5 Personal Finance Mistakes A Tax Planning Service Can Help Avoid

Some personal finance mistakes can be more costly than others, particularly when it comes to taxes. You could face stiff penalties, including losing money and jail time, for tax mistakes. That's where a tax planning service can come in handy. A good tax planner can help you avoid some of the most common and costly errors, such as failing to properly account for deductions or taking too much money out of your retirement account. Here are some personal finance mistakes a tax planning service can help you avoid.

1. Failure to Maximize Deductions 

One of the most common mistakes people make come tax time is failing to take advantage of all the deductions they're entitled to. This can be especially true for those who are self-employed or have complex financial situations. A tax preparation service can help you determine your eligible deductions and ensure you're taking full advantage of them.

2. Withdrawing an Excessive Amount From Your Retirement Accounts

If you need to tap into your retirement savings before you retire, be careful not to withdraw too much money at once. Doing so can trigger a hefty tax bill, penalties, and fees. A tax planner can help you understand the rules around withdrawals from retirement accounts and minimize the taxes you'll owe.

3. Failure to Report All Income 

Whether it's interest from a savings account or rental income from an investment property, it's important to report all your income on your tax return, even if it's just a small amount. If you don't, you could face stiff penalties from the tax authorities. A tax planning service can ensure you include all your income, so you don't get hit with any unexpected bills come tax time.

4. Claiming Too Many Dependent

If you have children or other dependents, you may be tempted to claim as many as possible on your taxes to maximize your deductions. But beware: claiming too many dependents can result in an audit from the taxman. A tax planner can help you determine the right number of dependents to claim so you don't raise any red flags.

5. Making Estimated Tax Payments Late

If you're self-employed or have other sources of income that aren't subject to withholding, you're responsible for making estimated tax payments throughout the year. These payments are due four times per year on fixed dates. A missed payment can result in interest and penalties, so it's important to stay on top of them, something a tax planner can help with.

Taxes are unavoidable, but they don't have to overburden you, nor do you have to evade them. You just have to be accurate and within set legal guidelines to be on the safe side. Consult tax planning services to get your taxes right this year.