Avoid These 5 Common Tax Mistakes

March 06, 2025

Tax season is upon us, and you might be one of the five Americans who feel extremely stressed about tax debt. The best way to calm your nerves is to be prepared, and face tax season with confidence. We’ve compiled a list of common tax mistakes, and how to avoid them this year.

Missing the Deadline

Filing your taxes late is a costly mistake! You could face a late filing penalty of up to 4.5% of your unpaid tax per month and 0.5% for paying late. If you still haven’t paid after 5 months, the late filing and payment penalty maxes out at 25% total, but the 0.5% late payment penalty continues until it also reaches 25%. In total, you could owe 47.5% of your unpaid tax. If your return is over 60 days late, you’ll face a minimum penalty of $485 or 100% of the unpaid tax, whichever is smaller.

If you know you won’t be able to get your taxes done on time, file for an extension to avoid penalties. If you’re struggling to complete your taxes on your own, consider hiring an accountant or using a software like Turbo Tax or H&R Block to speed up the process. Don’t over prepare and file too early! It’s important to make sure you’ve waited long enough for all of your documents to arrive to prevent making a mistake on your filing.

Inaccurate Information

Errors like misspelled names or incorrect social security numbers sound silly, but happen more often than you would think. Make sure you have all of your documents gathered for quick reference before you start. This preparation reduces the risk of mistakes that can occur when searching for missing information. Another way to mitigate the risk of skipping information or typing in the wrong Social Security Number for example, would be to file electronically or with a tax filing software to help you run a check to find any errors.

Math Mistakes

Mathematical errors are one of the most common tax mistakes. Simple miscalculations can lead to delays, audits, or even missed deductions. This is why the IRS recommends filing electronically. Because tax software does the math, the error rate is less than 1% among e-filed returns compared to 21% for paper returns. Filing digitally or working with a tax professional can mitigate risk for mathematical errors.

Missing Out on Credits

Know what you qualify for, so you don’t miss out on valuable deductions and credits that can lower your tax bill or increase your refund. Make sure to do additional research on specific credits and deductions you may be eligible for. Tax software and professionals can help guide you as well as the IRS Interactive Tax Assistant (ITA).

Commonly Overlooked Tax Benefits:

Earned Income Tax Credit (EITC): Designed for low- to moderate-income workers, the EITC can provide a substantial refund, yet many eligible taxpayers fail to claim it. To learn more and see if you or your family could qualify, read on here.

Retirement Savings Contributions Credit: Do you contribute to retirement accounts? If you’re an eligible taxpayer, you could potentially be credited up to $1,000 for single filers and $2,000 for married couples. Read more about bonus credit for savers.

Charitable Contributions: If you have itemized your charitable donations and expenses from volunteering, you could be eligible for tax deductions. Make sure you have receipts and proper records for mileage and donations. IRS publication 1771 details for making tax-deductible charitable donations.

Student Loan Interest Deductions: You could be eligible to receive deductions on the interest you paid on your student loans. If you have paid more than the minimum required in qualified student interest, you should have received a form 1098-E, have this ready when filing if you are eligible for the deductions.

Spending your Refund Right Away

Although it will be extremely tempting to spend your tax refund right away, be mindful of your savings plans. This is a great opportunity to put away savings or pay off debt. One of the easiest ways to keep yourself from making an impulse decision is to have a specific plan for where you will be depositing your money, so you don’t have to deal with the temptation to spend it right away. Directly deposit your tax refund into your CASFCU Savings account to take a huge step toward achieving your financial goals.

Avoiding these common tax mistakes can save you time, money, and stress this year. Make sure you file on time, educate yourself on your options, and ensure you have all of your documents prepared going into tax season. When questions arise, seek professional help or consider using tax software to ensure accuracy and maximize your refund. Happy filing! Be sure to contact us with any questions about depositing your refund to reach your savings goals.