Tax mistakes can cost you money (from missing deductions) or create headaches (from IRS notices). Here are the most common errors and how to avoid them.
Filing Mistakes
1. Wrong Filing Status
The mistake: Choosing the wrong status (single, married filing jointly, head of household, etc.)
Why it matters: Filing status affects your tax brackets, standard deduction, and eligibility for credits.
How to avoid:
- Married couples: Almost always file jointly (lower taxes)
- Single parents: Head of household if you qualify (better than single)
- Recently widowed: Special rules may apply
2. Math Errors
The mistake: Simple calculation mistakes
Why it matters: IRS will catch them and send a notice, delaying your refund
How to avoid: Use tax software (does all calculations) or have someone double-check
3. Missing the Deadline
The mistake: Filing late without an extension
Why it matters:
- Failure to file penalty: 5% per month, up to 25%
- Failure to pay penalty: 0.5% per month
How to avoid:
- File by April 15 (or request extension by that date)
- Extensions give you time to file, NOT to pay
- Owe taxes? Pay your estimate by April 15 even if filing later
Income Reporting Mistakes
4. Not Reporting All Income
The mistake: Forgetting side income, gig work, interest, stock sales
Why it matters: IRS gets copies of 1099s too. They WILL match records.
How to avoid:
- Wait for all tax forms (1099s often arrive through mid-February)
- Check for 1099s from: gig platforms, banks, brokerages, freelance clients
- Report even small amounts
5. Mixing Up Forms
The mistake: Entering W-2 numbers in wrong boxes, confusing 1099-INT with 1099-DIV
Why it matters: Creates mismatches that trigger IRS notices
How to avoid: Let tax software import forms directly, or enter very carefully
Deduction Mistakes
6. Missing the Standard vs. Itemized Decision
The mistake: Itemizing when standard deduction is higher (or vice versa)
Why it matters: You could pay more tax than necessary
Current standard deductions (2024):
- Single: $14,600
- Married filing jointly: $29,200
- Head of household: $21,900
How to avoid: Let software calculate both and take the higher deduction
7. Missing Deductions You Qualify For
Common missed deductions:
- Student loan interest (up to $2,500)
- Educator expenses ($300 for teachers)
- HSA contributions
- Self-employment health insurance
- Home office (self-employed)
- State sales tax (for those in no-income-tax states)
8. Claiming Ineligible Deductions
The mistake: Taking deductions you don't qualify for
Why it matters: Audits, penalties, interest
Common errors:
- Home office when you're not self-employed
- Business meals that were personal
- Charitable contributions without documentation
Credit Mistakes
9. Missing Valuable Credits
Often missed:
- Earned Income Tax Credit (EITC) - for lower income
- Child Tax Credit
- Saver's Credit (for retirement contributions)
- Education credits (American Opportunity, Lifetime Learning)
- Child and Dependent Care Credit
Why people miss them:
- Don't know they exist
- Think they don't qualify
- Don't answer screening questions carefully
10. Trying to Claim Credits You Don't Qualify For
The mistake: Claiming education credits for non-qualified expenses, or EITC when income is too high
Why it matters: IRS scrutinizes these credits heavily. Getting caught means payback plus penalties.
Self-Employment Mistakes
11. Not Paying Quarterly Estimates
The mistake: Waiting until April to pay
Why it matters: Underpayment penalties if you owe more than $1,000
How to avoid:
- Make quarterly estimated payments (April 15, June 15, September 15, January 15)
- Rule of thumb: Set aside 25-30% of freelance income
12. Missing Self-Employment Deductions
Commonly missed:
- Home office (must be regular and exclusive)
- Health insurance premiums
- Retirement contributions (SEP IRA, Solo 401k)
- Business portion of phone/internet
- Professional development
Retirement Account Mistakes
13. Excess IRA Contributions
The mistake: Contributing more than the limit ($7,000 in 2024, $8,000 if 50+)
Why it matters: 6% penalty per year on excess until corrected
14. Roth vs. Traditional Confusion
The mistake: Deducting Roth contributions (not deductible) or not deducting traditional (often deductible)
How to avoid: Understand your contribution type before filing
After Filing Mistakes
15. Throwing Away Records
The mistake: Tossing tax documents right after filing
Why it matters: IRS can audit up to 3 years back (6 years for substantial errors)
Keep forever: Tax returns themselves Keep 7 years: W-2s, 1099s, supporting documents
16. Not Cashing or Depositing Refund
The mistake: Letting a refund check expire
Why it matters: Treasury checks expire after 1 year
How to avoid: Use direct deposit. It's faster and can't get lost.
The Bottom Line
Most tax mistakes are avoidable with careful attention and good software. Double-check your entries, don't leave money on the table, and keep good records. When in doubt, get professional help for that year.