5 DIY Tax Filing Mistakes (and How to Avoid Them in 2026)

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Jessica Gonzalez, CPA | Published November 21, 2025 | Updated October 4, 2026

The most common DIY tax filing mistakes are missing an income form the IRS already has, claiming a credit or new deduction you don’t qualify for, entering stock or crypto sales without the right cost basis, getting withholding or estimated payments wrong, and missing deductions you do qualify for. Each one can lead to an IRS notice, a smaller refund, or a bigger bill.

Tax software is a good tool, but it only knows what you type in. The 2025 return brought more change than usual. The One Big Beautiful Bill Act added four new deductions on a new Schedule 1-A, Form 1099-K reporting rules changed again, and crypto exchanges sent the first Forms 1099-DA.

Here is what to check before you file, and when doing it yourself is perfectly fine.

DIY Tax Filing Mistake 1: Missing Income Forms the IRS Already Has

Small or unfamiliar forms are the easiest to miss: bank interest (1099-INT), dividends and brokerage sales (1099-DIV and 1099-B), contractor pay (1099-NEC), retirement distributions (1099-R), payment apps and online marketplaces (1099-K), and now crypto (1099-DA). Some arrive late. Some arrive corrected after you’ve already filed.

Why it matters

The IRS gets a copy of these forms and matches them to your return. When they don’t match, you may get a CP2000 notice proposing more tax. The IRS describes it simply: the income “we received from third parties, such as employers or financial institutions, doesn’t match what you reported” (IRS). These notices often show up many months after you file. If you already have one, here is how to respond to a CP2000 notice.

What changed with Form 1099-K

The One Big Beautiful Bill Act restored the old Form 1099-K threshold. Payment apps and online marketplaces only have to send one when your payments for goods or services exceed $20,000 and you have more than 200 transactions (IRS). Fewer people will get the form, but the income is still taxable whether or not you receive one (IRS 1099-K FAQs). Money from friends and family for gifts or shared expenses shouldn’t be on a 1099-K at all. If you sell goods or services on the side, that’s a business activity reported on Schedule C, and it’s handled as small business tax preparation.

What to do

• List every bank, brokerage, crypto, and payment account you used last year, and check that each one produced its form.
• Compare your forms with the wage and income transcript in your IRS online account. It can be incomplete early in the year, so don’t treat it as a full list.
• Use a checklist. Mine are on the resources page.

DIY Tax Filing Mistake 2: Claiming Credits or New Deductions You Don’t Qualify For

Software makes credits like the earned income credit, child tax credit, and American opportunity credit look simple. The eligibility rules are detailed: who lived with you, for how long, whose Social Security number, and how much you earned. If the IRS reduces or denies one of these credits for a reason other than a math error, you may have to file Form 8862 before claiming it again (IRS). In some cases you can be barred from claiming it for two or ten years (Form 8862 instructions).

The new Schedule 1-A deductions are easy to misclaim

For 2025 through 2028, Schedule 1-A covers four new deductions you can take whether or not you itemize. Each has rules that software questions can gloss over (IRS):

• Overtime. Only the extra “half” of time-and-a-half required by the Fair Labor Standards Act counts, not your total overtime pay. The cap is $12,500, or $25,000 on a joint return. For 2025, if your pay stub shows total overtime paid at 1.5 times your rate, the IRS lets you use one-third of that amount (IRS Notice 2025-69).
• Tips. Up to $25,000 of voluntary tips, and only in an occupation on the Treasury’s list of jobs that customarily received tips by the end of 2024. Self-employed tip earners have extra rules; I cover them in the tip deduction for self-employed workers.
• Car loan interest. Up to $10,000 a year, only on a loan taken out after 2024 for a new vehicle for personal use, with final assembly in the United States. Leases and used cars don’t qualify, and you need the VIN on your return.
• Seniors. Up to $6,000 per person age 65 or older.

All four phase out at higher incomes. For tips and overtime, the phaseout starts above $150,000 of modified adjusted gross income, or $300,000 on a joint return. If you’re married, you generally must file jointly to claim the tip, overtime, and senior deductions. These are income tax deductions only. Social Security and Medicare taxes still apply to tips and overtime.

What to do

Answer the eligibility questions slowly, and keep your pay stubs, employer statements, and loan papers with your return. If you’re not sure you qualify, ask before you claim it, not after a letter arrives.

DIY Tax Filing Mistake 3: Entering Stock and Crypto Sales Without the Right Cost Basis

Common errors include entering one total instead of each sale, importing the same data twice, and leaving cost basis blank. When basis is missing, software can treat the entire sale price as profit.

The first year of Form 1099-DA

Crypto brokers must report gross proceeds for digital asset sales made on or after January 1, 2025. Basis reporting only starts for certain sales on or after January 1, 2026 (IRS). So many 2025 Forms 1099-DA show what you sold for, but not what you paid. You need your own purchase records to fill in the gap.

Employee stock and wash sales

If you sold shares from employee stock options, the basis on your Form 1099-B may leave out the amount already taxed on your W-2. The Form 8949 instructions say to increase your basis by that amount. Skip that step and you can pay tax on the same income twice. Losses disallowed under the wash sale rule also need their own adjustment.

Why it matters

Errors here cut both ways. Missing basis means overpaying. Leaving out a sale the IRS can see on a 1099 means a mismatch notice.

