Filing your taxes can feel overwhelming, but small tax mistakes can lead to big headaches – like delayed refunds, penalties, or even an unexpected tax bill. The good news? Most tax errors are easily avoidable with preparation and attention to detail.
To help you file confidently, we’re breaking down some of the most common tax mistakes and showing you how to sidestep them. A little extra care now can save you stress (and money) later!
Missing the Filing Deadline
The last thing you want during tax season is to miss the filing deadline and end up with penalties. Tax Day traditionally falls on April 15th, and if you owe taxes but don’t file on time, the IRS will hit you with a “Failure to File” penalty. This fee equals 5% of your tax due minus any prepayments each month your return is past due.
Avoid last-minute stress (and extra fees), by starting your taxes early. Employers and financial institutions must send out tax forms by January 31st, so by early February, you should begin gathering everything you need. A good rule of thumb is to start filing by mid-March – that way, if you’re missing a document, you’ll have time to track it down.
If you’re using an accountant or tax professional, send them all your paperwork as soon as possible. Don’t forget to set a reminder for early April to double-check that everything is ready to go. Filing on time means one less thing to worry about and possibly a faster refund in your pocket.
Entering Information Incorrectly
We all make mistakes, even when filling out important forms. However, you want to take extra care to ensure you complete your tax forms accurately. Even small mistakes can create headaches and potential fees when the IRS receives and processes your return. Although tax preparation software and online tools can improve the accuracy of your return, they won’t necessarily catch every error you make when entering your data. Be sure to double-check each of the following:
- Your Social Security Number is entered accurately.
- Your Tax ID is displayed correctly.
- Your name is written clearly and legibly if filling out physical forms and spelled correctly if completing an online form.
- All other identifying information, like your address and contact info, is up-to-date and accurate.
- Verify that every box on your return matches its corresponding information from your W2 and other tax forms.
- Review your previous year’s return to ensure any imported information was transferred correctly.
Incorrect Account or Direct Deposit Details
Accurately entering your financial account information and direct deposit details are crucial steps in proper tax filing. Verifying these details ensures that you can pay any owed taxes on time and prevents you from encountering any issues with your payment. Perhaps most importantly, it guarantees you will receive your refund without unnecessary delays.
For example, suppose you’ve switched financial institutions since completing your previous year’s return and failed to update this information on your current return. In that case, your refund will be sent to your old account, which is no longer active. This situation complicates the refund process and can cause significant delays in receiving your money.
To avoid these types of hassles and delays, take the time to thoroughly review your financial institution’s routing number and your account number to ensure everything is accurate before submitting your return.
Choosing the Wrong Filing Status
Your filing status is more than just a checkbox – it determines your tax bracket, deductions, and credits, which can impact how much you owe or the size of your refund. The IRS offers five filing status options:
- Single
- Married Filing Jointly
- Married Filing Separately
- Head of Household
- Qualifying Widow(er)
While these categories might seem straightforward, many taxpayers accidentally select the wrong one, which can lead to missed savings or unexpected tax bills. Choosing the right status can make a big difference in your tax outcome.
Not sure which one fits your situation? The IRS Interactive Tax Assistant on their website can help guide you to the correct filing status, ensuring you maximize your tax benefits and avoid unnecessary complications.
Missing Valuable Credits or Deductions
Nobody wants to pay more in taxes than necessary! Tax credits and deductions can reduce what you owe and potentially boost your refund amount, so it’s worth it to see what you may be qualified to receive.
Most tax-saving opportunities fall into these categories:
- Family & Dependents
- Income & Savings
- Homeownership
- Healthcare
- Education
To ensure you get every dollar you deserve, gather any necessary documents before filing – receipts, tax forms, or proof of eligibility. Not sure what applies to you? The IRS Interactive Tax Assistant can help you check your eligibility and maximize your savings.
Forgetting to Sign
You may think it’s no big deal if you forget a signature here or there, but that’s not the case when it comes to your tax returns. Unsigned tax documents are not valid and the IRS will not accept them. If you’re filing electronically, it’s easy to sign digitally, and the website or software you use typically won’t allow you to submit without signing. But if you’re filling out physical paperwork, make sure you sign in every space it’s required!
Errors When Filing by Mail
Filing your taxes by mail isn’t necessarily a mistake, but it does come with a higher risk of errors – and even minor slip-ups can cause delays or complications. If you’re mailing your return, be sure to double-check for these common mistakes:
- Incorrect Form Order: Arrange your tax forms in the correct sequence.
- Missing Documents: Ensure you’ve included all required forms and attachments.
- Unpaid Taxes: If you owe money, don’t forget to enclose a money order or signed check.
- Insufficient Postage: Make sure your envelope has enough postage to reach the IRS.
- Wrong IRS Address: Double-check that you’re sending your return to the correct IRS office.
The simplest way to avoid the risk of these and other tax mistakes is by filing your returns electronically. Plus, you’ll get your refund faster!
Bonus Tips: Smart Ways to Use Your Tax Refund
Put your tax refund to work! You deserve to treat yourself with a portion of your funds – after all, you’ve earned it! But consider using most of your refund to make your money do more and help you toward your financial goals.
Consider using your refund to:
- Pay Down High-Interest Credit Card Debt
- Kickstart Your Emergency Fund
- Use It as a Down Payment on a New Car
- Boost Retirement Savings
- Cover Current or Future Education Expenses
- Upgrade Your Home
- Invest It
We’re Here to Help!
Tax season can feel overwhelming, but you don’t have to tackle it alone. By avoiding these common tax mistakes, you’ll set yourself up for a smoother, stress-free filing experience – and we’re here to support you every step of the way.
If you want to learn more about how to strategically use your tax refund to improve your financial well-being, we’re happy to help. Please stop by any of our convenient branch locations or call 1-800-531-8456 to speak with a team member today.
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Each individual’s financial situation is unique. We encourage you to contact United Texas Credit Union when seeking financial advice on the products and services discussed. This article is for educational purposes only; the authors assume no legal responsibility for the completeness or accuracy of the contents.
