Six Tax-Filing Mistakes That Cost Americans the Most Money Each Year

Small tax errors can quietly erode long-term wealth.

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When it comes to the most expensive tax-filing mistakes, audits or penalties are rarely involved. Missed opportunities and preventable reporting errors are usually the biggest culprits. The most common tax-filing mistakes are:

• misreporting investment income
• overlooking filing status after major life changes
• mishandling retirement account distributions
• overlooking rules about side income
• misunderstanding home sales and real estate basis
• not correcting errors before and after filing

By understanding where these mistakes typically occur and correcting them before filing, you can avoid losing thousands of dollars over time.

Let’s break down where Americans lose the most money and how to prevent it.

1. Misreporting Investment Income

Investment income creates complexity. Brokerage accounts generate multiple forms: 1099-DIV for dividends, 1099-INT for interest, and 1099-B for capital gains.