Taxes Are Still Complicated, and It’s Costing Americans Billions — How You Can Save This Season
Written by
Sarah Li Cain
Edited by
Amen Oyiboke
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Americans brace for tax season each spring, and each time we seem to be reminded of an uncomfortable truth. That is, the U.S. tax system is so complicated that many might be making mistakes or missing steps that are costing taxpayers.
Research shows that taxpayers are losing billions of dollars because of the difficulty in navigating the tax system, avoiding costly mistakes and claiming what they’re entitled to. The promising news is that with a few best practices, many Americans can save this tax season.
How Tax Complexity Hurts Americans’ Wallets
The National Taxpayers Union Foundation found that Americans in the 2025 tax year spent 7.1 billion hours on tax-related paperwork and spent around $148 billion in filing expenses.
Plus, the IRS reported that about 1.1 million taxpayers had yet to file their 2021 tax returns. The taxpayers are owed over $1 billion in refunds that they’ll lose permanently if they don’t act now. Many could walk away with large amounts, as the median refund among these taxpayers is $781.
Tax credits that are designed to help families also go largely unclaimed. A U.S. Treasury analysis shows that 5.4 million eligible taxpayers failed to claim the Earned Income Tax Credit in 2020, which meant these taxpayers left $7.6 billion on the table. More tax credits go unclaimed, like childcare costs and home energy upgrades, because filers don’t know if they qualify.
Those who missed the 2025 deadline have collectively lost about $1 billion in recovery rebate credits (aka, stimulus checks from the pandemic). All because they didn’t file a tax return.
How You Can Save This Season
The lesson here is that you should probably file taxes even if you’re not sure you’ll get a refund or that you qualify for any credits. You don’t want to lose out on cash you’re technically owed.
You can find help with filing taxes, as low to no-cost options exist. You can look at state resources to see what options are available, compare DIY software options, or take advantage of IRS resources like volunteer programs or Free File.
When you go to file your taxes or ask for professional help, make sure you claim every credit you can qualify for. Ask as many questions or do as much research as you can to see what you can claim. You don’t want to be among the taxpayers who lose out on a collective billion in unused credits.
Choosing good tax software or experienced tax preparers can help you automatically screen your eligibility for dozens of these credits.
Another step you can take is to adjust your withholding. The average 2025 tax refund was $2,939, according to the IRS, which meant that the government held onto funds that you could have used throughout the year.
Speak with your human resources to update your W-4 to see if you can change your withholding, so you can keep more of your take-home pay now, instead of waiting for the refund.
Ultimately, getting organized now will help you save money and claim what you’re owed. Think about it: Filing late and scrambling at the last minute to get your documents ready could lead to incorrectly filing your return.
While it’s not exactly fun, it’s worth it to take the time to organize your receipts, documents and any records to show you qualify for deductions so you’re not leaving money behind.
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