10 Common Mistakes to Avoid When Filing Taxes

Filing taxes can be tricky. Making mistakes might lead to delays, penalties, or even audits. Let’s explore common errors people make and how to avoid them.

1. Filing Too Early or Too Late

Filing too early can be a problem. You might not have all your forms like W-2, 1099, or Schedule C. Missing forms can cause errors. Sometimes, employers or clients send out forms late. If you file before receiving all your income forms, you might forget to report some income. This could lead to having to file an amended return using Form 1040X, which is more work.

Filing too late is also bad. The deadline is usually April 15. Missing it can lead to penalties, interest charges, and even IRS audit triggers. If you can’t finish in time, you can file for an extension using Form 4868, but remember, you still have to pay what you owe by the deadline.

2. Incorrect Personal Information

Mistakes in personal info can cause big issues.

• Wrong Social Security Number (SSN): Make sure it matches your Social Security card. The IRS uses this to match your tax return.
• Misspelled Names: Use the exact spelling from your official documents.
• Incorrect Bank Details: Entering the wrong routing or account number for your refund could mean you don’t get it, or someone else does.

Always double-check this information before submitting. These small details can lead to big problems if entered incorrectly.

3. Choosing the Wrong Filing Status

Your filing status affects many things like your tax rate, standard deduction, and eligibility for certain tax credits.

Here are the main statuses:

• Single: For people who are unmarried.
• Married Filing Jointly: Best for most married couples.
• Married Filing Separately: Sometimes used for tax or legal reasons.
• Head of Household: Unmarried with dependents.
• Qualifying Surviving Spouse: Lost a spouse recently and have dependents.

Using the wrong status can cause you to pay more taxes or miss out on credits like the Earned Income Tax Credit.

4. Math Errors and Miscalculations

Simple math errors can mess up your tax return. This includes:

• Wrong totals when adding up income or deductions.
• Incorrect tax table usage.
• Misreporting your Adjusted Gross Income (AGI).

If you use paper forms, double-check all math. Tax software usually catches these mistakes. But still, you should check everything before submitting.

5. Missing or Inaccurate Income Reporting

All income must be reported, or the IRS may see it as unreported income. Common income sources:

• W-2 Income: Wages from jobs.
• 1099 Income: Freelance, self-employment (use Schedule C), or contract work.
• Investment Income: Includes interest (Form 1099-INT), dividends (1099-DIV), and capital gains (Schedule D).
• Retirement Income: Pensions (1099-R), IRA distributions, Social Security benefits.
• Rental Income: From properties (Schedule E).

Even small income like hobby income, virtual currency transactions, or gambling winnings, must be reported.

6. Overlooking Deductions and Credits

Deductions and credits lower your tax bill. Missing them means paying more than you should.

Popular tax deductions:

• Charitable Contributions (reported on Schedule A)
• Home Office Deduction (self-employed only)
• Student Loan Interest Deduction (Form 1098-E)
• Medical Expenses

Popular tax credits:

• Child Tax Credit
• Earned Income Tax Credit
• Education Credits (Form 1098-T, Form 8862)
• Energy Efficient Home Credit

Credits give more value than deductions, so don’t miss out!

7. Incorrect Bank Account Information

When getting a refund, many choose direct deposit. It’s faster than waiting for a paper check. But if you enter your bank info wrong:

• The IRS may send your refund to the wrong account.
• You may not be able to recover the money.

Check your routing number and account number carefully. Look at a check or ask your bank if unsure.

8. Missing Signatures

An unsigned return is invalid. The IRS won’t process it. If you mail your return:

• You must sign it.
• If filing Married Filing Jointly, both spouses must sign.

For e-filing, you’ll usually use a PIN or a digital signature. Don’t skip this part!

9. Using Unreliable Tax Preparers

Some tax preparers are not trustworthy. They may:

• Overpromise large refunds.
• Leave out needed information.
• Refuse to sign your return (known as a ghost preparer).

Use licensed professionals like:

• Certified Public Accountants (CPAs)
• Enrolled Agents (EAs)
• IRS-certified volunteers through VITA programs

You can check their credentials on the IRS website.

10. Ignoring IRS Notices and Communications

The IRS may send letters if:

• Your return has math errors.
• There’s a problem with your filing status.
• You didn’t report some 1099 income.

Don’t ignore these. Respond quickly. If you disagree, you can file a response or talk to a tax professional. Ignoring notices can lead to more penalties.

Common Forms and Their Purposes

Here’s a table of common IRS forms:

How to Avoid These Mistakes

Here are tips to help:

• Double-Check Info: Look over your forms for errors.
• Wait for All Forms: Don’t file until you have every document.
• Use Tax Software: Helps catch mistakes.
• Keep Records: Store copies of all forms, receipts, and W-2s for 3 years.
• Ask for Help: Use a trusted tax preparer or call the IRS.

Conclusion

Filing taxes doesn’t have to be stressful. Avoiding common mistakes can save you time and money. Review your return carefully, report all income, and take advantage of credits and deductions. If you’re unsure, get help. Doing it right the first time is always best!