5 Biggest Tax Mistakes to Avoid & How to Maximize Your Refund

Tax season can feel overwhelming, but avoiding a few common mistakes can save you money and stress. As a tax professional, I’ve seen people miss out on thousands of dollars simply because of avoidable errors. In this guide, I’ll cover the five biggest tax mistakes and how to avoid them, so you can maximize your refund and stay compliant.

1. Filing Late & Missing Deadlines

One of the easiest ways to lose money on your taxes is filing late. The IRS charges penalties and interest on late payments, and state tax agencies often do the same.

How to Avoid It:

✅ Mark April 15 on your calendar (Tax Day).

✅ If you need more time, file for an extension (but remember, an extension to file is not an extension to pay!).

✅ Stay organized and keep all your documents in one place for easy filing.

2. Not Claiming All Deductions & Credits

Many taxpayers miss out on valuable deductions and credits simply because they don’t know they qualify.

Common Overlooked Deductions & Credits:

📌 Education Credits – If you or a dependent took college courses, you may qualify.

📌 Self-Employment Expenses – Home office, mileage, and internet costs are deductible for freelancers.

📌 Medical Expenses – If your medical costs exceed 7.5% of your income, you may be eligible.

📌 Retirement Contributions – Contributions to an IRA or 401(k) may reduce taxable income.

How to Avoid It:

✅ Work with a tax professional who knows all available credits.

✅ Keep receipts for education, medical, and work-related expenses.

✅ Use tax software or a preparer to catch deductions automatically.

3. Incorrectly Reporting Income

If your tax return doesn’t match what the IRS has on file, it could trigger an audit or refund delay.

Common Errors:

❌ Forgetting freelance or gig income (1099 forms).

❌ Misreporting investment earnings.

❌ Not including side hustle or small business income.

How to Avoid It:

✅ Double-check all W-2s and 1099s.

✅ Use accounting software or keep a spreadsheet to track all earnings.

✅ Hire a tax professional to ensure everything is accurate.

4. Choosing the Wrong Filing Status

Your filing status impacts your tax rate and deductions, but many people choose incorrectly.

Filing Status Options:

📌 Single – If you’re unmarried and don’t have dependents.

📌 Married Filing Jointly – Often the best for couples to get bigger deductions.

📌 Head of Household – For single filers with qualifying dependents (this has better tax rates).

How to Avoid It:

✅ If you have a dependent, check if you qualify for Head of Household.

✅ If married, compare Married Filing Jointly vs. Separately to see what’s best.

✅ Use a tax professional to ensure accuracy.

5. Not Keeping Tax Records for Long Enough

The IRS can audit you up to 7 years after you file, but many people throw away their documents too soon.

How to Avoid It:

✅ Keep tax returns for at least 7 years.

✅ Store documents securely online or in a locked file.

✅ If self-employed, keep detailed records of all expenses.

Final Thoughts: Stay Ahead & Maximize Your Refund

Taxes don’t have to be stressful! By avoiding these common mistakes, you can keep more of your money and stay compliant.

Want help filing your taxes accurately? I offer expert, hassle-free tax preparation with 1776 Tax, LLC—all done remotely for your convenience.