Making mistakes on tax returns needlessly costs people money. You may miss out on a larger refund than you claimed, wind up owing more taxes – plus interest and penalties – or even worse, invite an IRS audit. The best defense against these bad results is a good offense – namely, avoiding errors on your return. 

Most Common Mistakes on Tax Returns 

Here are the most common mistakes taxpayers make:

1. They blow the basics.

Make sure you choose the correct filing status for your situation. For example, if you’re unmarried, you may file as single. But you could qualify for more favorable tax rates and other items if you meet the requirements for being a head of household or a qualifying widow(er) with a dependent child. And, under the right circumstances, married couples may pay less tax overall if they file separately rather than jointly. Claim all the dependents you’re entitled to (e.g., a parent living in a nursing home if you meet dependency requirements). Make sure your name and those of your dependents are spelled correctly and that Social Security numbers are correct.

2. They don’t enter income as it’s been reported to them (and the IRS).

Wages, dividends, bank interest, proceeds from property sales and other income that you received (and that was reported on an information return, such as a W-2, 1099, K-1, etc.) should be entered carefully. The government’s computers are looking for this income. If you dispute what’s been reported to you, contact the business that made the payment (e.g., your employer) and request a correction. (See 10 Things You Should Know About 1099s.)

3. They enter items on the wrong line.

Be careful that your entries appear where you intend them to. Don’t put your tax-free IRA rollover on the line meant for taxable IRA distributions, for instance.

4. They automatically claim the standard deduction.

While itemizing requires more effort – and receipts and other proof – than relying on the standard deduction, you could be costing yourself money by automatically taking the standard deduction. Check which alternative gives you the greater write-off. Note: If you’re married but file separately and your spouse itemizes deductions, you must also itemize; you can’t take the standard deduction in this case.

5. They don’t take write-offs you’re entitled to.

Some may fear that a certain deduction is an audit red flag and shy away from it. For example, there continues to be a belief that claiming a home office deduction can trigger a tax audit, but this is probably not true given the fact that the IRS created a simplified deduction alternative to writing off actual expenses. As long as you meet tax-law requirements for a deduction, it’s wise to take it. Another reason for failing to take write-offs is that you’re overlooking some because you don’t think you qualify. For example, a self-employed individual may not think to check eligibility for the earned income tax credit, believing that it’s only for low-income employees (see 10 Tax Deductions & Benefits for the Self-Employed). Or you may have failed to qualify for a break last year and assume you don’t qualify this year, even though cost-of-living adjustments to certain eligibility thresholds have changed so that you’re now eligible.

6. They don’t check for typos.

It’s easy to transpose a number or leave out a digit, a mistake that can distort the information you’re reporting. For example, you and your spouse contributed $7,200 to your IRAs but you inadvertently entered $2,700 as the deduction on your return, cheating yourself out of a $4,500 deduction (which costs you $1,125 more in taxes if you’re in the 25% tax bracket).

7. They report negative numbers incorrectly.

If you have to enter an item as a negative number, do so with brackets; don’t use the minus symbol. This ensures that IRS computers read the negative entry correctly.

8. They don’t bother telling the IRS how to handle their refund.

If you are due a refund because you overpaid your taxes, be proactive about what you want the government to do. If you don’t do anything, the U.S. Treasury sends you a check, which can take weeks. To receive your refund much faster, add your bank account information (account number; routing number) so it will be deposited directly into your account. Or you can opt to split your refund – toward next year’s estimated taxes or as contributions to various accounts (e.g., IRAs). The instructions to Form 8888 explain the accounts to which refunds can be transferred: an account at a bank, credit union, brokerage firm or mutual fund; an IRA, Roth IRA or myRA​; a health savings account (HSA) or Archer MSA; a Coverdell education savings account (ESA); or a TreasuryDirect online account to buy U.S. Savings Bonds, Series I.

9. They don’t pay their taxes properly.

If you owe taxes, make sure that a payment is properly credited to you. Whether filing electronically or by paper, include Form 1040-V with your check. Alternatively, you can pay through the government’s free payment sites ( or DirectPay!) or by credit/debit card through an IRS-approved payment provider. Those without a bank account or credit card can use PayNearMe to pay by cash at a retailer that’s partnered with the IRS, such as a 7-Eleven. You can also ask for an installment payment agreement if you can’t pay your bill all at once.

10.  They don’t file.

The biggest mistake of all is not filing or filing late. Late-filing penalties mount up considerably over time. If you don’t think you’ll be able to make the filing deadline for 2016 returns – April 18, 2017 – just ask for a filing extension by this date. For example, file Form 4868​ electronically to gain another six months to October 16, 2017; other ways to get an extension are explained in the instructions to this form. Don’t let your inability to pay your taxes keep you from filing; at least you minimize or avoid late-filing penalties. (For more, see When You Can't Pay Your Taxes on Time.) 

The Bottom Line

Take the time to check and double-check your return to avoid mistakes. Then make sure you keep a copy of your return, along with proof of filing (an acknowledgment that your e-filed return has been accepted by the IRS or a certified receipt for a paper return sent by mail). Having this proof will protect you from any claims by the IRS that you filed late, or not at all. And the information on this return will help you prepare your return for next year!

See also: Tax Documents You Should Always Keep



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