Top Tax Filing Mistakes—And How to Avoid Them

Steer clear of these errors to save money and avoid tax penalties

Making mistakes on your tax return can cost you money. You may miss out on a larger refund than you claimed, wind up owing more taxes—plus interest and penalties—or invite an Internal Revenue Service (IRS) audit. The best defense against these results is a good offense, namely avoiding errors on your return.

Key Takeaways

  • Make sure that your basic information—such as your name, Social Security number, and filing status—is correct and that financial information is reported on the right line, and always proofread and check for typos.
  • Report your financial information exactly as it is reported to the IRS on such forms as the W-2, 1099, and K-1.
  • Check to see if taking the standard deduction is better for you financially than itemizing your deductions.
  • Take every write-off to which you are legitimately entitled.
  • Make sure to proactively tell the IRS how you want it to handle your refund—or, if you owe taxes, be careful that you pay them in the right way, so that your payment is properly credited to you.

Avoid These Mistakes

Here are 10 of the most common filing mistakes people make.

1. You blow the basics.

Make sure your name and those of your dependents are spelled correctly and that Social Security numbers are correct. Select the correct filing status for your situation. For example, if you’re unmarried, you may file as single but 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.

2. You don’t enter information as it’s been reported to you (and the IRS).

Wages, dividends, bank interest, and other income that you received and that was reported on an information return (W-2, 1099, K-1, etc.) should be entered carefully. These forms have also been reported to the IRS, and the government’s computers are looking for this information. If you need to dispute what’s been reported to you, contact the business that made the payment (e.g., your employer) and request a correction.

3. You don’t enter items on the correct line.

Use care to make sure 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. Using tax software should help prevent this issue, but always double check where items appear on your final return before clicking the submit button.

4. You automatically take 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 that, with the standard deduction nearly doubling as of the 2018 tax year under the Tax Cuts and Jobs Act, itemizing is now less likely to save you money. All the same, it never hurts to run the numbers both ways. Most tax software will automatically calculate which method is most beneficial to you.

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

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. This is probably not true, especially 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.

However—and this is a big however—you can now only take a home office deduction if you’re using the home office because you are self-employed. Employees of companies can no longer deduct unreimbursed home office expenses as a miscellaneous itemized deduction on Schedule A.

The Affordable Care Ac9 (ACA) individual mandate penalty is no more as of 2019, but some states still may charge one, so know what your state requires.

6. You forgot your state healthcare individual mandate.

As far as your federal taxes go, the Affordable Care Act individual mandate, which required you to pay a penalty fee for every month that you (or your family, if applicable) lacked qualifying health coverage, is no more as of 2019. However, according to the U.S. Centers for Medicare & Medicaid Services, “Some states have their own individual health insurance mandate, requiring you to have qualifying health coverage or pay a fee with your state taxes for the 2019 plan year.” So make sure you know what your state requires.

As of the 2020 tax year, five states and the District of Columbia have their own individual health insurance mandate.

  • California (effective in 2020)
  • Rhode Island (effective in 2020)
  • The District of Columbia
  • Massachusetts
  • New Jersey
  • Vermont (effective in 2020, but does not include a penalty for non-compliance)

7. You 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 contributed $5,200 to your individual retirement account (IRA), but you inadvertently entered $2,500 as the deduction on your return, cheating yourself out of a $2,700 deduction (which costs you $648 more in taxes if you’re in the 24% tax bracket).

Always use brackets to indicate a negative number instead of a minus sign, as IRS computers can only recognize the brackets.

8. When you have negative numbers, you use a minus sign. 

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.

9. You don’t bother telling the IRS how to handle your refund.

If you overpaid your taxes and are due a refund, be proactive about what you want the government to do. If you don’t do anything, the U.S. Treasury sends you a check in the mail.

However, to get your refund much faster, add your bank account information (account number and routing number), so the refund will be deposited directly into your account. Or you can opt to split your refund into as many as three accounts. You can also use it toward next year’s estimated taxes, as contributions to various retirement accounts (e.g., IRAs), or to buy U.S. Treasury marketable securities (e.g. Series I savings bonds). The instructions for Form 8888 explain your options.

10. You don’t pay 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 or debit card through an IRS-approved payment provider.

Always keep a copy of your signed return and have proof of filing.

The Bottom Line

Make sure you keep a copy of your signed 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. Furthermore, the information on this return will help you prepare your return for next year.

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  4. U.S. Centers for Medicare & Medicaid Services. "No health insurance? See if you'll owe a fee." Accessed Dec. 8, 2020.

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