What Tax Return Mistakes Should You Avoid?

Filing your tax return accurately and on time is crucial, but small oversights can lead to delays, audits, or missed deductions. To help you file smoothly, here’s a list of tax return mistakes to avoid and how to fix them before submission.

1. Missing Forms

Use last year’s tax return as a checklist to ensure you have all necessary W-2s and 1099s. Missing these forms can trigger an IRS mismatch, leading to an unexpected correspondence audit. If a form is missing, contact the issuer immediately to request a copy.

2. Incorrect Dependent Information

If you added a new dependent in 2024, double-check that their name, Social Security number, and birth date are correctly reported. If you share custody, clarify in advance who will claim the dependent to avoid conflicts that could prevent your tax return from being filed.

3. Cost Basis Errors

If you sold investments or real estate, ensure you have accurate cost basis information to determine taxable capital gains or losses. Review your investment statements to confirm that brokers have reported the correct amounts on Form 1099-B.

4. Overlooked Schedule K-1s

Partnership and S corporation owners must report their share of profits or losses using Form K-1. Pay close attention to box 17 (code V) for S corporations and box 20 (code Z) for partnerships, which provide key details for the Qualified Business Income Deduction.

5. Unreported Digital Asset Transactions

If you’ve bought or sold cryptocurrency or other digital assets, you must report the cost basis and sale price of each transaction. Failing to do so can lead to IRS scrutiny and potential penalties.

6. Forms Without Explanations

If you receive a tax form that lacks context—such as a retirement account distribution—it could be misclassified as taxable income. If the distribution was a rollover, you must provide an explanation to avoid unnecessary taxation.

7. Missing Signatures

Before your tax return can be filed, both you and your spouse (if applicable) must review and sign the e-file approval forms. Delays in signing can push back your filing date, potentially leading to missed deadlines or penalties.

By avoiding these tax return mistakes, you can ensure a smoother filing process and reduce the risk of IRS issues.

Take action now—double-check your documents and file your tax return with confidence!

If you need professional tax assistance, don’t wait. Contact us for expert tax preparation services at 832-303-3995 or book your appointment today.