A common mistake that the most eligible and efficient tax professionals can make is in the reporting of dividends. The IRS is very strict in this area. You need to use Schedule B under all circumstances to report dividends. There are no exceptions to this rule. On top of that, you need to fill the form out correctly.
A common mistake people often make is entering the wrong name on the payer line. Many people utilize brokers when it comes to the handling of their stocks. When they get their interest income or dividends from the broker and it comes time to report these dividends to the IRS, they report the name of the stock.
This is how it works. The broker's firm is the one that owns the stock. On the Schedule B of your tax return, you need to report the firm's name as the payer of the dividend, not the stock.
If you follow the above advice, you won't get that dreaded notice from the IRS. This is actually a common occurrence which happens to a lot of people when they do not get their names right when it comes to reporting dividends on their tax returns. The name of the payer is checked against a 1099 form the IRS receives from all financial institutions, listing their transactions. Any discrepancies between your tax returns and the 1099 forms the IRS receives will not go unnoticed.
