Tax season 2026 — common filing mistakes

Mistakes that trigger automated notices

Math errors: discrepancies between lines (e.g., AGI on line X doesn't match the sum of the inputs that should produce it). DIY software typically catches these but manual paper returns generate notices for math errors.

Mismatched-1099 totals: a 1099 issuer reported income to the tax authority that doesn't appear on your return. The matching system at the IRS, HMRC, ATO, CRA, etc. flags these automatically and generates a notice asking for clarification.

Missing forms: required schedules or supplemental forms not attached. Common omissions: Schedule SE for self-employment tax (US), Schedule B when interest or dividend income exceeds the disclosure threshold (US), Form 8938 when foreign-asset thresholds are met (US), foreign-bank account questions on Schedule B regardless of FBAR threshold (US).

Identification mismatches: name on the return doesn't match the SSN/ITIN on file with the tax authority (often after a name change without underlying SSN/SSA update).

Mistakes that trigger audit selection

Disproportionate Schedule C losses: sustained Schedule C losses without offsetting non-employee-compensation income raise hobby-loss audit risk under IRC §183. The IRS publishes specific audit-selection criteria around hobby-loss issues.

Unusually large deductions relative to income: charitable contributions or business expenses that are large relative to AGI without supporting documentation can trigger audit selection. The DIF (Discriminant Information Function) score that the IRS uses for audit selection is undisclosed but is known to weight unusual-deduction patterns heavily.

Unreported foreign assets: undeclared foreign bank accounts that subsequently get reported through the Common Reporting Standard (CRS), DAC2, or the US Foreign Account Tax Compliance Act (FATCA) intergovernmental agreements. The tax authority cross-checks domestic returns against foreign-source data; mismatches generate notice.

Undeclared cryptoasset gains: tax authorities increasingly receive cryptoasset transaction data from licensed exchanges. Undeclared disposals at major exchanges generate matching notices similar to 1099-B mismatches. The crypto-tax topic hub covers the framework in detail.

Mistakes that increase tax owed

Choosing the wrong filing status: in the US, married-filing-jointly vs. married-filing-separately materially changes the tax calculation; head-of-household requires specific qualifying-dependent and household-maintenance criteria. Choosing the wrong status often increases tax owed by hundreds or thousands of dollars.

Not claiming all available credits: child tax credit, earned income tax credit, retirement-savings contribution credit, education credits — a high percentage of eligible filers in DIY-prepared returns either don't claim or claim incorrectly. Each missed credit is dollar-for-dollar tax savings.

Mishandling stock-based compensation: ISO/NSO/RSU/ESPP transactions have specific cost-basis adjustments that brokerage 1099-B statements often report incorrectly under reporting category 1099-B box-code rules. The default 1099-B reporting frequently double-taxes ESPP and RSU vesting because the income was already taxed via wage withholding when the equity vested.

Not reconciling estimated tax payments: filers who made quarterly estimated tax payments need to reconcile the actual payments against the calculated estimated tax credit on the return. Misreporting the actual paid amount results in overpayment of the balance owed.

Mistakes that create future risk

Not retaining cost-basis records for cryptoasset disposals: where the disposal proceeds are reported on a 1099-B but the cost-basis is not (cost-basis defaults to zero on the 1099-B, generating apparent gain equal to disposal proceeds), the filer needs cost-basis records to override the default. Loss of cost-basis records means the apparent gain stands.

Not retaining substantiation for deductions: charitable contributions over USD 250 require contemporaneous written acknowledgement under IRC §170(f)(8). Without the acknowledgement, the deduction is disallowed on audit even if the contribution actually occurred.

Missing the late-election deadline for tax-favorable treatment: many tax-favorable elections (Section 179 for accelerated depreciation, S-corp election under Form 2553, late-filing relief under Rev. Proc. 2013-30) have specific deadlines. Missing the deadline often makes the election unavailable.

Filing an inconsistent prior-year amended return after current-year filing: amending a prior year after the current year is filed creates a sequence-dependence: the amended return needs to feed forward to the current year, and the current year's basis carries from the amended prior year. Amend in chronological sequence.

How to mitigate

Engage a qualified preparer for any return with: international elements, business income, real estate income, stock-based compensation, multiple income sources, complex deductions, cryptoasset activity at scale.

Where DIY is appropriate (single-W-2, standard deduction, no foreign asset reporting, no business income), use software that has been certified by the relevant tax authority's e-file program (IRS Free File, HMRC online filing, ATO myTax, CRA NETFILE).

Cross-check the return before filing: review every line, confirm no obvious omissions, verify identification matches your authority records, run the integrated software's pre-file diagnostic check. Spend 30 minutes on the cross-check; it materially reduces post-filing notice volume.

Retain documents in the format described in the preparing-your-documents article for at least the relevant statute-of-limitations period.