Tax season can be stressful enough without the added burden of costly mistakes. Missing deadlines, choosing the wrong filing status, or failing to keep proper records could mean losing out on refunds or facing unexpected tax bills. 

The good news? A little organization and preparation can go a long way in avoiding these pitfalls. We’ll break down five common tax mistakes and show you how Trustworthy makes it easier for families to stay on top of financial documents, deadlines, and updates to make tax season feel a little less taxing.

Key Takeaways 

• The five most common tax mistakes are missing tax deductions, choosing the wrong tax status, not keeping proper records, not updating your information, and procrastinating on preparation.

• Common tax mistakes can be avoided with better preparation and organization.

• Poorly organized tax documents can result in delayed refunds, an increased tax bill, and costly penalties. 

5 Common Tax Mistakes

1. Missing Tax Deductions and Credits

A common mistake families make is overlooking tax deductions and credits due to misunderstanding or disorganization. Many also believe filing isn’t necessary if their income is below the tax threshold—but that’s not true. You may still qualify for a refund through the Earned Income Tax Credit (EITC), but you must file to claim it.

Deepak Shukla, founder of Pearl Lemon Tax, an international accounting firm that works with American taxpayers, explains:

“A lack of proper document organization can result in missing receipts for expenses that can cause you to miss out on tax deductions that can lower your tax liability. For example, according to the IRS, one of the most common errors seen on tax returns is the child tax credit.”

A lack of organization can result in not knowing whether you have a qualifying child or missing a Social Security number on the form, resulting in refund delays and missed deadlines.  

Commonly overlooked tax deductions and credits include: 

Home office expenses: Working from home? You may be eligible to deduct a portion of your business expenses. This includes rent, utilities, insurance, mortgage, advertising costs, stationery, and equipment. Make sure to keep all receipts in case of an audit. 

Education: The American Opportunity Credit (AOTC) and the Lifetime Learning Credit (LLC) can help cut thousands off your tax bill. The AOTC allows claims of up to $2,500 per student. The LLC is worth up to $2,00 per tax return.  

Medical expenses: Taxpayers can deduct unreimbursed medical expenses exceeding 7.5% of their adjusted gross income (AGI). Eligible expenses include doctor visits, prescriptions, inpatient care, nursing home costs, medical equipment, and some general health expenses. Self-employed individuals may also deduct 100% of their health insurance premiums.

State sales tax: If you live in an area without state income tax, you may be able to claim a deduction for sales tax. Calculate an estimate of your state and local sales tax deduction using the IRS calculator. 

Luis Rivero Vazquez, a CPA, told CNBC, “The most common mistake that you’ll see is that a taxpayer will go to an accountant or go to do their taxes through a self-preparing mechanism, and they’ll do it without everything they need.”

Vazquez recalls some scenarios of taxpayers not having their documents prepared, saying, “A taxpayer might say, ‘Oh, hey, I’m getting this huge refund, but I forgot my crypto.’ Or, ‘I forgot the small investment that I sold that I need to pay taxes on.’”

Avoid missing out on deductions due to unorganized documents by using a digital organizational tool like Trustworthy. With Trustworthy, families can upload, organize, and store their tax documents in one secure location. This makes it easier to claim every deduction for which you’re eligible. 

2. Filing Under the Wrong Status

Your filing status is vital in determining what deductions you are eligible for. Joanne Burke, a certified public accountant, advises taxpayers to take the time to review their tax information. She says, “Certain filing statuses–like Head of Household–offer better tax brackets and a higher standard deduction than single status. Choosing the wrong filing status could cost you more in taxes.” 

Common filing status errors include: 

Filing as Single instead of Head of Household: Single parents who provide most of the financial support will qualify as head of household, which offers lower tax rates and bigger deductions. For example, $50,000 of taxable income will fall within the 22% tax bracket under Single status, but under the Head of Household status, it will fall within the 12% bracket.  

Filing separately while married: Some couples make the mistake of filing separately when married. Filing jointly could lower their tax bill. Filing separately as married means you cannot claim deductions like the child and dependent care credit and the earned income tax credit. 

So, now you can see why choosing the correct tax filing status can maximize your chance of getting an increased refund and lowering your tax bill. Take the time to review the IRS guidelines to choose what status applies to you. Miscalculating your income and deductions can also prompt you to choose the wrong status. 