What to do

Reconcile Form 8949 to each broker’s year-end statement before you file. Keep purchase records for crypto and for any shares you moved between brokers.

DIY Tax Filing Mistake 4: Withholding and Estimated Tax Errors

It’s easy to mistype a withholding amount, forget a quarterly payment, or pick up side income with no tax withheld. Changing jobs, holding two W-2 jobs, or starting a business makes it more likely.

Why it matters

You can end up with a surprise balance and an underpayment penalty. You generally avoid the penalty if you owe less than $1,000, or if your withholding and estimated payments covered at least 90% of this year’s tax or 100% of last year’s tax. If last year’s adjusted gross income was over $150,000 ($75,000 if married filing separately), the prior-year test is 110% (IRS).

What to do

Check your withholding mid-year, not in April. If you have side income, set aside part of each payment and make quarterly estimates. The last 2026 estimated payment is due January 15, 2027. This is a big part of year-round tax planning.

DIY Tax Filing Mistake 5: Overlooking Deductions and Credits You Do Qualify For

Software asks about what it expects. It won’t find a deduction you don’t know to mention. Items I’d double-check this year:

• The senior deduction if you or your spouse turned 65 by the end of the year. It phases out above $75,000 of modified adjusted gross income, or $150,000 for joint filers.
• Qualified overtime and tips for 2025, even if your W-2 doesn’t show them separately. Pay stubs can support a reasonable estimate under IRS Notice 2025-69.
• Interest on a qualifying new car loan taken out in 2025.
• HSA contributions you made outside payroll.
• Home energy credits for qualifying work in 2025. These credits ended after December 31, 2025, so don’t expect them for 2026 projects. The new and used clean vehicle credits ended for vehicles acquired after September 30, 2025 (IRS).

What to do

Before you file, compare this year’s return with last year’s line by line. Any big change should have a reason you can explain. If you find a missed item after filing, you can fix it with Form 1040-X (IRS).

When DIY Tax Filing Is Fine

Plenty of people file their own returns well. DIY usually works when:

• Your income is W-2 wages plus a little bank interest
• You take the standard deduction and nothing major changed from last year
• Your investment sales show full basis on the 1099-B
• You have no side business, rental, or crypto activity

Even then, use a checklist and compare with last year’s return before you file.

When to Get Help With Your Tax Return

It’s worth a second set of eyes if you started a side business, received your first 1099-K or 1099-DA, sold employee stock, claimed a new Schedule 1-A deduction you’re unsure about, had a major life change, or got an IRS letter. Professional preparation applies the rules to the records you provide. It doesn’t guarantee a refund, a specific result, or freedom from notices or examination. My individual tax preparation starts at $500, and returns with a Schedule C start at $1,200 through small business tax preparation. If a notice has already arrived, my first IRS notice review is a flat $250, completed in 3 to 5 business days.

DIY Tax Filing Mistakes FAQ

Do I have to report income if I didn’t get a Form 1099-K?

Yes. Taxable income must be reported whether or not you receive a 1099-K or any other form.

Is overtime tax-free now?

Not entirely. For 2025 through 2028, you can deduct the FLSA overtime premium, up to the cap and subject to income limits. Social Security and Medicare taxes still apply.

Can I fix a mistake after I file?

Yes, with Form 1040-X. To claim a refund, you generally must amend within 3 years of filing or 2 years of paying the tax, whichever is later.

How does the IRS find missing income?

Mostly by matching the forms banks, brokers, and employers send it against your return. A mismatch can lead to a CP2000 notice.

Will crypto basis show on my 2025 Form 1099-DA?

Often not. For 2025 sales, brokers had to report gross proceeds. Basis reporting begins for certain sales in 2026, so keep your own purchase records.

Get a Second Look From a San Antonio CPA

I’m Jessica Gonzalez, a Texas-licensed CPA and former IRS Revenue Agent. I prepare returns for individuals, families, and small businesses in North San Antonio, Stone Oak and Sonterra, Bulverde, and all of San Antonio, in English and Spanish, with secure virtual service. Military families are welcome. You’ll get a fixed fee in writing before any work begins.

To see whether we’re a fit, book a complimentary 15-minute fit call or call (210) 441-1293. Please don’t email tax returns, Social Security numbers, or IRS notices; I’ll send a secure SmartVault link.

Sources

• IRS: Understanding your CP2000 series notice
• IRS: FAQs on Form 1099-K threshold under the One Big Beautiful Bill
• IRS: Form 1099-K FAQs, common situations
• IRS: Get Transcript
• IRS: About Form 8862
• IRS: Instructions for Form 8862
• IRS: Schedule 1-A, Additional Deductions
• IRS: One Big Beautiful Bill Act tax deductions for working Americans and seniors
• IRS Notice 2025-69, qualified tips and qualified overtime for 2025
• IRS: Broker reporting on sales and exchanges of digital assets
• IRS: Instructions for Form 8949
• IRS: Underpayment of estimated tax by individuals penalty
• IRS: FAQs on energy credit changes under the One Big Beautiful Bill
• IRS: File an amended return
• Congress.gov: H.R. 1, One Big Beautiful Bill Act (Public Law 119-21)

Related: Individual Tax Preparation · IRS CP2000 Notice · Tax Checklists