By basis, also known as cost basis, Du Val is referring to the dollar amount you paid for your shares. The basis is adjusted for items such as returns of capital and transaction fees and can impact your tax liability when you sell shares.
Schedule E blunders. "This is the Schedule that is used to report rental property, royalties, partnership income and expenses, estate income and expenses and S-Corp income and expenses," says Du Val, flagging it as the area on the federal tax form 1040 where people are most likely to make a mistake.
He adds that anyone who needs to fill this out should be familiar with phrases like "property basis" and "suspended losses." If you own rental property and don't know those terms, you should start learning everything you can about them, as well as "depreciation" and "passive activities," Du Val says.
Or, of course, you could hire someone who does, because things can get sticky when it comes to rental property. "For example," Du Val says, "A residential rental property is depreciated over 27 1/2 years, but furniture is depreciated over five years."
Waiting until the last minute. That can be the biggest mistake for a taxpayer because it leads to making other mistakes, says Ryan Blume, a senior manager of tax and business consulting at Moss Adams, a public accounting firm headquartered in Seattle.
"The rush to meet tax-filing deadlines shifts your accountant's focus to compliance and ensuring that you fulfill the basic tax requirements, rather allowing him or her time to seek additional ways to reduce your taxes through overlooked deductions or preparation mistakes," Blume says.
And if you rush your taxes to the point where you feel that you've made a mess of things, Blume suggests asking the IRS for an extension.
"Some individuals think asking for an extension is a red flag for the IRS. Not true," Blume says. "Instead, it gives you more time to seek additional ways to reduce your taxes through overlooked deductions or preparation mistakes."
Not filing. That, everyone agrees, is the biggest mistake of all.