Choose Trustworthy for secure document storage and ensure you file under the correct status each year. Keep essential records like custody agreements, past tax returns, and marriage certificates organized for accurate and timely filing. 

3. Not Keeping Proper Records

One of the biggest tax mistakes you can make is failing to maintain accurate records. Losing track of key receipts and financial invoices can result in the following: 

• Errors on tax returns can increase your chances of an audit 

• Missed deductions and credits due to lost receipts 

• Delays in filing and missing deadlines due to missing documents 

Essential documents to keep: 

• Mortgage interest statements 

• Business expenses 

• Medical and childcare expenses 

• Charitable donation receipts 

• W-2s and 1099s 

Accurate records make tax season easier, and Trustworthy helps keep everything organized. Use the mobile app’s built-in scanner to upload documents as you receive them, preventing clutter.

The AI-powered Autopilot feature streamlines organization with predefined categories (finance, health, family), document summaries, and smart filename suggestions—so you don’t have to build a system from scratch. Plus, smart search ensures instant access to your files.

Have peace of mind that your documents are secure with Trustworthy’s bank-level security features like AES 256-bit encryption, multi-factor authentication, biometric authentication, physical security keys, advanced threat detection, and tokenization.  

4. Failing to Update Information for Life Changes

Major life events can have a significant impact on your taxes, and failing to update this information can lead to missed deductions and credits. 

Some common life changes that require tax updates include:

Marriage or divorce: A change in your marital status will mean a change in tax status, which can result in increased or decreased tax rates. 

Buying a home: Homeownership comes with deductions that may not have been available before. These include deductions on mortgage interest and property taxes. Other credits, like the Energy Efficient Home Improvement Credit, can give homeowners a credit of up to $3,200 for energy-efficient improvements like installing solar systems.  

Having a baby: Having a child means you may now be eligible for the Child Tax Credit. 

Failing to update tax information can lead to missed deductions, delayed refunds, and outdated W-4 or Social Security records. Stay on track with Trustworthy’s smart reminders to update documents and meet deadlines.

Securely share updated information with family and tax advisors by creating a trusted network on Trustworthy. Control access levels and use SecureLinks™ to share specific files outside your network with time-limited, view-only links—ensuring full control over your documents.

5. Procrastinating on Filing or Payment

Waiting until the very last minute to file your taxes or make payments can cause unnecessary stress and come with other more costly headaches, including:

Late filing penalties: Failure to file can result in a penalty of 5% of your tax due for each month. Failure to pay your penalty comes with another penalty of 0.5% of the unpaid taxes but won’t exceed 25% of your unpaid taxes. It’s important to note that interest is charged on penalties. If you cannot pay your taxes on time, there is an option to set up a payment plan, which can reduce future penalties.  

Increased errors: Rushing through tax preparation can result in errors that can trigger audits and increase your tax liability. Common errors caused by rushed preparation include spelling mistakes, math errors, choosing the wrong filing status, missed deductions, incorrect account information, missing information, and not signing the form. 

Missed refund: If you don’t file within three years, you forfeit your refund from eligible deductions and tax credits. 

Avoid these mistakes by preparing for your taxes all year round. This means regularly updating your information, storing all receipts and expenses, and filing things as soon as you receive them. Use Trustworthy to set reminders to review and organize your tax documents every couple of months or when major life events occur. 

Get Organized for Tax Season With Trustworthy 

Avoid making these common tax mistakes that cost you and turn to Trustworthy for organization, tracking financial documents, and setting reminders for tax deadlines. Take the stress out of tax season by getting started with Trustworthy for free.

Frequently Asked Questions 

How long should I keep my tax records?

The IRS recommends storing your previous tax records for at least three years for general tax returns and six years if you underreported your income by more than 25%. 

What happens if I make a mistake on my tax return?

If you realize you’ve made a mistake on your tax return form, you can amend it using form 1040-X. correct errors like left-out deductions, missed income, and choosing the incorrect filing status. Sometimes, the IRS will automatically correct this for you.

How can I avoid tax identity theft?

Avoid being a victim of tax identity theft this tax season by filing early, using the IRS-provided identity protection pin, and storing your essential tax documents in a secure digital tool like Trustworthy with bank-level security.