5 Big Tax Mistakes That Quietly Cost People Money Every Year

Financial Horizons: Insights for Building Wealth and Securing Your Legacy

By Dr. Jose G. Cardenas, Chief Tax Strategist at The C & R Group, LLC

Here’s the thing about taxes:

Most people don’t get hurt because they’re trying to cheat the system.
They get hurt because they’re busy, overwhelmed, or guessing—and small mistakes quietly turn into penalties, lost refunds, or money left on the table.

The good news? You don’t need to know the entire tax code to protect yourself. If you simply avoid the biggest, most common mistakes, you’re already ahead of most taxpayers.

Let’s walk through 5 big tax mistakes to avoid and what to do instead.

1. Failing to File a Tax Return

Mistake #1 is simple—and costly: not filing at all.

People skip filing because they’re:

• Afraid they owe and don’t have the money
• Confused about whether they’re required to file
• Overwhelmed with life and letting paperwork pile up

Here’s the problem:

• If you owe, penalties and interest start stacking up when you don’t file.
• If you don’t owe but had tax withheld, you might actually be due a refund—but you’ll never see it if you don’t file.
• For some credits (like certain refundable credits), filing is the only way to claim money the government is willing to send you.

Better move:

• File something, even if you can’t pay in full.
• If you’re behind, get help filing past-due returns instead of hiding. The IRS is much easier to work with when you’re making a good-faith effort to get current.

2. Not Reporting All Income

The IRS gets copies of most of the same forms you do—W-2s, many 1099s, and other income documents. If you leave something off, the system eventually notices.

Common misses:

• Side gigs and freelance income
• Online sales or contract work reported on 1099 forms
• Small interest/dividend amounts (“It’s only a few dollars, it doesn’t matter”)
• Pension, Social Security, or retirement distributions
• Unemployment or other benefits

Underreporting income—on purpose or by accident—can trigger:

• IRS notices
• Back taxes owed
• Penalties and interest

Better move:

• Create a simple checklist of every place you earned money last year.
• Wait until you’re confident you have all income forms before filing.
• If you receive a late 1099 or realize you missed something, amend the return instead of hoping it slips through.

You don’t want to be in a “the IRS found it before I fixed it” situation.

3. Filing the Incorrect Form or Filing the Right Form the Wrong Way

Tax forms look similar—but they’re not interchangeable. Filing the wrong form or leaving required schedules out can lead to processing delays, incorrect tax calculations, or lost credits.

Examples:

• Using the wrong form or schedule for self-employment income
• Missing the additional forms needed for investments, rentals, or business activity
• Filing only a basic form when you actually qualify for credits that require extra documentation
• Incorrectly filing as an independent contractor when you’re really an employee—or vice versa

Better move:

• Before you file, ask: “Did anything new happen this year—business, side job, investments, move, major life change?”
• If the answer is yes, don’t just assume last year’s setup still works.
• When your situation gets more complex, that’s the moment to bring in a professional instead of guessing your way through new forms.

Your tax return is not just a document—it’s a financial report to the government. Make sure it actually reflects your real life.

4. Forgetting to Claim Deductions or Credits You’re Eligible For

This is one of the most expensive mistakes of all—not because you did something wrong, but because you didn’t claim what you were legally allowed to.

Common areas where people leave money on the table:

• Retirement contributions (IRAs, 401(k)s, and plans for the self-employed)
• Certain education expenses and credits
• Child and dependent care expenses
• Health Savings Accounts (HSAs) in eligible situations
• Charitable contributions to qualified organizations
• Legitimate business or self-employment expenses

Two big reasons this happens:

1. People don’t know what to look for.
2. They don’t keep good records during the year, so by tax time, the details are gone.

Better move:

• Think year-round, not just in March or April.
• Keep folders—physical or digital—for things like charity, education, medical, and business expenses.
• At least once, have a professional review your situation to identify credits or deductions you may have been missing.

Sometimes the quickest way to “save on taxes” is simply to stop giving up deductions you already qualify for.

5. Making Estimated Tax Payments Blindly

Here’s a sneaky one:

Paying too few estimated taxes can lead to penalties.
But paying too much—without a plan—is a way of giving the government an interest-free loan with your money.

Many business owners, self-employed individuals, and investors either:

• Don’t make estimated payments at all (and get crushed by a big tax bill), or
• Throw money at estimates without knowing if the numbers are accurate.

Either way, you’re operating on guesswork, not strategy.

Better move:

• Work with a tax professional to calculate realistic estimated payments based on your income pattern.
• Adjust during the year if your income goes up or down.
• Build tax savings into your monthly cash flow so you’re not scrambling or massively overpaying.

You want your estimated payments to be intentional—not random.

How to Stop Making These Mistakes for Good

All five of these mistakes have one thing in common:

They come from reacting to taxes instead of planning for them.

You can change that by:

• Filing on time—even if you need an extension or payment plan
• Reporting all income and keeping a simple list of where it comes from
• Using the right forms and schedules as your financial life evolves
• Tracking deductions and credits throughout the year
• Making estimated tax payments based on a real plan, not fear or guesswork

You don’t need perfection. You need a system—and a professional you can lean on when the numbers start to get serious.

🔗 Read more at: www.thecrgroupllc.com/blog

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About the Author

Dr. Jose G. Cardenas is a retired U.S. Army Finance Officer and the Chief Tax Strategist at The C & R Group, LLC. With a Doctorate in Business Administration and over 20 years of experience in financial strategy and tax planning, Dr. Cardenas helps individuals and business owners avoid costly tax mistakes, protect their wealth, and build a lasting legacy. Learn more at www.thecrgroupllc.com

📌 Disclosure

This article is for educational and informational purposes only and is not intended to serve as personalized legal, tax, or investment advice. Tax laws, filing requirements, and penalty rules are complex and subject to change. You should consult with a qualified tax professional about your specific situation before making any decisions. Dr. Jose G. Cardenas, DBA, provides tax advisory services through The C & R Group, LLC. Insurance and investment strategies may be offered through his role as a licensed financial professional affiliated with Experior Financial Group.

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