Nobody sets out to file an incorrect tax return. But it happens — a lot. Some of the errors we see are small and get caught quickly. Others sit quietly on a return for years until an IRS notice arrives or a refund comes in smaller than expected. The common thread is that almost all of them are avoidable.

We're not talking about aggressive tax positions or grey-area deductions. These are straightforward mistakes — the kind that cost people real money because they didn't know what to look for.

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Filing Under the Wrong Status

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This one has an outsized impact relative to how simple it seems. Your filing status determines your standard deduction, your bracket thresholds, and your eligibility for a range of credits. Getting it wrong doesn't just change one line on your return — it ripples through the entire calculation.

The most common version of this we see: a single parent filing as Single instead of Head of Household. The difference in standard deduction alone can be significant, and Head of Household also has wider tax brackets, meaning more of your income is taxed at lower rates. (Standard deduction figures vary by year and are indexed.)

We also see married couples who default to Married Filing Jointly without running the numbers for Married Filing Separately. In most cases, joint is better. But when one spouse has significant medical expenses, student loan considerations under income-driven repayment plans, or certain liability concerns, filing separately can produce a better outcome. It's worth checking both ways every year.

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Not Reporting All Income

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The IRS doesn't need you to tell them what you earned. They already have third-party reporting and they match what they received against what you filed. If the numbers don't agree, you'll hear about it.

The most common version of this isn't deliberate underreporting. It's forgetting. You did some freelance work in February and by the time you file in April, it's slipped your mind. You earned $43 in interest from an old savings account and didn't think it mattered. You sold some stock and assumed the brokerage handled the taxes.

It all matters. It all gets matched. A CP2000 notice — the automated “we think you owe more” letter — is a common outcome when third-party data doesn’t match the return.

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Choosing the Standard Deduction Without Checking

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The standard deduction is generous under current law. For tax year 2025 under the One Big Beautiful Bill Act, it’s $15,750 for Single (and Married Filing Separately), $31,500 for Married Filing Jointly, and $23,625 for Head of Household.

For many people, the standard deduction is the right call. But “many” is not “all,” and we see taxpayers take the standard deduction year after year without ever running the itemized calculation.

Homeowners in San Diego are one of the most likely groups to benefit from itemizing. Between mortgage interest, charitable contributions, medical expenses in some years, and state and local taxes, the itemized total can exceed the standard deduction — sometimes by a meaningful amount.

Under the One Big Beautiful Bill Act, the SALT cap is temporarily higher, but it is not “$40,000 for everyone.”

Here’s what the current SALT rules do, in plain English, using the law’s actual breakpoints and mechanics:

• The SALT deduction cap is $40,000 for tax year 2025 ($20,000 if Married Filing Separately).
• The higher cap is reduced if your modified adjusted gross income (MAGI) is above the threshold, and the reduction is $0.30 for every $1 of MAGI over the threshold.
• The cap will not phase down below $10,000 ($5,000 if Married Filing Separately).
• The cap increases by 1% per year from 2026 through 2029, and the phase-down threshold also increases by 1% per year over the same period.
• The cap reverts to $10,000 in 2030 (and the phase-down thresholds no longer apply after 2029).

Here are the practical income breakpoints (MAGI) that trigger the phase-down, plus the caps that apply in each year:

• 2025 threshold: $500,000 (All other filing statuses) / $250,000 (Married Filing Separately); cap: $40,000 / $20,000.
• 2026 threshold: $505,000 / $252,500; cap: $40,400 / $20,200.
• 2027 threshold: $510,050 / $255,025; cap: $40,804 / $20,402.
• 2028 threshold: $515,151 / $257,575; cap: $41,212 / $20,606.
• 2029 threshold: $520,302 / $260,151; cap: $41,624 / $20,812.

What that means in practice is straightforward:

• If your MAGI is at or below the threshold for the year, you get the full higher cap (assuming you itemize).
• Once you cross the threshold, your cap drops by $0.30 for every $1 above it until it hits the floor.
• Because the phase-down is 30%, the cap hits its floor once you’re $100,000 above the threshold (since $100,000 × 0.30 = $30,000 of reduction). This is just the math implied by the law’s 30% phase-down rule and the $40,000-to-$10,000 range.

If you refinanced, paid points, made large charitable gifts, or had significant medical bills, the itemized number may surprise you. We run both calculations for every client, every year. The answer can change depending on what happened financially. Taking the standard deduction on autopilot is leaving potential savings unchecked.

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Overlooking Credits You Qualify For

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Tax credits are more valuable than deductions. A deduction reduces your taxable income. A credit reduces your actual tax bill, dollar for dollar. And yet, we regularly see returns where eligible credits weren't claimed.

The big ones people miss include the Earned Income Tax Credit, the Saver's Credit, the Child and Dependent Care Credit, and education credits like the American Opportunity Tax Credit and the Lifetime Learning Credit.

California has its own credits too. If you're only looking at federal forms, you're potentially missing state-level money.

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Mishandling Self-Employment Income

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This is a big one in San Diego, where gig work, freelancing, and side businesses are everywhere. Self-employment income reported on Schedule C isn't just subject to income tax — it's subject to self-employment tax at 15.3% up to the Social Security wage base (which changes annually), plus the 2.9% Medicare portion above that.

The mistakes we see: not deducting the employer-equivalent portion of self-employment tax on the 1040, not tracking business expenses throughout the year, and not making estimated payments.

And the one that costs the most over time: not considering whether an entity election makes sense once your net income is consistently high enough for the numbers to justify it.

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Mistakes on the Basics

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It almost feels too simple to mention, but transposed Social Security numbers remain one of the top reasons returns get rejected. One wrong digit and your return bounces back. Check the numbers against the actual cards, not from memory. Every year.

Wrong bank account numbers for direct deposit. Forgetting to sign the return. Entering a W-2 amount in the wrong box. These aren't sophisticated errors, but they cause delays, rejected filings, and in some cases, lost refunds.

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The Bigger Picture

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Most of these mistakes share a common cause: rushing. Filing too early before all documents are in. Filing too late under pressure. Using software without understanding what the questions are actually asking. Carrying forward last year's assumptions without checking whether anything has changed.

A good tax professional doesn't just fill in boxes. They review the full picture, ask questions you might not think to ask yourself, and catch issues before they become notices. That's the difference between filing a return and filing the right return.

San Diego Tax Associates is here to make sure your return is done correctly the first time.

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