Tax Mistakes That Can Get You in Trouble with the IRS


According to a survey, about 80% of people in the US made various mistakes when filing taxes in 2018. Over the years, this number increases as more people fail to observe the different tax code.

While some of the tax mistakes you make when filing returns may be minor, they might have significant consequences. Besides, an IRS investigation can pause operations in your business and affect professional relationships.

It’s essential to understand tax laws when filing your returns to avoid penalties and get your refunds in time.

Here, we discuss some common tax errors that may get you in trouble with the Internal Revenue Service (IRS). We’ll also offer tips on how you can avoid them and comply with regulations.

1. Missing the Filing Deadline

One major mistake most taxpayers make is waiting until the IRS deadline approaches to file returns. In some cases, some even forget to submit their forms until the date passes, exposing themselves to fines.

When you miss the given timeline, you risk paying a 5% penalty each month on the amount due. You will also have to wait for an extended period for the IRS to deposit the tax refunds you qualify for in your bank account.

If you suspect that you may miss or forget the deadline provided for tax remittance, it’s advisable to request an extension in advance. This will help you avoid paying the monthly lateness penalty. However, you will still incur a penalty and added interest on the value of taxes you were to remit.

2. Claiming Wrong Deductions

Deductions reduce your taxable income and can help you lower the amount of money you owe the IRS. The most common tax breaks include medical costs, charitable gifts, sales tax, and lifetime learning.

If you do not understand how tax codes work, you may end up claiming the wrong breaks. The IRS will then impose a 20% penalty on the amount you owe for wrongful deductions. You may also face criminal prosecution if the amount is substantial and go to jail or pay fines when found guilty.

It’s vital to learn more about different types of tax breaks before claiming them. Taking this step will help you avoid jail time, expensive penalties, and a damaged reputation.

If you already claimed a wrong deduction, you can still prevent these repercussions by filing an amended return or hiring a tax expert to do it.

3. Not Claiming Extra Income

If you earn money from more than one source, it may be challenging to keep up with the numbers. When filing your taxes, you may forget to include some of the money you made. Despite this mistake occurring most times due to genuine reasons, the IRS may consider it tax fraud.

Always ensure each job you do, whether part or full-time, issues you with either a Form 1099 or W-2. These documents will help you report all your incomes, including dividends and money earned as an independent contractor.

You should also keep track of all revenues and make sure you account for them when filing tax returns. Such measures will allow you to provide the IRS with correct information and help you avoid fines on unreported income.

4. Miscalculations

Another remittance error that can get you in trouble with the IRS is wrong math. Since most tax forms require you to do many calculations, the chances of making a mistake are high.

These miscalculations may cause you to pay an amount lower than what is due. You may then end up claiming wrong refunds and raise various concerns with the IRS.

The most effective way to avoid making such a mistake on a tax return is using online programs and software. These platforms can do the calculations and help you identify inconsistencies.

It’s also key to confirm each figure at least twice to avoid omitting or repeating some numbers. Other than that, consider getting help from an accountant or a tax professional at an agreed fee.

5. Forgetting to Sign

Failing to sign tax returns is among the filing mistakes that are minor but very common. Since the IRS considers unsigned tax documents invalid and does not process them, you should confirm your signature before sending.

If you remit your taxes electronically, make sure that you use your ID number or pin to sign. On the other hand, if you get someone to do it, ensure that they provide their IRS preparer tax Id number.

Taking these measures will help you observe all tax laws and regulations and avoid associated penalties.

6. Wrong Social Security Number

After you file taxes, the IRS uses your social security number (SSN) to confirm the information it receives from your employer or bank. In case you did not provide the right one, the details given will not match. As a result, the IRS will reject your forms and require you to repeat the filing process.

It’s advisable to always confirm your social security number twice before submitting your taxes. Moreover, if you file returns with a spouse, ensure that you write the SSN as indicated on their card. Alternatively, if they do not have one, you can use their individual taxpayer identification number (ITIN).

7. Filing Under the Wrong Status

The income tax rate applied by the IRS can differ depending on your marital status. Besides, the benefits you qualify for may vary based on the filing status you select.

If you pick the wrong one, the amount you owe may increase or decrease. Once the IRS discovers that you gave false information, they may impose a penalty. In severe cases, they may order an audit to confirm the integrity of the provided financial details.

You can avoid such repercussions by providing the correct information about your status and confirming the details indicated in your tax forms before sending them.

Contact the Law Office of Katie Lawson to Deal With Tax Mistakes

Tax mistakes may have minor or severe consequences depending on their intensity. At the Law Office of Katie Lawson, we provide you with the legal representation you need after making such errors.

Our attorney can also offer advice on various tax matters to help you stay compliant. Contact us today for reliable tax resolution services.