Tax experts share the 6 biggest mistakes people make when filing

The process of filing taxes can be daunting and complex, so it can be easy to make a mistake if you’re not careful — and these tax mistakes can end up costing you. So I spoke to top tax experts to find out the silly mistakes people make on their taxes, and how to either quickly fix them or even avoid them entirely. Read what they had to say before you file so that you don’t end up missing out on money that could go into your refund — or worse, paying fees that you shouldn’t have to.

This content is not available due to your privacy preferences.
Update your settings here to see it.

1. Losing Out on Deductions

“The biggest mistake people make with taxes is poor bookkeeping,” said Doug Lynam, director of educator retirement services at LongView Asset Management. “As a general rule, if you don’t track an expense, you can’t deduct it — weak data in, weak results out. Be sure to set aside time each week for bookkeeping. Don’t procrastinate! Trying to do all the paper-pushing at tax time is a migraine wrapped inside a nightmare.”

Robert Fishbein, vice president and corporate counsel with Prudential Financial, Inc., agreed that keeping track of expenses throughout the year is the best way to make sure you don’t miss any deductions you might qualify for.

“Those who have waited until the last minute to do their taxes often risk losing deductions,” he said. “The time to consider what deductions you have and can report should be a yearlong process. As the year goes on, you should be keeping a list or otherwise collecting the documentation to support such deductions. At year-end, many — but not all — of those deductions will be reported to you, and you can then cross check against your records to confirm the tax reporting is accurate (sometimes the reporting companies make errors!).”

To prevent missing out on deductions, Fishbein suggests using online resources, like LINK by Prudential, which helps you keep track of your finances so you can easily see which deductions you might qualify for.

Find Out: Here’s Every Single Tax Deduction You Could Possibly Ask For

2. Missing the Filing Deadline

The tax filing deadline for 2019 is April 15, or April 17 for residents of Maine and Massachusetts — and this is a deadline you don’t want to miss.

What happens if you file taxes late? Well, the news isn’t great. “The penalty for missing the filing deadline makes it not just a dumb mistake, but a costly one,” said Nathan Rigney, lead tax research analyst at The Tax Institute at H&R Block. “The penalty for not paying in full is 0.5 percent of the unpaid balance per month with a maximum of 25 percent.

This content is not available due to your privacy preferences.
Update your settings here to see it.

The monthly penalty for not filing a tax return is 10 times that amount (5 percent) capped at a maximum of 25 percent. Interest also accrues on the unpaid tax and the penalties assessed. If you can’t file by April 15, request an extension to move the filing deadline to October 15. And if you can’t pay, file on time and request an installment agreement with the IRS.”

3. Stressing Out About Filing

“Many taxpayers get stressed when thinking about taxes — they don’t feel confident they can complete and file their tax return themselves. This is a big mistake,” said Seth Babb, director of consumer products at TaxSlayer. “TaxSlayer has spent the last few decades working to ensure taxpayers feel comfortable and confident that they have filed the most accurate tax return while receiving their maximum refund. Each year we turn taxpayers into TaxSlayers by providing them a way to e-file with all forms, credits and deductions included, allowing them to choose the level of support they want at the absolute best value. We thrive on creating new ways for taxpayers to spend more time on the things they want to do instead of the things they have to do.”

4. Waiting Until the Last Minute to File

“The changes to the tax laws from the Tax Cuts and Jobs Act have changed the deductibility of certain expenses, such as home mortgage interest, state and local tax payments, etc., so you want to make sure you allow yourself enough time to familiarize yourself with the new rules if you are filing your own return,” said Peter Mallouk, president of Creative Planning. “If you are working with a tax preparer, you’ll want to make sure you gather all of the appropriate receipts and other important tax documents as soon as possible to give them the adequate time to work on your return.”

5. Filing Too Early

While it’s a bad idea to be filing taxes late, it’s also a bad idea to file prematurely.

“Filing your tax return before you receive all the proper tax reporting documents is one of the most common errors we see with clients who used a DIY solution,” said Gernot Zacke, CEO and co-founder of Visor. “Remember that 401(k) you rolled over from a previous employer? Well, expect to receive a Form 1099-R by February 15. If you file without it you will get an IRS notice assessing tax, when in reality it was a tax-free rollover. If you wait till you receive the Form 1099 you will save yourself a lot of headaches. Another example is filing before you receive your 1099 from your taxable brokerage account. Filing without this will result in a tax notice assessing interest and penalties as well.”

Not only that, but it can also cause you to miss out on deductions if you don’t have all of your financial documents yet.

“Rushing to prepare the returns without having all [the] information needed [can lead to] missing potential deductions,” said Mike Savage, founder, owner and CEO of 1-800Accountant.

6. Not Filing Your Taxes at All

“The IRS reports every year that they have close to $1 billion in unclaimed tax refunds, and the average refund is about $700 per taxpayer,” said Lisa Greene-Lewis, CPA, senior communications manager and tax expert at TurboTax. “If you haven’t filed previous tax returns because you thought you didn’t make the IRS threshold for filing, which in 2018 was $12,000 [for single filers] and $24,000 married filing jointly, you may want to file since the IRS may be holding on to your unclaimed refund — especially if you had federal taxes withheld and are eligible for refundable tax credits like the earned income tax credit. You can go back three years and file for a tax refund.”

And depending on your situation, there can be a penalty for not filing taxes, so you’ll want to do what you need to in order to avoid paying even more.

Gabrielle Olya contributed to the reporting for this article.

This article originally appeared on GOBankingRates.com: Tax Experts Share the 6 Biggest Mistakes People Make When Filing

Your resource on tax filing
Tax season is here! Check out the Tax Center on AOL Finance for all the tips and tools you need to maximize your return.
Filing Your Taxes Late
What do you do if you can't meet the IRS filing deadline? Learn more about filing a tax extension, late payment and late filing penalties, and what to do if you can't pay your taxes.
Read MoreBrought to you byTurboTax.com
How to File an Amended Tax Return with the IRS
Did you make a mistake on your tax return or realize you missed out on a valuable tax deduction or credit? You can file an amended tax return to make the correction. Filing an amended tax return with the IRS is a straightforward process. This article includes step-by-step instructions for when and how to amend your tax return using Form 1040-X.
Read MoreBrought to you byTurboTax.com
Taxes 2021: 7 Upcoming Tax Law Changes
Tax Year 2021 will likely bring some surprises, but some of its changes are already planned. Here's what you need to know about some of the planned phase-outs, changes and inflation adjustments the IRS will present for taxes in 2021.
Read MoreBrought to you byTurboTax.com
Ways to Increase Your Tax Refund You Never Thought About
Laying the groundwork for a tax refund requires some simple tax planning, a little research and some forethought. Reviewing your tax status, consulting your spouse when filling out your W-4s and taking advantage of several tax credits can help you increase your tax refund. TurboTax also can help decide which credits can get you the biggest refund.
Read MoreBrought to you byTurboTax.com