6 common tax-filing mistakes and how to avoid them, according to a financial planner

The offers and details on this page may have updated or changed since the time of publication. See our article on Business Insider for current information.

Affiliate links for the products on this page are from partners that compensate us (see our advertiser disclosure with our list of partners for more details). However, our opinions are our own. See how we rate tax products to write unbiased product reviews.

• It's not too late to make last-minute contributions that can save you on your tax bill.
• Double-check that you've included all your 1099 forms — and that all the numbers are accurate.
• This article is part of "Tax Health Check," a series of expert-backed advice to help you win tax season.

Tax season is here again — a time of opportunity for some and stress for many. Some people get professional help, but others take the DIY route when filing their taxes. Often, that means missing valuable tax-saving opportunities. This can lead to overpayments or even IRS scrutiny.

As a certified public accountant and certified financial planner, I've seen self-prepared returns result in missed deductions, reporting errors, and higher than necessary tax bills. A qualified tax professional doesn't just file your return — they help you keep more of your hard-earned money and prevent headaches.

Here are six costly tax mistakes I help my clients avoid.

1. Overlooking last-minute tax strategies

Before submitting your tax return, review it carefully to ensure you're not missing last-minute deductions or contribution opportunities that could lower your tax bill.

Here are a few tax-saving moves to consider:

• Max out your health savings account (if eligible) before the April 15 deadline.
• Contribute to a traditional individual retirement account by April 15, which could lower your taxable income.
• Use leftover funds in your flexible spending account before the deadline (when applicable, grace periods are often until March 15).
• Contribute to a 529 plan if your state allows deductions for contributions made by April 15.

Reviewing your return with these strategies in mind could lead to real tax savings.

2. Not evaluating potential tax credits

Unlike deductions, which lower taxable income, tax credits reduce your tax bill dollar for dollar. Some commonly overlooked credits include:

• Child tax credit — available for qualifying dependents and can reduce your tax bill by up to $2,000 a child.
• Earned income tax credit — designed for low- to moderate-income earners.
• Saver's credit — for eligible taxpayers who contribute to retirement accounts.
• Education credits — such as the American opportunity credit and lifetime learning credit.
• Energy-efficient home and vehicle credits — available for people who invest in solar panels, electric vehicles, or energy-efficient home improvements.

Each credit has eligibility requirements, so reviewing them before filing is essential.

3. Forgetting to report 1099 documents

I've seen people forget to report 1099 income many times. In most cases, it's an honest oversight — maybe you opted to receive your 1099s electronically and missed the email, or perhaps a form got lost in the shuffle. But failing to report this income can trigger IRS notices, penalties, or even an audit.

Here are some common 1099 forms to look out for:

• 1099-INT — reports bank interest.
• 1099-DIV — reports dividends and distributions.
• 1099-B — reports proceeds from selling stocks, bonds, or other investments.
• 1099-R — reports distributions from retirement accounts, pensions, or annuities.
• 1099-NEC — reports nonemployee compensation of $600 or more (even if you earn less than $600, this income should still be reported).
• 1099-G — often issued for state tax refunds, unemployment benefits, or other government payments.

Taking the time to collect and report these forms accurately can help you avoid costly IRS penalties and ensure your tax return is filed correctly the first time.

4. Forgetting to report estimated tax payments made throughout the year

People often forget to report their estimated tax payments, which are quarterly tax payments from self-employment income made throughout the year. If you don't include these payments on your tax return, you could end up overpaying or delaying your refund.

While the IRS or your state tax agency may eventually catch the omission and adjust your return, relying on them to do so is risky — corrections can take time and may not always be accurate.

To avoid this, I always advise my clients to keep a detailed record of their estimated tax payments. As a CPA, I also track these payments to ensure they are properly reported on the return.

5. Not double-checking the accuracy of imported W-2s

Many taxpayers assume that tax-software import features are error-proof — but that's not always the case. Just because your W-2 imports successfully doesn't mean it's 100% accurate.

Formatting errors, missing digits, or incorrect employer-reported information can lead to costly mistakes. Always double-check that your imported information matches your physical W-2.

6. Not planning for taxes for side hustles

It's easy to overlook taxes on side-hustle income. Many people don't set aside or pay taxes throughout the year, thinking their side income is too small to matter.

But even an extra $10,000 in earnings can create a surprise tax bill. For example, if your effective tax rate is 20%, that's $2,000 owed — plus penalties if you didn't meet the IRS safe harbor rule.

To avoid this, I always advise my clients to set aside a set percentage of their side-hustle income for taxes. Depending on the amount, making quarterly estimated tax payments can help prevent unexpected tax bills and penalties.