Avoiding The Mistakes Made During Tax Season

So for more on how you can avoid making common mistakes during tax season, we are joined by Mark Steber, senior vice president and chief tax officer for Jackson Hewitt Tax Services. Mr. Steber, thank you for joining us. Good to be here. Very important time and a very important topic. Well, we are about one month away from the final day of tax season and many are getting the returns in now. So what are the benefits of filing early. Well technically you're not filing early. It's halfway through the season. So I'll simply say make the most use of the time you have remaining, even if it's just bragging rights on those really millions of people that wait till the last second. But some of the standard best practices that are associated with early filing is we know 100 million people get refunds every year. That's typically about 300 or $400 billion with a B. The earlier you file, the earlier you get your money. You don't have to be a financial savant to know that makes sense. Secondly, I'm often told by people, well, my side hustle made money this year or my crypto made bank and I'm going to. Oh, so I'm not going to pay the man any earlier. Well, the reality is you don't know how much you're going to owe. So the earlier you get your taxes done and find out exactly how much you owe, you know, how many Starbucks trips you're not making. And here's the secret for your viewers. You can still file your tax return, but you don't have to pay until April 15th at midnight. So filing is separate from paying. And thirdly, and as important as the other two, you're not running up against the last minute. Hey, do you know you got the new tip deduction or the new overtime deduction or the new senior deduction or the new interest deduction on a purchased automobile, and you're scrambling for data. So file early, get your money file early, even if you have all your stuff, and you can still find out what you owe and not pay till April 15th. But most importantly, with all the life changes and tax changes and other changes, you just want a little extra time in case something pops up that you've got to go do a little more digging to get the biggest refund that you can. So you just touched on some of the changes that have been come in this year. Some of them attributed to President Donald Trump's big beautiful bill. What are some differences that people should pay attention to and maybe things that they can take advantage of? Yeah. The new tip deduction of up to $25,000 in qualified tips. Brand new, never seen before. Don't have to itemize. Similarly, if you've got overtime income. If you've got overtime, a new $12,500 per person deduction, new form, new line don't have to itemize. There's a new deduction for seniors not to be confused with other deductions for seniors that already exist. And no, you do not have to be receiving, you know, Social Security to get it. You just have to be 65 or older on December 31st, 2025. New deduction, new line don't have to itemize. And as I mentioned, one of the other big ones, this year, if you purchased an automobile in 25 and you financed that and up to $10,000 deduction on that auto interest different than years past where you had to itemize this, when you do not. And those are all in a transition year. Meaning this is year one. And the rules were passed late. So it won't be the same as it will be in 26 with a simple box or a simple item that you just grab and throw on your return this year. You may have to do a little bit of work depending on your employer and your records. And so you want a little extra time because those benefits you leave them off, they stay off. The IRS will not be sending you additional cash. So you need to put them on there. And you need to do it right. And you need to do it early in case you need more time. Now more and more people have switched to cell filing and it's becoming a more common practice. So what are some of the common errors you see people making, and is there anything they can do to avoid them? Yeah, I answer your second question first. Don't use self prep. It's just not a great idea on your single largest financial transaction. And before you say Mark Steber is a shill for paid prep, we have our own self prep engine at Jackson Hewitt. We recognize we're a country founded on astronaut cowboy mentality, but not when it comes to your single financial transaction. It's most important your tax return. So some of the mistakes we see every year that are simple to avoid is plan on either learning the rules and learning the nomenclature and learning the words and terminology, or having risk. And a good paid tax professional can help you navigate that risk and in many cases, even pay for themselves by lowering your stress, finding every deduction and credit and election that you deserve, and more importantly, giving you tips to go forward. Because we're not ever changing world of tax law changes and a good pro can help make that, you know, all the more beneficial for the next 30, 40 or 50 years that you'll be filing your tax returns. And now most of the tax returns that come in are simple tax returns. But do you have any advice for people who are running a small business or are self-employed and might have a more complicated filing? Yeah, that simple tax return is kind of like that elf riding the unicorn down the rainbow. I've heard about that and I guess it might exist, but I've never seen it. Low income, high income, moderate income, no income. All those people have different considerations. But you really hit on a key, group a key demographic, the self-employed people. Ever since the pandemic, when people were laid off and fired and had to find ways to make amends, you know, those people, 30 or 40 million people have continued. They like it. They like the extra money. And that's an entirely separate set of very good, but can be very complicated rules. So if you have side hustle income, if you have side gig income, know this living off your tax return is probably the worst idea. First, that's not legal until you may be leaving off deductions that could even create a net loss to offset your regular income. A lot of rules, a lot of elections, a lot of things to know both federal and state on that side hustle income. But mostly because we live in America. Those are good rules. You just need somebody to help you navigate through the side hustle income, get some help or pay too much. And then unfortunately, as more people do get into doing their own taxes themselves, we're hearing more about refund fraud. Is there anything people should be on the lookout when it comes to tax scams? Yeah, I know somebody said that's a great and important topic. When you have 100 million Americans getting refunds and that amount is $300 billion with a B, typically some are estimating up to 400 billion with a B this year because of increased refunds from some of those great new rules that we talked about. You know, that attracts a certain unscrupulous type of individual. Sometimes they deceive taxpayers with promises of a guaranteed refund, or they know a trick to get an extra deduction on there that nobody will see. But most importantly, if it sounds too good to be true, it's probably too good to be true. And no branded, trusted guaranteed tax pro would probably stoop to that level. But a lot of people do during this time of year, so watch out for it. Watch out with your largest single transaction, your tax return, some of your most precious information. And no, you wouldn't cut your own hair. You generally don't do your own wiring on your house unless you're an electrician, and you certainly shouldn't do your own tax return unless you're prepared to invest the time and the effort to understand the rules, the deductions, the language, and the different selections that you can make. And a tax pro can help with that and help avoid both the stress, the risk of an audit. And as I say, the biggest mistake leaving off a benefit that the IRS is not just going to mail you more money because you left off a deduction that was rightfully yours, a tax pro can help do that. And for those folks that do wait to the last minute, are there any resources available to help them find better ways to file their taxes? Yeah, there's a lot of different options. There's even free options on the IRS website. If you want to go to the trouble of doing it yourself. And I'll simply say right now, as we're talking about, this is a wonderful time, there's extra hours, extra staffing at all the tax companies. But as you get closer and closer to that, April 15th deadline and ten, 20 and 30 million people do wait till the last minute, that tends to eat up those resources. Now, companies like mine, we do add extra hours and everybody will be served. But why not take advantage of the lull? Right now you have all of your documents, or you should. And if you don't, hope is not a strategy. You need to track that document down. But right now is a great time to go talk with your pro. And if you need extra time on that new tip deduction or overtime deduction or life change or crypto or whatever, you there's a lot of time left in the calendar and a lot of time left for that tax pro to help you get the biggest refund. As you get up against the deadline, more people are going to be rushing in at the last minute when they say, hey, we need to get your tip deduction, help me work that up. It's going to be a harder thing to navigate both with your employer and with your tax pro and what the IRS and state systems. So now's a great time later. Not as optimal. I'm sure these tips are going to help a lot of people this season. So Mr. Steber, thank you for taking the time to talk to us. Great to be here. Go get your money. It's your money and it's not automatic.