We all know that filing taxes can get complicated, especially when dependents, deductions, and multiple income sources come into the equation and numerous extra forms and schedules are required in your return. The common mistakes listed below arise when dealing with these detailed parts of your tax return. Although many taxpayers might not have encountered some of these situations, having awareness is important – if you do find yourself needing to handle these aspects of US taxes in the future, you’ll be well prepared.
Using an Incorrect Filing Status
Your filing status has a significant impact on your tax return. It affects:
Whether you need to file a return at all
How much tax you owe
Credits and deductions you are eligible for
What tax filing forms you should use
Your standard deduction amount
Whether or not you are eligible for a refund…
And more. There are currently five separate filing statuses; determining the correct one is essential:
Single (unmarried, divorced, legally separated)
Married filing jointly
Married filing separately
Head of household (you’re single, but you have a dependent)
Qualifying surviving spouse
Notably, if you are married, you have a choice to file jointly or separately. This can also have a major impact on your total tax liability as a couple, and you should carefully consider your options when it comes to choosing your status. You can refer to our guide "A US Taxpayer's Field Guide: The Essential IRS Forms and Concepts" on preparing for US Tax filing for more information on how to choose your filing status.
The downsides of using the incorrect filing status can range from missing out on tax benefits to financial or even criminal penalties from the IRS if you are determined to have intentionally mis-reported your filing status for your own advantage.
Claiming Improper Dependents
For the average US Taxpayer, the question of who is or is not your dependent is usually fairly straightforward. However, this isn’t always the case, and sometimes making the correct determination of who is or is not your dependent can get quite messy.
Given how many rules there are about relationships, support provided or earned, and who spent how long living where, it’s no wonder that mistakes can be made about who qualifies as a dependent on your tax return. If you’ve gone through a divorce, custody circumstances can make the situation that much more difficult to navigate.
If you are listing dependents on your tax return, be absolutely sure that they qualify under the requirements listed by the IRS.
Generally speaking, a dependent must:
Be a US Citizen, resident alien, or resident of Canada or Mexico
Not be claimed as a dependent on any other tax return
Not claim any dependents of their own
Be a qualifying child or relative of the filing taxpayer
Qualifying children must:
Be your son, daughter, stepchild, eligible foster child, brother, sister, half-sister or -brother, stepbrother, stepsister, adopted child or the child of one of these in this list
Be under 19 (24 if they are a full-time student), (any age if they are permanently and completely disabled)
Live with you for over half a year (with exceptions)
Receive more than half their financial support from you
Qualifying relatives must:
Not be a qualifying child
Live with you full-time as a member of your household
Has gross income under USD 4,700
Gets more than half their financial support from you
More rules and exceptions apply to the above. For the full list of regulations, refer to the IRS page on dependents.
If you have any doubt about claiming dependents on your tax return, we definitely recommend consulting with a tax professional to be sure that you are doing so correctly. The IRS absolutely does look into the details of these claims, so don’t assume that you’ll fly under the radar.
Claiming improper credits and deductions
Deductions and credits are an important part of every individual income tax return – especially if you choose the itemized deductions approach instead of opting for the standard deduction.
This is another aspect of tax filing that can be a double-edged sword. If you mistakenly claim the wrong credits or deductions and you may be liable for IRS penalties and fines – on the other hand, not claiming credits or deductions that you are eligible for could potentially cost you thousands of dollars in tax savings.
Some of the most commonly overlooked credits and deductions include (but are not limited to:
The Earned Income Tax Credit (for low and moderate-income taxpayers)
Costs of caring for dependents
IRA Contributions for you and your spouse, and related retirement savings credits
The Lifetime Learning Credit for taxpayers paying college tuition
Credits and deductions are a complex topic, and they’re constantly changing. We’ve prepared a comprehensive overview of the most essential credits and deductions you should be aware of as a US Taxpayer - you can find it here "US Federal Taxes: Inheritance, Marriage, Expenses and Deductibles".
Again, having a certified tax professional on your side here can save you from both missed opportunities and potential penalties or fines. It’s their job to know exactly what credits and deductions apply to your unique situation.
Copyright © 2025 by Del Sol CPA Services
Comments