Harris: Avoiding red flags and common tax mistakes

By Charlestien Harris, Retired Financial Coach at Southern Bancorp

Usually, the IRS begins accepting 2025 tax returns by the end of January for the new tax season. Most employers should have mailed the necessary tax documents by January 31, allowing most filers to begin preparing their returns. However, there are several things you, as the tax filer, need to be aware of to avoid triggering an IRS audit or making mistakes during the preparation process. The last thing you want is to be audited or have your refund delayed because of an avoidable error. Below are a few key items to pay close attention to so you can avoid audit red flags or mistakes when filing your tax return.

1. Not reporting all your income.
   The IRS matches the income you report with what is submitted by your employer and other agencies to verify accuracy. Failing to report all your income is a major audit trigger. Make sure you have received all of your income documents before filing. This will help you avoid needing to amend your return later, which can delay your refund if you are expecting one.
2. Mixing business and personal expenses.
   The IRS frowns on tax returns that combine business and personal expenses. Keep separate records for each. Claiming 100 percent business use of a vehicle that you also use personally is a red flag. Maintain a log for both business and personal miles driven. Accurate recordkeeping helps you avoid math errors and potential audit concerns.
3. Using rounded numbers for deductions.
   The IRS discourages using rounded numbers because they suggest estimation rather than actual documented amounts. Rounded figures may signal poor recordkeeping or missing documentation, which could be viewed as deceptive during an audit.
4. Reporting excessive business deductions.
   The IRS has expectations regarding the proportion of deductions relative to your income. Only claim deductions you can legitimately support with written documentation. Unusually high deductions, especially on Schedule C, can raise red flags.
5. Failing to check your math.
   According to the IRS, math errors are the number one mistake on tax returns. Many mistakes are caught by the IRS system, but they can still cause delays. Like Santa checking his list, review your return once, twice, and even a third time for accuracy. Math errors can delay both processing and refunds.
6. Incorrect personal information.
   It is critically important that names, Social Security numbers, and addresses match what the IRS has on file. Any discrepancies can delay processing for weeks or even months. As a VITA tax preparer, I have seen returns rejected simply due to inaccurate personal information entered during e-filing.
7. Incorrect filing status.
   Filing status errors are another common reason for processing delays. Most tax software includes questions to help determine your correct status. Claiming an incorrect status – such as Head of Household when your dependent cannot be verified – raises red flags. Make sure you have proper documentation for each dependent you claim. The IRS will verify eligibility.
8. Not filing an extension when needed.
   If you cannot complete your return by the deadline, filing an extension is essential. An extension does not delay the due date for taxes owed, and you may still incur penalties for late payment. However, the extension protects you from penalties related to failing to file.

This is only a short list of common mistakes and red flags the IRS frequently encounters. Some ways to avoid them include keeping detailed written records and receipts, using IRS-vetted tax software, ensuring you have all your documents before filing, and, if necessary, filing an amended return. Mistakes happen, and sometimes they are discovered only after you file.

For more information on this and other financial topics, you can email me at charlestienharris77@gmail.com or write to me at P.O. Box 1825, Clarksdale, MS 38614. 

Until next week – stay financially fit!

Charlestien Harris is our financial contributor, a retired financial coach with Southern Bancorp.