The 7 Most Common Tax Mistakes People Make

Do you know the most common tax mistakes? When tax time rolls around, you don’t want to be caught with a glaring arithmetic error or missing income source. The penalties can be fierce, and the Internal Revenue Service (IRS) does check. If you’re preparing to file your taxes, make sure to avoid the most common errors and oversights. 

1) Inaccurate Information 

The No. 1 most common tax mistake by far is to include erroneous information on the return. While inaccurate information certainly can be an act of fraud, most tax return errors are just honest mistakes. Still, these mistakes can trigger a tax audit and create major headaches if you aren’t careful. It’s especially important to check for the most common errors: 

• Wrong filing status: There are five filing statuses to choose from: Single Filer, Married Filing Jointly, Married Filing Separately, Head of Household, and Qualifying Widow(er). Make sure you understand what each status entails and file accordingly. One of the most common mistakes is to file as Head of Household when you don’t actually meet the IRS’s criteria for such a filing status. Your correct filing status should be whatever you qualified for on December 31st of the tax year. 

• Missing or inaccurate social security number: Unless you’re filing on behalf of a business, your social security number serves as your primary taxpayer identification number. If it’s written incorrectly, your return will typically be rejected by the IRS and you’ll need to refile. When filing a joint tax return, make sure to get your spouse’s number correct as well. 

• Incorrect bank account numbers: Without an accurate bank account number and routing number, the IRS can’t process your tax refund via direct deposit. 

• Misspelled names: The name on your tax return should appear exactly as it’s spelled on your social security card. The same goes for your spouse if you’re filing jointly. If you commonly use a shortened name, a nickname, or an alias, you’ll need to be careful here. 

• Math errors. It’s very easy to make an arithmetic error on a tax return. You can often avoid (or at least minimize) these types of errors by e-filing, but you should still double-check every number before submitting your return. 

• Data entry errors: When you’re carrying numbers over from your W2s, 1099s, and other tax statements, you have to be very careful to ensure that the numbers are accurate. If your reported numbers don’t match what the IRS already has on file, you might get a letter in the mail about it. These types of errors are among the most common IRS audit triggers. 

2) Not Reporting All Income Sources 

Forgetting an income source can be an honest mistake, but in many cases, it’s a conscious decision. For instance, let’s say that you have a side gig that pays a steady $500 a month. It’s just a little extra money for gas and entertainment, and you don’t receive a 1099 for it. So why even bother including it on your tax return, right? 

Actually, the IRS requires you to report all taxable income, regardless of whether or not there’s an official record of it. If it’s earned income from a job or gig, it still counts. What’s more, the IRS is cracking down on unreported side income. Starting in 2023, services like PayPal and Venmo will be required to send you a 1099-K if you received more than $600 in income (the previous minimum threshold was $20,000). This is money that automatically gets reported to the IRS. 

In addition, it doesn’t benefit you in the long run to under-report your own income. When you appear to earn less money than you actually do, you might have a more difficult time proving creditworthiness to buy a house, finance a vehicle, secure a business loan, or enjoy other advantages. Make sure to report all of your taxable income. 

3) Filing Too Early 

Don’t jump the gun when it comes to filing your tax return. Many of us would like to get it out of the way as quickly as possible, but if you file too early, you might inadvertently omit important tax documents that you didn’t even know were coming your way. 

Most tax documents, including W2 forms, have a January 31st deadline. However, some tax forms might not arrive until mid-February. That’s why it’s best to wait until at least February 15th before filing your return—particularly if you have multiple income sources, own a home, or may be subject to medical- or education-related tax documents. 

4) Filing Too Late 

The tax deadline is April 15th (except when otherwise noted). If you file late without filing for an extension, you may be subject to a Failure to File Penalty. The penalty is 5% of the unpaid taxes for each month or partial month that the return is late. The maximum penalty is 25% of your unpaid taxes. 

If you don’t think you’ll be able to file by the April deadline, or if you’d prefer to file at a later time, you can request an extension by filing Form 4868. Make sure to file the form before April 15th.

5) “Ballparking” Your Tax Deductions 

Calculating tax deductions and expenses is one of the most tedious parts of doing your taxes. Digging up receipts and adding up totals can be a hassle. So it’s understandable that some people are tempted to just ballpark it. In other words, maybe you don’t remember exactly how much you spent on business travel, but you have a basic ballpark idea. So you jot down a rough estimate under your business expenses. 

This type of hasty reporting can really come back to haunt you in the event of a tax audit. The IRS will want to see the receipts, and they’re going to have questions if your reported numbers don’t match their own calculations. If you already find yourself in this predicament, we recommend seeking professional tax audit services. 

6) Claiming Tax Credits and Deductions You Don’t Qualify For 

There’s a lot of confusion regarding certain credits and deductions. For instance, who qualifies for the Earned Income Tax Credit? The Child Tax Credit? The Child and Dependent Care Credit? Also, is it better to itemize your deductions or take the standard deduction? 

There’s no easy way to answer these questions without an in-depth look at your unique tax situation, which is why we generally recommend working with a tax-planning specialist. If you do your taxes on your own, it also helps to file online or use professional tax software. Your e-file provider can help you to more accurately determine which credits and deductions you qualify for. 

7) Mailing Your Tax Return to the Wrong Address 

Finally, if you mail your paper tax return the old-fashioned way, make sure it goes to the right place. Your filing location may vary depending on your location (a taxpayer in Los Angeles, California, will have different processing centers than a taxpayer in Jacksonville, Florida), the type of tax form you’re submitting, and whether or not you’re submitting a payment with your tax form.

If you’re not sure where to submit your tax form, refer to the IRS’s official submission guide. If you’re filing electronically, you won’t have to worry about this one. 

Don’t Make the Most Common Tax Filing Mistakes 

The best way to avoid common tax mistakes is to work with a professional. And if you’ve already made mistakes on your tax return, a tax resolution specialist can help you to get back on track. 

Don’t let your tax burden become a tax nightmare. Gather all of your documents, triple-check every figure, and have an expert on your side.