I’m an Accountant: Here Are 5 Mistakes You Are Making With Your Taxes in 2024
Written by
Jake Safane
Edited by
Molly Sullivan
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By this time of year, your W-2s, 1099s and other tax forms are probably rolling in, and before you know it, the April 15 tax filing deadline will be here. Not only can it be hard to understand the many nuances of the U.S. tax code, but these rules often change, and you don’t want to be caught off guard by misunderstanding new tax issues.
While you still have time to get your taxes in order, consider the following five mistakes that you should avoid, as explained by Tom Wheelwright, a certified public accountant (CPA) and CEO of WealthAbility.
Mistake No. 1: Not Taking the Threat of an Audit Seriously
It might seem like audits are too rare to worry about, or reserved only for the ultra-wealthy. But this year, it could be even more important to take the risk of getting audited seriously.
“The IRS is significantly ramping up its enforcement this year, thanks to $79 billion in additional funding from the Inflation Reduction Act. Congress earmarked most of that money for enforcement, including investigations, litigation support, and expanding the use of AI and other advanced technologies,” Wheelwright said. “Taxpayers who want to protect themselves should skip the DIY approach to filing their taxes and instead work with a skilled CPA who isn’t afraid of the IRS.”
Mistake No. 2: Missing Out on New Tax Credits and Deductions
Tax credits and deductions exist as a means to legally reduce your tax liability, thereby saving money. It’s important to understand that these can change from year to year, so you want to make sure you understand what the relevant credits and deductions are for you this tax filing season.
“Many taxpayers pay far more tax than they need to because they haven’t claimed all the tax credits and deductions to which they are entitled. There are usually two culprits at work: the taxpayers don’t know about the credit or deduction or aren’t keeping track of their expenses,” Wheelwright said.
“Some of the ones that will be most overlooked this year include the solar tax credit, electric vehicle tax credit, and business expense deductions for new entrepreneurs and gig economy workers,” he added.
Mistake No. 3: Not Handling Cryptocurrency and NFTs Correctly
Cryptocurrencies and non-fungible tokens (NFTs) remain relatively new territory, and those who own them might overlook how the IRS treats digital assets.
“While digital currencies are gaining popularity, few people understand their tax implications. Taxpayers who received, sold, exchanged or otherwise disposed of digital assets such as cryptocurrencies or NFTs must note this on their tax return,” Wheelwright said.
“They also must report any income they receive related to these transactions. Because the value of many cryptocurrencies and NFTs fluctuate throughout the year, this can get complicated quickly, so it is essential to work with a tax advisor skilled in this area of the tax law,” he added.
Mistake No. 4: Falling for Scams
Financial scams can happen at any time, but they’ve been very prevalent in recent years around tax time, and the threat only seems to be increasing.
“We’re likely to see an unprecedented number of fraudsters preying on taxpayers in 2024. High-income individuals are frequent targets of bogus schemes promising to reduce or eliminate taxes, while other scammers are out to capture your data for identity theft purposes,” Wheelwright said.
“To avoid these traps, taxpayers should educate themselves about legitimate strategies for tax reduction, be wary of anything that sounds too good to be true, protect their data, and work with an experienced tax advisor,” he noted.
Taxpayers can also turn to official government sites, including the IRS website, to verify information. For example, the IRS won’t use email, text messages or social media to request your personal or financial information, explains the Federal Trade Commission.
Mistake No. 5: Not Filing for an Extension If Needed
Lastly, some taxpayers might make the mistake of not filing for an extension. This can happen any year, but in recent years you might have automatically had a later filing deadline due to the pandemic or natural disasters in your area. For 2024, the federal tax filing deadline is April 15 unless otherwise noted by the IRS, such as for those in disaster relief areas.
“Thousands of taxpayers who don’t have all the information they need to file a complete, accurate return on April 15 will panic and either miss the deadline entirely or make costly mistakes by rushing,” Wheelwright said.
“The better course of action is to file for an extension, which will give you until Oct. 15 to get everything organized. Just be sure to understand that this is an extension to file, not an extension to pay. Any taxes you owe from 2023 are still due by April 15, 2024, to avoid penalties and interest,” he explained.
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