As tax season approaches, it often brings a whirlwind of stress, urgency, and unexpected opportunities for many individuals and businesses. However, the complexities of tax filing can be daunting, even for the most experienced filters. Every year, millions of taxpayer’s face delays and complications due to common mistakes that are easily avoidable. This blog is designed to help you steer clear of the pitfalls that can derail your filing experience. From gathering essential documents to meticulously reviewing your personal information, we’ll outline the most frequent errors and provide actionable tips to ensure smooth sailing through tax season. Let’s dive in and empower you to take charge of your tax filing journey!

Why Tax Filing Mistakes Are So Common 

Filing taxes can be tricky, even for seasoned filters, and the high volume of last-minute submissions only adds to the potential for error. In 2022, the IRS received over 150 million individual returns, and of these, a significant number had mistaken due to oversight, especially as nearly 21% of Americans filed close to the April 15 deadline. Constant updates to tax laws and eligibility for new credits make it challenging for many filters to keep up with all the changes.

1. Rushing to File Without All Required Documents

One of the most common mistakes in tax filing is sending in your return too early, often before  gathering all the necessary forms and records. While there may be a rush to file and get a refund,   it’s crucial to wait until you have everything to avoid missing any income reports, which can lead to a need for an amended return.

Document Type	Purpose	Deadline to Receive
W-2	Employee Income	January 31st
1099-NEC	Non-employee Compensation	January 31st
1099-MISC	Other Income	January 31st
1099-B	Broker Transactions	February 15th

Some taxpayers forget to report small income amounts or earnings from freelance work, such as 1099 forms, resulting in an IRS correction notice and delays.

Tip: If you’re still waiting on important forms, consider waiting until mid-February to avoid the need for corrections. Missing forms can lead to costly mistakes, delay your refund, or even trigger an IRS correction notice.

2. Errors in Personal Information: Names, Social Security Numbers, and Bank Information

Mistakes in personal details like names, Social Security Numbers (SSNs), or bank account numbers are a common and preventable issue. Last year, thousands of refunds were delayed because of small mistakes like these.

Double-checking this information is especially important if you have dependents or a complex tax situation with multiple people listed on your return. A few specific areas to review include:

• Names and SSNs: Make sure names and SSNs match the Social Security card exactly. If you’ve had a name change, such as through marriage, update the SSA with your new name before tax time.
• Bank Details: Opting for direct deposit can speed up your refund, but a simple typo in your account or routing numbers could send your funds to the wrong account. Direct deposit generally delivers refunds within 21 days of filing, much faster than receiving a paper check.

Example Scenario: Imagine that you’re filing jointly with your spouse, who recently changed their last name. If your return lists the updated name but the SSA has not been informed, the IRS may flag this mismatch, which can cause delays or require additional verification steps.

3. Missing Out on Eligible Tax Credits and Deductions

Tax credits and deductions are essential for reducing your tax liability, yet they’re commonly overlooked. According to IRS data, only about 25% of eligible taxpayers claim the Earned Income Tax Credit (EITC) each year, potentially leaving thousands on the table. Tax credits directly reduce the amount of tax owed, while deductions lower your taxable income, both providing valuable ways to save.

Common Credits and Deductions to Check For:

• Earned Income Tax Credit (EITC): Available to individuals and families with low to moderate income. In 2023, the maximum EITC was up to $7,430 for a family with three or more children. Even if you don’t owe taxes, you could still get a refund from this credit.
• Child Tax Credit: For families with children under 17, the Child Tax Credit can provide up to $2,000 per child. This credit is phased out at higher income levels, so check the eligibility requirements to ensure you qualify.
• Saver’s Credit: If you contributed to a retirement account, you might qualify for this credit, designed to help low to moderate-income taxpayers. It can provide credits of up to $1,000 for individuals or $2,000 for couples.

Credit/Deduction	Eligibility	Maximum Benefit
Earned Income Tax Credit	Low to moderate-income individuals/families	Up to $7,430
Child Tax Credit	Parents with dependents under 17	Up to $2,000 per child
Saver’s Credit	Contributions to retirement accounts	Up to $2,000 per couple

Tip: To optimize your tax credits, use tax software or consult a tax professional who can ensure you maximize these benefits based on your income, filing status, and family situation.

4. Overlooking Additional Income Sources

Another common mistake is forgetting to report smaller or occasional income sources. The IRS tracks all income, not just wages from an employer, and failing to report additional earnings can lead to complications. Common types of additional income to report include:

• Freelance Income: Payments from freelance work or side gigs often come with a 1099-NEC, but even if a client doesn’t send you a 1099 form, you’re still responsible for reporting that income.
• Investments: Interest from bank accounts, dividends from stocks, and capital gains from investments are all taxable income and reported on forms such as 1099-INT and 1099-DIV.
• Rental Income: If you rent out property or even a room in your home, that income must be reported. Additionally, there may be deductions related to rental property management that can help offset taxable income.

