Have you ever made a mistake on your tax return? From data entry errors to misunderstanding tax credits, the most common tax mistakes can often be avoided with a little extra care and preparation. In this post, we’ll walk you through the top ten tax filing mistakes to avoid and provide practical tips for fixing them, ensuring your tax season goes as smoothly as possible.
1. Inaccurate PINs or Social Security Numbers
One of the most common tax errors is submitting incorrect or mismatched Identity Protection Personal Identification Numbers (IP PINs) or Social Security Numbers (SSNs). These numbers are essential for identifying you, your spouse, and your dependents. Double-check each entry to ensure accuracy. Make sure that your preparer has a copy of your IP PIN issued by the IRS.
How to Fix It: If you’ve already submitted your return with an error, file an amended return (Form 1040-X) with the correct information.
2. Misspelled Names or Data Entry Errors
Misspelled names or typos in other key information can cause your return to be flagged. This often happens if your name does not match what’s on file with the Social Security Administration.
How to Fix It: Review all personal details carefully before submitting your return. If you’ve changed your name due to marriage or divorce, update your information with the Social Security Administration before filing.
3. Losing Track of Dependents
Forgetting to include eligible dependents or mistakenly claiming someone who no longer qualifies can result in errors or audits. This error is frequently made by recently divorced parents who both file the same dependent separately. Typically, parents will need to switch years, and your exact cadence will depend on the divorce agreement.
How to Fix It: Keep an updated list of your dependents and their eligibility criteria. If you make a mistake, file an amended return to correct dependent information.
4. Incorrect Filing Status
Choosing the wrong filing status (or more than one status) is another of the biggest tax filing mistakes to avoid. Whether you’re single, head of household, or married filing jointly, your filing status affects your tax rate and potential deductions.
How to Fix It: Consult a tax professional if you’re unsure which status applies to you. If you file incorrectly, you can amend your return to reflect the correct status.
5. Filing Prematurely
Filing your return too early can lead to errors if you don’t have all the necessary documentation, such as W-2s, 1099s, or other evidence of income. Do you have a side gig or some other form of income? Sometimes, filers will forgot their extra 1099-NEC and file as soon as they have their main salary W-2, but this will lead to an inaccurate filing.
How to Fix It: Wait until you’ve received all relevant tax documents before filing. If you realize you left something out, file an amended return to include the missing information.
6. Bad Direct Deposit Numbers
Entering incorrect banking information for direct deposit can delay your refund or cause it to be deposited into the wrong account.
How to Fix It: Verify your bank account and routing numbers carefully. If you’ve already submitted an incorrect number, contact the IRS immediately to discuss next steps.
7. Paper Filing
While filing taxes on paper is still an option, it’s prone to errors and can significantly delay processing times. Some states such as New York actually insist on not paper filing depending on the time of the year.
How to Fix It: E-filing is faster, more accurate, and often provides an immediate confirmation of receipt. Consider using reputable tax software or working with a CPA to file electronically.
8. Not Understanding Credits and Deductions
Many taxpayers miss out on valuable credits and deductions, or claim ones they’re not eligible for, leading to either lost savings or audits.
How to Fix It: Research common credits and deductions or work with a tax professional to identify opportunities.
9. Not Including Address or Residency Changes
Failing to update your address or residency status can cause confusion or delays. You may need to file in a new state or multiple states, depending on your situation.
How to Fix It: Notify the IRS of any address changes using Form 8822. Ensure your current address is accurate on your tax return before filing.
10. Forgetting Taxes Due
It’s not uncommon for taxpayers to forget that they owe taxes on the deadline, especially if they’re self-employed or have income that hasn’t been subject to withholding.
How to Fix It: Pay the amount owed before the deadline (usually April 15th for individuals). Some choose to calculate and pay estimated taxes throughout the year as well. If you miss a payment, pay as soon as possible to minimize interest and penalties.
Avoiding these common tax mistakes and understanding how to fix them can save you time, money, and stress. Whether you’re filing independently or working with a CPA, double-checking your return for accuracy is crucial. If you’re unsure about any aspect of your taxes, don’t hesitate to reach out to a trusted tax professional for guidance.
