10 Common Tax Filing Mistakes to Watch Out For This Tax Season

Posted on January 23, 2025

As you're getting ready for this year's tax season, it's understandable if you're feeling a bit apprehensive about tackling your tax returns. It's not uncommon, and you're not alone. Even expert business owners and professionals who have been through the tax filing process time and time again can overlook the finer details simply due to the overwhelming nature of all the required paperwork and deadlines.

But don't let that list of forms, numbers, and regulations intimidate you. In making sense of it all, it's often about identifying the common stumbling blocks others have encountered and knowing how to sidestep them effectively.

So, how can you make your journey through tax season as smooth as possible, sparing yourself the stress and complications that mistakes can cause?

Let us share ten common tax filing mistakes you need to watch out for.

 

1. Incorrect Personal Information

When filing taxes, it’s critical to verify your personal information is accurate. A small typo, an outdated address, or a mismatch in your Social Security number may seem inconsequential but can lead to significant issues. The IRS uses your personal details to verify your identity and process your return. Errors in this information can cause processing delays, rejected filings, or even misdirected refunds. For individuals who recently moved, changed their name, or experienced other life events, this is an area where mistakes often happen.

The consequences of incorrect personal details extend beyond just delays. A mismatch with IRS records could trigger further scrutiny or require additional documentation to resolve. Ensuring your information aligns with official records saves time and prevents unnecessary stress during an already overwhelming tax season.

Practical Tips to Avoid Mistakes:

• Double-check every field: Review your Social Security number, spelling of your name, and current address before submitting your return.
• Update official records: If you’ve had a name change due to marriage or other reasons, notify the Social Security Administration to guarantee consistency.
• Review last year’s return: Compare personal details on your current filing with the previous year to spot discrepancies.
• Use tax software: Most modern software cross-references personal information with past returns, minimizing errors.

 

2. Failing to Report All Income

One of the most common mistakes in tax filing is failing to report all sources of income. With the rise of freelance work, gig economy jobs, and side hustles, it’s easy to overlook smaller income streams. Even income from platforms like Etsy, Airbnb, or Uber must be included in your return. Forgetting to report this income can result in IRS penalties and audits since the IRS often receives third-party reports (like 1099 forms) to cross-check your reported earnings.

Unreported income, whether intentional or not, creates discrepancies that could prompt unnecessary scrutiny or lead to additional tax liabilities, interest, and penalties.

Practical Tips to Avoid Mistakes:

• Keep detailed records: Track all income, even cash payments or small transactions, throughout the year.
• Save documentation: Store all W-2s, 1099s, or other income-related forms for easy reference.
• Log all earnings: Use accounting software or spreadsheets to track income from gig jobs or freelance work.
• Review statements: Cross-check bank deposits and receipts to account for all income sources.

 

3. Claiming the Wrong Filing Status

Choosing the correct filing status is key as it affects your tax bracket, deductions, and credits. Selecting the wrong status—such as filing as "Single" instead of "Head of Household"—can result in paying more tax or missing out on benefits. The IRS offers five filing statuses: Single, Married Filing Jointly, Married Filing Separately, Head of Household, and Qualifying Widow(er) with Dependent Child. Misunderstanding which status applies to your situation is a common mistake, especially after significant life changes such as marriage or divorce.

Incorrectly chosen filing statuses not only affect your deductions but may also increase your chances of an IRS review.

Practical Tips to Avoid Mistakes:

• Assess your situation: Determine your marital status and household responsibilities to identify the correct filing status.
• Understand each option: Learn the benefits and limitations of each status, such as tax brackets and credit eligibility.
• Use IRS tools: The IRS website offers online tools to help determine your filing status.
• Seek professional advice: A tax preparer can help you choose the status that benefits you most.
• Reassess annually: Revisit your status if your life circumstances change (e.g., marriage, divorce, dependents).

 

4. Math Errors

Math errors are a frequent issue for taxpayers, especially those who file manually. From miscalculating income totals to incorrectly adding deductions, these errors can cause discrepancies that delay refunds or increase your tax liability. Even a small mistake in basic addition or subtraction can cascade into larger issues throughout your return.

These errors often happen when taxpayers rush to meet deadlines or fail to review their calculations thoroughly.

Practical Tips to Avoid Mistakes:

• Use tax software: Filing software automates calculations, reducing the risk of math errors.
• Double-check entries: Review totals for income, deductions, and credits before submission.
• Organize documents: Consolidating all tax-related paperwork before filing can help you verify that have accurate figures.
• Review totals: Compare your calculations to the IRS tax tables to verify accuracy.

 

5. Missing the Filing Deadline

Missing the tax filing deadline can lead to penalties and interest charges. The IRS imposes a failure-to-file penalty, which accrues monthly and can reach 25% of the tax owed. This mistake not only costs money but also creates additional stress as you rush to file late.

Many taxpayers miss deadlines due to disorganization, procrastination, or underestimating the time required to prepare their return.

