Tax Pros Warn of 4 Common Strategies That Can Trigger Costly Mistakes
Written by
J. Arky
Edited by
Jenna Klaverweiden
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Lots of us might have a system when it comes to planning for and filing our taxes, but some methods can actually get you in trouble.
GOBankingRates got in touch with tax pros who warned of four common strategies that can trigger costly mistakes.
Bad Recording Keeping
One thing that can lead to costly mistakes is bad record keeping.
“Not keeping good records such on investments they buy and sell, particularly digital assets such as cryptocurrency, or when they make money on these assets such as from staking,” explained Annette Nellen, a tax professor at San Jose State University. “For many of these transfers in 2025, the IRS and owner will get Forms 1099-DA reporting sales proceeds and taxpayers need to be able to reconcile these to their records and report correctly or likely get a notice from the IRS.”
Missing Out on Tax-Preferred Retirement Accounts
Nellen highlighted that not taking advantage of tax-preferred retirement accounts — e.g., contributing to an IRA if not covered by a plan or not taking an employer match to your 401(k) account at work, if offered — could hurt you come tax season.
“These rules are complex, but if you have the ability to save through an IRA, 401(k), 403(b) or plans for self-employed-take advantage of the savings and tax deferral possible,” Nellen said.
Qualifying Children
According to Kurt Walcutt, principal, tax at Sikich, the Earned Income Tax Credit (EITC) is fraught with errors around qualifying child rules, that is claiming children who do not meet residency or relationship requirements.
“If a taxpayer qualifies for the Child Tax Credit, errors often mirror those of the Earned Income Tax Credit, specifically regarding qualifying child definitions,” Walcutt said.
Refusing To Sell Investments To ‘Avoid Paying Taxes’
This is one of the most common emotional tax traps, according to Tony Pitzer, a wealth manager at Merit Financial Advisors, where instead of selling an investment such as stocks, people hold on to “avoid taxes.”
“There’s no gain, no tax due but also no profit,” Pitzer said. “You are better off to pay taxes on gains and walk away … Taxes should never be the sole reason to hold or sell an investment. Investment decisions should lead and tax consequences should follow.”
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