10 Common Mistakes on Form 1040 That Could Cost You Big

Filing Form 1040 can be a daunting task for many U.S. taxpayers, and errors are common. These mistakes can lead to delays, additional correspondence with the IRS, or even penalties. Based on my experience, here are some of the most frequent errors encountered when filing Form 1040.

1. Incorrect or Missing Social Security Numbers

One of the most common errors is entering incorrect or missing Social Security numbers (SSNs) for taxpayers, spouses, and dependents. This simple mistake can cause the IRS to reject the return or delay the processing of credits and deductions.

2. Filing Status Errors

Selecting the wrong filing status is another frequent issue. Taxpayers often struggle with choosing between options like Single, Head of Household, or Married Filing Jointly. Choosing the wrong status can affect the tax brackets, deductions, and credits available, leading to an inaccurate return.

3. Errors in Income Reporting

Failing to report all sources of income is a significant error. Taxpayers sometimes omit income from side gigs, freelance work, or other sources not captured on W-2 forms. The IRS receives copies of all income statements, so any discrepancy can trigger an audit or additional tax liabilities.

4. Math Errors

Simple math errors can cause big problems on a tax return. Although tax software reduces the likelihood of this mistake, it still happens. These errors can result in incorrect tax liability, which may lead to overpayment or underpayment of taxes.

5. Incorrect Deductions and Credits

Misreporting deductions and credits is another common problem. For instance, claiming the Child Tax Credit or the Earned Income Tax Credit without meeting the qualifications can result in delays or even penalties. Similarly, forgetting to include certain deductions, like student loan interest or medical expenses, can cause taxpayers to miss out on potential savings.

6. Failure to Sign the Return

It might seem trivial, but failing to sign the return is a frequent mistake. An unsigned return is considered invalid by the IRS and will not be processed. This can lead to missed deadlines and potential penalties.

7. Bank Account Errors

For those opting for direct deposit of their refund, entering incorrect bank account numbers or routing numbers can cause delays or misdirected refunds. Double-checking these details is crucial to ensure the refund goes to the right place.

8. Not Keeping Records

Taxpayers sometimes overlook the importance of keeping supporting documents, such as receipts, for deductions and credits claimed. If the IRS questions a return, having proper documentation is essential to substantiate the claims.

9. Incorrect Estimated Tax Payments

If you’ve made estimated tax payments throughout the year, ensuring they are correctly reported on your return is vital. Failing to do so can lead to an incorrect calculation of tax due or overpayment.

10. Missed Deadlines

Finally, missing the filing deadline or the deadline for requesting an extension can result in late fees and interest. It’s essential to be aware of the deadlines and submit your return on time.

These common errors can often be avoided with careful attention to detail and proper planning. Double-checking your Form 1040 for these mistakes before filing can save you time, money, and stress.