Practical Tips to Avoid Mistakes:

• Set reminders: Use calendar alerts to track key tax deadlines.
• Organize documents early: Start gathering forms and receipts as soon as they become available.
• File an extension: If you can’t file on time, request an extension to avoid penalties.
• Use e-filing: Electronic filing ensures quicker submission and confirmation of receipt.
• Hire help: A tax professional can assist in meeting deadlines efficiently.

 

6. Overlooking Deductions or Credits

Many taxpayers leave money on the table by overlooking deductions and credits. For example, common deductions like student loan interest, medical expenses, or home office costs often go unclaimed. Similarly, credits like the Earned Income Tax Credit (EITC) or the Child and Dependent Care Credit can significantly reduce tax liability.

These missed opportunities usually occur due to a lack of awareness or knowledge of eligibility requirements.

Practical Tips to Avoid Mistakes:

• Research available options: Familiarize yourself with deductions and credits applicable to your situation.
• Keep records: Save receipts and documentation for deductible expenses throughout the year.
• Use tax software: Many programs identify eligible deductions and credits automatically.
• Consult a professional: A tax expert can help you uncover deductions you might not know about.
• Review annually: Update your knowledge of tax law changes that may introduce new opportunities.

 

7. Failing to Sign and Date the Return

Failing to sign and date your tax return renders it invalid, delaying processing and refunds. This mistake is especially common for joint filers who forget that both spouses must sign. Without a signature, the IRS cannot accept or process your return, which could lead to late penalties.

Although electronic filers are less likely to encounter this issue, paper filers must pay close attention to guarantee completeness.

Practical Tips to Avoid Mistakes:

• Review before submission: Double-check your return to verify all required signatures are present.
• Use e-signatures: Electronic filing systems often prompt you to sign digitally.
• Coordinate with your spouse: For joint filers, both parties need to review and sign the return.
• Attach a power of attorney form: If someone else signs on your behalf, include IRS Form 2848.
• Create a checklist: Include signing and dating as part of your final review process.

 

8. Using the Wrong Bank Account for Refunds

Entering incorrect bank account information can result in refund delays or misdirected funds. Errors in routing or account numbers can create significant complications, requiring intervention from both the IRS and your bank.

This issue is particularly common when taxpayers switch banks or fail to confirm account details.

Practical Tips to Avoid Mistakes:

• Verify bank details: Double-check routing and account numbers before filing.
• Use direct deposit: Electronic refunds are faster and reduce the chance of errors.
• Keep records updated: Notify the IRS and your bank of any account changes.
• Review confirmation screens: Check your entries during e-filing for accuracy.
• Consult professionals: A tax preparer can help confirm correct bank details.

 

9. Incorrectly Estimating Quarterly Taxes

Self-employed individuals and small business owners often face penalties for underpaying quarterly taxes. Incorrect estimates can result in unexpected tax bills and interest charges.

This mistake usually stems from miscalculating income or failing to account for seasonal fluctuations.

Practical Tips to Avoid Mistakes:

• Use prior returns: Reference last year’s income to estimate quarterly payments.
• Adjust for changes: Update estimates based on business growth or income fluctuations.
• Track earnings: Maintain detailed records of income and expenses throughout the year.
• Pay on time: Set reminders for quarterly tax deadlines to avoid late payments.
• Seek expert advice: An accountant can help refine estimates and minimize penalties.

 

10. Not Keeping Proper Documentation

Proper documentation is critical for substantiating income, deductions, and credits. Missing records can create issues during audits or lead to denied deductions.

This mistake often occurs when taxpayers fail to organize receipts or lose track of important forms.

Practical Tips to Avoid Mistakes:

• Organize early: Set up a filing system for receipts and forms at the start of the year.
• Use digital tools: Scan and store documents electronically for easy access.
• Reconcile regularly: Review financial records monthly to guarantee accuracy.
• Keep copies: Save all W-2s, 1099s, and other forms for at least three years.

 

Related: Factors to Consider Before Hiring a Bookkeeping Service

 

Final Words

As we've unraveled the most common tax filing mistakes, it's worth reflecting on how being proactive, informed, and prepared can significantly influence your tax outcomes, avoiding unnecessary stress and fostering financial stability. By paying close attention to details such as personal information accuracy, thorough income reporting, correct filing status selection, and avoiding other costly errors like math mistakes or missed deductions, you're making sound strides toward a smooth tax filing experience.

The good news is you do not have to go through this alone. Claudette Bookkeeping And Tax, LLC, located in Randolph, Massachusetts, is here to support you in every step of your tax journey. Our expertise, from business consulting and strategy to tax services and bookkeeping, is designed to provide guidance, and implement strategies that help prevent mistakes and optimize your gains.

Our Income Tax Return services aim to make your tax process as seamless as possible, alleviating concerns so you're free to focus on what truly matters—whether it’s growing your business or managing your personal finances with peace of mind. With a systematic approach to tax strategy and a holistic view of your accounts, we can help you achieve not just compliance, but financial harmony.

We’re here to make sure every tax season is a chapter of progress, not just a task to be ticked off. Let us help you cultivate a tax strategy that aligns with your goals, ensuring that your fiscal path is clear and confidently charted. Contact Us Now!