the tax code is constantly evolving. Whether you’re filing as an individual or a small business owner, it’s easy to make mistakes that could lead to penalties, fines, or missed deductions. To help you navigate this process smoothly, we’ve compiled a list of the 10 most common tax mistakes Brooklyn residents should avoid.
One of the most common tax mistakes is missing the filing deadline. Filing late can result in hefty penalties and interest on any unpaid taxes. Make sure to mark your calendar with key dates or file for an extension if you need more time.
Even if you can't pay your taxes in full, filing on time will prevent additional penalties related to late filing.
Many Brooklyn residents, especially freelancers, gig workers, or small business owners, may forget to report some of their income. Whether it’s from side jobs, freelance work, or cash payments, the IRS expects all income to be reported. Failing to report all income can trigger an audit and lead to severe penalties.
Always keep accurate records of your income and expenses throughout the year to avoid this mistake.
There are many tax deductions and credits available to Brooklyn residents, such as those for home office expenses, educational costs, or charitable donations. Failing to take advantage of these can lead to paying more in taxes than necessary.
Be sure to research available deductions or consult with a tax professional to maximize your potential refunds.
Maintaining accurate records is essential for a smooth tax filing process. Whether you’re self-employed or working for an employer, keeping detailed records of your receipts, expenses, and tax documents can save you from trouble down the line.
Using apps or software to track your financial activities can help you stay organized and prepared when tax season comes around.
Contributions to retirement accounts like IRAs and 401(k)s can be tax-deductible, and they also help you build wealth for the future. If you miss out on these contributions, you could be leaving money on the table. Additionally, contributions made before the tax deadline can reduce your taxable income for that year.
Consider making retirement contributions early in the year, and don’t wait until the deadline to take advantage of these opportunities.
Incorrectly claiming dependents, whether it’s for children or other qualifying individuals, can be a costly mistake. If you’re unsure whether a person qualifies as a dependent or if multiple people are claiming the same dependent, it could result in a delay in your refund or penalties.
Review the IRS guidelines or consult a tax professional to ensure you're making the correct claims.
In addition to federal taxes, Brooklyn residents are also required to file state and city taxes. New York State and New York City have their own tax laws, and many Brooklyn residents may forget to file their local taxes or overlook some local tax credits.
Make sure you understand both your state and city tax obligations, as these taxes can significantly impact your overall tax bill.
Tax laws can be complex, and navigating them on your own can lead to mistakes. Hiring a tax professional can help ensure you're filing correctly, taking advantage of all eligible deductions, and avoiding costly errors.
Even if your tax situation seems simple, a professional can provide guidance on things like retirement contributions, deductions, and tax planning.
A common issue for Brooklyn residents is not properly adjusting their tax withholding. If you withhold too little, you might end up with a large tax bill when you file your return. On the other hand, over-withholding means you're essentially giving the government an interest-free loan.
Review your withholding amounts during the year to make sure they match your tax liability. You can adjust your withholding by submitting a new Form W-4 to your employer.
It can be tempting to file your taxes as soon as you gather your documents, but filing too quickly can lead to mistakes. Whether it’s entering incorrect Social Security numbers, missing out on a deduction, or submitting incorrect information, rushing through your taxes can cost you.
Take your time, double-check everything, and if needed, consult a tax professional before submitting your return.
Filing taxes can be a stressful task, but avoiding these common mistakes will save you time, money, and potential headaches. As a Brooklyn resident, understanding your federal, state, and city tax obligations is crucial to making the most of your tax situation. Remember, if you're ever uncertain, a tax professional can provide personalized guidance to ensure you're on the right track.
By staying organized, being proactive, and taking the time to review your filings, you can minimize the chance of making costly errors and maximize your potential refund.