Common Taxpayer Errors are Declining

Halfway through the filing season, the Internal Revenue Service today said that some progress is being made in reducing common taxpayer errors on returns and offered some tips to those taxpayers who have not yet filed.

Five principal error topics from last year have all shown declines in returns reviewed so far. Of all the errors made by taxpayers this year, those involving the Earned Income Credit (EIC) have accounted for 10.3 percent, down from 13.5 percent in 1990. Failing to claim the credit when entitled to it and using the incorrect income amount when going to the EIC table are the most common EIC mistakes.

While dropping in frequency, entering the wrong standard deduction continues to be the single most prevalent error, representing 4.2 percent of taxpayer errors, down from 6.2 percent last year. The standard deduction is based on filing status, with special provisions for a taxpayer who is age 65 or older, blind, or a dependent of another taxpayer. For example, a husband and wife who were both 65 in 1990 would pay tax on $1,300 less income than a couple under 65. The tax form instructions have charts to find the correct standard deduction amount.

Incorrect filing status lines, exemption lines and age or blindness boxes were each down .4 percent from 1990. Taxpayers should check the proper filing status and list all requested data for dependents claimed.

Look out for simple math errors. Two subtraction steps are among the most common mistakes: figuring the refund or balance due amount and subtracting personal exemptions to arrive at the taxable income figure. A few minutes of checking a return may prevent days of waiting for a refund check, IRS cautioned.

The number of income tax returns received by the IRS is slightly ahead of last year, with electronic returns exceeding the total for all of 1990. Over 32 million returns have been filed, a .3 percent increase over the same period last year, including 4.8 million electronic returns -- a 90 percent jump. At $953, the average refund amount is up about 10 percent.

The IRS reminded persons who served in the Persian Gulf and their representatives to put "Desert Storm" at the top of tax returns filed, or tax bills or examination notices received. This alerts IRS to taxpayers entitled to tax relief, including extra time to file, suspension of IRS collection and examination actions and of interest charges on back taxes. Local IRS offices will help spouses and others representing Desert Storm taxpayers in filing tax returns, including free electronic filing of returns in those IRS offices with that capability.

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