Common Tax Filing Mistakes That Could Cost You Money (And How to Avoid Them)
Filing your taxes can be complicated, and small mistakes can lead to costly penalties, refund delays, or even an IRS audit. Whether you’re an individual taxpayer, freelancer, or business owner, making errors on your return can mean missing out on deductions, overpaying, or triggering unnecessary scrutiny from the IRS.
To help you file accurately and maximize your refund, we’ve compiled a list of the most common tax filing mistakes and how to avoid them.
1. Incorrect Personal Information
✅ The Mistake:
Many taxpayers mistype their Social Security number (SSN), misspell their name, or forget to update their address when filing their return.
🔴 Why It’s a Problem:
Even a minor mistake can cause the IRS to reject your tax return or delay processing, meaning your refund will take longer to arrive.
💡 How to Avoid It:
✔️ Double-check your SSN, legal name, and address before submitting your return.
✔️ Make sure your name matches the one on your Social Security card.
✔️ If you’ve moved recently, update your address with the IRS and your employer before tax season.
2. Failing to Report All Income
✅ The Mistake:
Not reporting all sources of income, including freelance work, side gigs, rental income, dividends, or interest.
🔴 Why It’s a Problem:
The IRS receives copies of your W-2s and 1099s, so if you fail to report income, it could trigger an IRS audit or penalties for underreporting.
💡 How to Avoid It:
✔️ Keep track of all income sources, including W-2s, 1099s, and bank interest statements.
✔️ Review your IRS wage and income transcript to confirm what the IRS has on record.
✔️ Use tax software or hire a tax professional if you have multiple income streams.
3. Claiming the Wrong Filing Status
✅ The Mistake:
Choosing the incorrect filing status (Single, Head of Household, Married Filing Jointly, Married Filing Separately, or Qualifying Widow(er)).
🔴 Why It’s a Problem:
Your filing status affects your tax rate, standard deduction, and eligibility for credits. Selecting the wrong one can cost you money or flag your return for errors.
💡 How to Avoid It:
✔️ Head of Household offers better tax benefits than Single but requires you to support a dependent—verify your eligibility before claiming it.
✔️ Married couples should compare whether filing jointly or separately saves them more money.
✔️ If you’re unsure, use the IRS’s Filing Status tool or consult a tax pro.
4. Overlooking Tax Deductions & Credits
✅ The Mistake:
Not claiming valuable deductions and credits, such as:
Earned Income Tax Credit (EITC) – for low-to-moderate income workers
Child Tax Credit (CTC) – for parents with qualifying dependents
Self-Employment Deductions – home office, internet, and business expenses
Education Credits – for tuition and student loan interest
🔴 Why It’s a Problem:
Missing these deductions means paying more in taxes than you should or losing out on a bigger refund.
💡 How to Avoid It:
✔️ Keep detailed receipts and records for deductible expenses.
✔️ Use tax software or work with an accountant to identify eligible deductions.
✔️ Research new tax laws that could benefit you.
5. Forgetting to Sign & Date Your Return
✅ The Mistake:
Forgetting to sign your tax return (when filing by paper) or failing to e-file with an IRS-approved PIN.
🔴 Why It’s a Problem:
An unsigned return is invalid, meaning the IRS won’t process it until it’s signed, which delays your refund.
💡 How to Avoid It:
✔️ If filing by paper, double-check that all required signatures are present.
✔️ If filing jointly, ensure both spouses sign the return.
✔️ For e-filing, create a secure IRS PIN to verify your identity.
6. Using the Wrong Bank Account for Direct Deposit
✅ The Mistake:
Entering the wrong bank account number or routing number for direct deposit.
🔴 Why It’s a Problem:
Your tax refund could be deposited into the wrong account, causing delays or even loss of funds.
💡 How to Avoid It:
✔️ Triple-check your account and routing numbers before submitting your return.
✔️ If you change banks, update your direct deposit information before filing.
✔️ Consider using IRS tools to track your refund status.
7. Missing the Tax Deadline
✅ The Mistake:
Waiting until April 15 to file and missing the deadline.
🔴 Why It’s a Problem:
Missing the deadline can result in penalties, interest, and even tax liens if you owe money.
💡 How to Avoid It:
✔️ Set up reminders for key deadlines.
✔️ If you can’t file on time, submit Form 4868 for an extension (but pay any taxes owed).
✔️ File as early as possible to reduce stress and prevent last-minute errors.
Final Thoughts: Avoid Costly Tax Mistakes & File with Confidence
Mistakes on your tax return can lead to costly penalties, refund delays, or even IRS audits. By double-checking your information, keeping accurate records, and taking advantage of tax deductions and credits, you can file with confidence and keep more of your hard-earned money.
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