Tax season often comes with a mix of anticipation and anxiety. For many, the worry of making costly mistakes looms large. Yet, filing your taxes accurately is crucial—not only can it save you from penalties and delays, but it can also ensure you maximize your refund. To help you file confidently, this guide highlights some of the most common tax filing mistakes and how to avoid them.
Common Tax Filing Mistakes and How to Avoid Them
Filing taxes may feel overwhelming, but a little care and tax preparation can help you steer clear of frequent errors. Below, we’ll walk you through some of the most common mistakes taxpayers make and how to tackle them effectively.
1. Incorrect Social Security Numbers & Personal Information
This might seem minor, but errors in Social Security Numbers (SSNs) or personal details can result in significant processing delays. Since the IRS uses SSNs to match tax returns to taxpayer records, even small mistakes disrupt the process. If filing electronically, errors in SSNs may cause immediate rejection. For paper filings, the IRS typically sends a notice, further delaying the process.
All tax returns, whether e-filed or mailed, must include a valid signature. Unsigned paper returns are considered invalid and may be rejected outright, prolonging refund timelines.
How to avoid it:
Double-check all personal information, including SSNs, against official documents like Social Security cards. Always sign and date paper forms before submission. Opt for electronic filing to include a digital signature and reduce the risk of omission.
2. Misreporting Income
Income is the bedrock of your tax return. Whether it’s wages, dividends or freelance earnings, failing to report all income can lead to penalties. The IRS usually receives income data from employers and other payers via forms like W-2s and 1099s. Discrepancies between your reported income and IRS records can lead to audits or penalties.
How to avoid it:
Keep detailed records of all income sources. Use tax software or enlist a professional to ensure every dollar is accounted for correctly. Omitting income not only delays refunds but may also expose you to penalties and interest.
3. Overlooking Deductions and Credits
You may miss out on valuable tax deductions and credits because you are unaware of your eligibility. Missing deductions or credits like the Earned Income Tax Credit (EITC) or Child Tax Credit means you could be leaving money on the table.
The IRS will catch certain errors, such as missed W-2s or dependents claimed, but they won’t identify missed deductions or credits. This oversight could reduce your refund or unnecessarily inflate your tax liability.
How to avoid it:
Familiarize yourself with credits and deductions that fit your financial situation. Consult with a tax expert if you’re unsure or use tax software, which often identifies eligible deductions.
4. Filing with the Wrong Status
Your filing status determines your tax bracket and credit eligibility, so making the correct choice is essential. Choosing the wrong one can lead to paying more taxes or losing valuable benefits.
The five tax filing statuses are:
- Single
- Head of Household
- Married Filing Jointly
- Married Filing Separately
- Qualifying Surviving Spouse
Each filing status comes with its own rules of who can select the filing option. Some individuals will be eligible for more than one filing status—which option you choose could impact how much tax you pay or how large a refund you receive.
How to avoid it:
Consult IRS resources or use calculators such as the Interactive Tax Assistant to identify the appropriate filing status based on your circumstances.
5. Math Errors
Math mistakes are one of the most common errors on tax returns, with the IRS identifying nearly 9.4 million math errors in 2022 alone. Simple missteps, like incorrect additions or entering numbers into the wrong fields, can have serious consequences. For example, miscalculating deductions or credits like the Child Tax Credit can significantly affect your refund or tax liability.
Thankfully, the IRS often catches these errors and will send a notification explaining the issues. While the resolution process is straightforward, it can delay your refund or result in additional steps to adjust your owed taxes.
How to avoid it:
Tax software minimizes human error by handling most calculations for you. Whether filing electronically or manually, always double-check your final numbers before submitting. Taking just a few extra minutes can save you time and hassle later.
6. Filing Too Early or Late
Filing too early, before you’ve received all necessary documents like W-2s or 1099s, increases the likelihood of errors, such as missing income or unclaimed tax breaks. Rushing to file could mean overlooking key information needed to claim benefits like childcare expenses, student loan interest or the Premium Tax Credit.
On the other hand, missing the tax filing deadline can result in penalties. These penalties are typically calculated as a percentage of unpaid taxes and increase the longer your return is delayed. If you need additional time to file, requesting an extension gives you an extra six months to complete your return. However, keep in mind that you must still pay any taxes owed by the original deadline to avoid late payment penalties.
How to avoid it:
Wait until you’ve received all required forms and documentation before filing. Aim to file your return well before the April 15, 2025, deadline. Use reminders or mark your calendar to stay on track and avoid unnecessary stress.
7. Entering Incorrect Bank Information
Providing incorrect bank details when setting up direct deposit for your tax refund can cause significant delays or misdirect your refund. Errors in account or routing numbers may prompt the IRS to issue a paper check instead, potentially adding weeks to your wait. While the IRS does validate bank information, numbers that pass this check but belong to another person’s account can lead to your refund being deposited elsewhere.
Recovering funds sent to the wrong account often requires working directly with the bank, adding unnecessary stress and hassle.
How to avoid this hassle:
Carefully double-check all your banking details when completing your return. Verify each digit in your account and routing numbers are correct before submitting. Taking an extra moment to review can save weeks of potential delays.
What to Do If You’ve Made a Mistake
Even with the best intentions, mistakes happen. What’s important is how you address them. If you realize you’ve made an error after filing, act quickly to minimize complications.
- File an amended return: Use Form 1040-X to correct your return. Typically, you have three years from filing or two years from the tax payment to file amendments.
- Seek professional help: For complicated issues, a tax professional can provide the guidance you need to resolve the problem efficiently.
Avoid Filing Errors: Final Tips
Correctly filing taxes is an achievable goal when you know what to watch for:
- Double-check all personal information, income figures and financial details before filing.
- Use tax software or professional services to eliminate simple mistakes, identify eligible deductions and streamline the filing process.
- Mark your calendar for key deadlines and ensure accurate completion of forms, including signatures.
Remember, mistakes are correctable. Promptly filing an amended return or seeking expert advice can mitigate any lasting impact and give you peace of mind.
Need expert assistance? LTax is here to help at every step—from identifying tax-saving opportunities to correcting errors. Consult an LTax professional today and file with confidence!
LEGAL OR TAX: The information herein is not legal, such as trust or estate planning, advice, or tax advice. Any such information is provided for illustrative purposes only and must not be relied upon without the benefit of the advice of your lawyer and/or tax professional. Lido specifically disclaims any liability from any reliance on such information. Lido is not a legal service provider or tax professional and does not offer legal or tax advice. Should you desire to obtain tax or legal services or advice, you must enter into your own, independent engagement agreement with a licensed attorney or tax professional.