With tax season here, many Americans are preparing to file their returns — but new studies show that one in three is making one common mistake that could end up costing big. Such mistakes can also result in penalties, audits, or even delays. Avoiding this mistake and understanding it are crucial if you want to get through your tax filing this year without a hitch.
In this article, we explore the latest figures around this common problem, the main causes behind it, and how to prevent falling into this trap yourself.
Related Posts:
The Biggest Mistake You Can Make When Filing Your Taxes: Failing to Report Income Correctly
Reporting income incorrectly is one of the top mistakes people make when it comes to their taxes. All of this extra income — whether it’s from freelance work, side gigs, or investment income — should be accounted for when filing taxes, and omitting or misreporting this income can have a big impact on your tax return.
Why Do So Many People Make This Error?
- Diversity of streams of income: The explosion of remote work and the gigs economy has resulted in many taxpayers managing many different streams of income. Some are easy to overlook, especially if your forms (like 1099s or W-2s) aren’t always what you’re expecting.
- Mistake: Taxpayers may also fail to take advantage of deductions they should be taking, like job-related expenses or home office deductions for remote workers.
How to Avoid It:
- Re-confirm your sources of income: Always ensure that all sources of income are accounted for — even if you don’t receive a form for it. You may receive a 1099 from platforms like PayPal, Venmo, and others if you cross certain thresholds.
- Use tax software: There are many software programs that can assist in tracking your income and making sure you have all your deductions.
- Reach out to a tax professional: If you have any doubts about how you reported your income, you may want to seek advice from a professional, particularly if you have income that isn’t traditional.
Consequences of Filing Incorrect Tax Returns
Filing your taxes incorrectly can have real-world implications. Even though it may seem like small mistakes won’t matter that much, even a simple error can set off a chain reaction of problems, from small delays to hefty financial penalties.
Filing the Wrong Tax Return Has Its Consequences:
- Delayed refunds: Misleading information can also slow down your tax return; you may be already suffering damage due to losing money.
- Penalties and interest: The IRS assesses penalties and interest on unpaid taxes or errors in your return, which can increase your tax liability.
- Audits: Incorrect returns can prompt an IRS audit — and more extensive examination of your finances and extra expenses.
Current Trends and New Development of Tax Season
As tax regulations continue to change, there’ve been some important updates that could alter how you file this year. These shifts you into being proactive.
- Increase in standard deduction: The standard deduction rose yet again in 2025, which can be a boon for many filers. Be sure you know the most recent numbers for your filing status.
- Child Tax credit updates: The child tax credit has changed and you might get a bigger refund this year. Make sure you review the updated eligibility criteria to get the most out of your refund.
- Remote work deductions: Many people have worked remotely over the last year, creating opportunities for home office-related deductions. Keep up with the current rules for claiming these deductions.
FAQs: Answers to Frequently Asked Questions on Tax Filing Errors
Q: What are some of the biggest mistakes taxpayers make during tax season?
A: Some of the most common mistakes include inaccurately reporting income, missing deductions, and entering the wrong information on tax forms. You can avoid some of these errors by double-checking your forms and by using reliable tax software.
Q: What are the most common mistakes that can trip people up?
A: Double-check your tax returns, ensure you report all sources of income, and take advantage of any available deductions. Tax software can help reduce errors by guiding you through the process.
Q: If I earn income from various sources, how can I steer clear of making a tax mistake?
A: Report all income as a safeguard against mistakes, including payment from side gigs, freelance gigs, or online platforms. Use tax software or hire a tax professional for help.
Q: Will I be penalized for making a mistake on my taxes?
A: Errors can result in penalties, interest, and potentially even audits if they’re severe. This is why it’s so important to file accurately to prevent these situations. If you understand that you’ve made a mistake, it’s best to submit a corrected return.
Last-Minute Things to Know to Get Your Taxes Right
- Be organized: Make sure to organize all tax-related documents during the year. A little organization can go a long way toward saving you time and preventing errors when you file.
- Utilize IRS Help: The IRS website provides useful tools and resources for taxpayers, including information about common tax errors and how to avoid them.
- File early: If you file your taxes early, you’ll discover any problems sooner and have time to fix them — well ahead of the deadline.
Tax season doesn’t need to be a stressful time of year if you take the time to prepare and be aware of common pitfalls. But with some homework, you can sidestep the expensive mistake that one in three Americans make annually.
What is your biggest challenge in tax season? Tell us in the comments, and share this article so that others won’t fall into an expensive pitfall!