One helpful tool is the IRS wage and income transcript, available online. This transcript lists all income reported to the IRS under your Social Security Number, providing a convenient way to verify your income sources before you file.

5. Choosing the Incorrect Filing Status

Your filing status is a foundational part of your tax return, impacting your standard deduction, eligibility for credits, and overall tax rate. Common filing statuses include single, married filing jointly, married filing separately, and head of household. Choosing the wrong status could mean you miss out on deductions or end up paying a higher tax rate. Here’s a quick guide:

Filing Status	Description	Key Benefit
Single	Not married or legally separated	Standard deduction for singles
Married Filing Jointly	Married couples filing together	Lower tax rates and more credits
Head of Household	Single or separated with a dependent	Higher standard deduction and lower tax rate

Tip: If you’re a single parent, the “Head of Household” status typically provides a higher deduction and can reduce your tax liability. However, if you’re married, filing jointly generally provides a lower tax rate than filing separately, making it the better choice in most cases.

6. Incorrectly Valuing Charitable Contributions

Charitable donations can be deducted from your taxable income, but they must be reported accurately. Overstating the value of your donations, whether cash or items like clothing and electronics, could raise a red flag with the IRS. Here are a few guidelines for claiming donations:

• Accurate Valuation: Non-cash items, like furniture or electronics, must be valued at their fair market value (what someone would pay for them today). Goodwill and the Salvation Army, for example, provide guides for valuing common items.
• Documenting Donations: Always keep receipts and take photos of large donations for your records. If your total non-cash donations exceed $500, complete IRS Form 8283, which requires additional details about the donations.

Example: If you donated a used sofa in good condition, you might claim a value of around $50, based on what a buyer would likely pay. Overvaluing items, such as claiming $200 for the same sofa, could lead to penalties if the IRS challenges the donation.

7. Missing Out on Retirement Contribution Deductions

Contributing to retirement accounts like IRAs and 401(k)s can lower your taxable income and save you money, both now and in the future. In 2023, the IRA contribution limit was $6,500, and contributions made up until the tax deadline of April 15 can still count toward the prior tax year.

• Traditional IRA Contributions: These may be deductible depending on your income and filing status, reducing your taxable income.
• Saver’s Credit: Low to moderate-income taxpayers may qualify for a Saver’s Credit, which is a separate tax credit that rewards contributions to retirement accounts.

Even small contributions to retirement accounts add up overtime and have the added benefit of lowering your tax bill, so make a habit of contributing regularly, if possible.

8. Failing to Adjust Withholding After Major Life Events

Major life changes like marriage, the birth of a child, or buying a home have significant tax implications and often require adjustments to withholding. Updating your withholding helps ensure the correct amount is deducted from each paycheck, preventing a large tax bill or an excessive refund.

• Marriage or Divorce: Changing from single to married or vice versa affects tax brackets and standard deduction amounts, which can impact overall tax liability. Use IRS Form W-4 to update your marital status with your employer.
• New Dependent: The birth or adoption of a child not only qualifies you for new credits like the Child Tax Credit but also impacts withholding needs.
• Home Purchase: Interest payments on a mortgage are tax-deductible, so new homeowners should assess whether to itemize deductions instead of taking the standard deduction.

Regularly updating your W-4 and reassessing your tax situation can help reduce surprises when filing.

Conclusion: Start Your Tax Season with Confidence

Navigating tax season doesn’t have to be a source of anxiety. Avoiding these common filing errors — from double-checking details to exploring every credit and deduction — makes tax season far more manageable. And if the complexity becomes overwhelming, consider seeking help. Working with experienced tax professionals like Global FPO can ensure smooth, accurate filing experience. With expert guidance, you can maximize deductions, optimize credits, and avoid costly errors, setting you up for financial success every year.

FAQs

1. What happens if I make a mistake with my taxes?

Mistakes can delay your refund or even lead to an IRS correction. Common errors include incorrect numbers, missed credits, or leaving out income. Double-check everything before submitting!

2. Why is it important to file all my income sources?

The IRS tracks all income, even from side jobs or freelancing. If you forget to add some, you might get a notice from the IRS, which can lead to extra paperwork and penalties.

3. What is the best way to report freelance income?

Freelance or gig work income is reported using a 1099 form if you earn over $600 from one client. But even if you don’t get a 1099, you still need to report it. Keep good records!

4. Why does my filing status matter?

Your status, like “Single” or “Married Filing Jointly,” changes your tax rate and the standard deduction. Picking the wrong status can mean missing out on savings, so choose carefully.

5. What should I do if I get a new job or move?

Anytime you change jobs, update your W-4 form with your new employer. This form tells them how much tax to take out of each paycheck, helping you avoid a big tax bill later.

Summary

Filing taxes can be tough, and many people make mistakes that can cause delays and lose refunds. This blog talks about common mistakes, like putting in the wrong personal information, not reporting all income, and missing out on tax credits. It also covers how to choose the right filing status and the need to keep up with tax rules. By preparing carefully and checking your information, you can make tax season easier and get the most back from your return.