3 Tax Filing Mistakes That Could Cost Retirees the Most Money

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The tax season is in full swing, which means it’s time to get organized and prepare all your tax documents.

But for any retirees who haven’t started filing their tax returns yet, there are some common tax filing mistakes to be aware of before hitting the submit button because even the tiniest errors can cost you money or even delay a refund.

Not Claiming the New Deduction 

Because of the federal tax code changes that the One Big Beautiful Bill introduced, you can claim an additional $6,000 deduction if you’re 65 or older, or $12,000 when both you and your spouse are 65 or older.

That said, the deduction phases out for taxpayers with modified adjusted gross income over $75,000 ($150,000 for joint filers), and it’s not available for people with incomes above $175,000 ($250,000 for joint filers). Note that this new deduction is only temporary. It applies just for the 2025 through 2028 tax years. 

Not Giving Yourself Credit for Money Put Into Your House

Many retirees may have downsized and sold their house last year. If you’re a single filer, home-sale profits above $250,000 are taxed as capital gains. And if you’re married and filing jointly, that threshold is $500,000. However, because the IRS taxes your profit, you can actually subtract money you spent on home improvements over the years to lower your tax bill. 

So if you’ve put a new roof on the house, remodeled the bathroom or renovated your kitchen, you can deduct those costs when you’re calculating your profit from the sale of a home. Those investments can really add up, especially if you’ve lived in the home for decades and have put a lot of money into improving the home. 

Not Double-Checking Your Forms for Errors

Many math error notices are sent by the IRS each year. And when a tax return has errors, like typos or math mistakes, it can lead to longer processing times and even penalties. So before submitting your tax return, make sure to double-check everything.

If you’re using tax software to help you file, it should flag common errors and prompt you for missing information. But still, it’s worth spending an extra 10 minutes to review your forms and confirm details like your income, filing status, Social Security number, and any deductions or credits you claimed.

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