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Filing your taxes can feel like a never-ending checklist — income, deductions, credits, forms, deadlines. But while some mistakes just slow down your refund, others can lead to serious IRS trouble.

I'm talking penalties, interest charges, and in some cases, even audits.

These aren't just small slip-ups. They're the kind of mistakes that can trigger tax bills you weren't expecting, stall estate settlements, or even put you on the IRS's radar. And yet, they're shockingly common — especially for people who are self-employed, juggling side gigs, or working with shady tax preparers.

In this article, I'll cover four major tax mistakes that can cause legal or financial headaches. But more importantly, I’ll show you how to avoid them.

Whether it's failing to pay estimated taxes, forgetting to file for a deceased loved one, misunderstanding extensions, or trusting the wrong tax preparer; these errors all have one thing in common: They can cost you time, money, and peace of mind.

Let's break them down so you can file with confidence — and stay out of trouble with the IRS.

1) Assuming a Filing Extension Means a Payment Extension

Need more time to do your taxes? Filing an extension (Form 4868) can give you until October 15 to submit your return. But here's what many people get wrong — an extension only gives you more time to file, not more time to pay.

If you owe taxes and don't pay by April 15, you'll start racking up interest and penalties — even if you file an extension.

The Impact: Filing an extension gives you extra time to submit your return — not to pay what you owe. If you don't pay by April 15, the IRS starts tacking on penalties (0.5% per month) and interest, which can add hundreds to your bill by the time you file. Wait too long, and the IRS might escalate things withnotices, wage garnishments, or even bank levies to collect what's owed.

How to Avoid It: Filing an extension is fine, but don't mistake it for extra time to pay — the IRS still expects its cut by April 15. If you think you'll owe, estimate your tax liability and pay as much as possible before the deadline to minimize penalties and interest. Even a partial payment helps reduce the damage. And if paying in full isn't an option, set up an IRS payment plan to break it into manageable installments instead of racking up unnecessary fees.

Filing an extension doesn't mean you can ignore your taxes until October — it just means you'll have a bigger bill waiting for you if you don't pay on time.

2) Ignoring Estimated Tax Payments (for Freelancers & Side Hustlers)

If you're self-employed, a freelancer, or earning side income, you may be required to make estimated tax payments throughout the year. If you don't, you could end up owing a big tax bill plus penalties when you file.

Unlike W-2 employees, who have taxes automatically withheld, freelancers and independent contractors must set aside their own tax payments. Many people don't realize this and get hit with a massive tax bill in April.

The Impact: Skipping estimated tax payments might seem harmless — until tax season hits and you're stuck with a huge lump sum tax bill you weren't prepared for. And it doesn't stop there. The IRS charges penalties and interest if you underpay throughout the year, meaning you could owe even more than expected when it's time to file.

How to Avoid It: If you expect to owe more than $1,000 in taxes, plan to make quarterly estimated payments in April, June, September, and January to stay ahead. A good rule of thumb is to set aside 25%-30% of your freelance or side gig income for taxes, covering federal, self-employment, and state taxes if applicable.IRS Form 1040-ES can help calculate what you owe, and using IRS Direct Pay to automate payments ensures you don't fall behind.

Side gigs are great, but getting blindsided by a huge tax bill isn't. If you earn freelance or contract income, pay as you go!

3) Forgetting to Claim a Deceased Person's Final Tax Return

Losing a loved one is overwhelming, and taxes are probably the last thing on your mind. But if someone passed away during the tax year, their final tax return still needs to be filed. Many families don't realize this, which can cause legal complications, missed refunds, or IRS notices down the road.

The Impact: Skipping a deceased person's final tax return isn't just a paperwork issue — it can trigger IRS notices, penalties, or even collection attempts if the agency assumes taxes are still owed. If the deceased was due a refund, it won't be automatically issued — someone has to file to claim it. And if taxes aren't properly handled, it can delay estate settlements, holding up inheritances and creating unnecessary legal headaches for heirs.

How to Avoid It: The executor or personal representative should file the deceased person's final tax return as usual, adding "Deceased" next to their name. If the person had income from investments, property, or other sources after passing, an additional estate tax return (Form 1041) may be required. And if a refund is owed, IRS Form 1310 allows heirs or representatives to claim it — otherwise, that money could go uncollected.

It's not the easiest part of handling an estate, but filing taxes properly can prevent legal and financial headaches later.

4) Using a Disreputable Tax Preparer

Not all tax preparers are created equal. Some do a great job, but others cut corners, make mistakes, or even commit fraud. If you trust the wrong person with your return, you — not them — are responsible for any errors, penalties, or audits.

Warning signs of a bad tax preparer:

- They promise huge refunds before reviewing your documents.

- They don't sign your return as a "Paid Preparer."

- They ask for a percentage of your refund instead of a flat fee.

- They encourage claiming deductions or credits you don't qualify for.

The Impact: A bad tax preparer's mistakes become your problem, not theirs — if they file incorrectly, you're the one stuck fixing it. Worse, if they inflate deductions or claim credits you don't qualify for,you could face an audit, fines, or even legal trouble for tax fraud. And in the worst cases, shady preparers steal refunds outright by directing the money into their own accounts instead of yours.

How to Avoid It: Not all tax preparers are created equal, so do your homework before handing over your return. Stick withIRS-certified professionals, like CPAs, enrolled agents, or preparers with a valid Preparer Tax Identification Number (PTIN) — this helps weed out the shady ones. Never sign a blank return or let someone e-file without reviewing it first — once it's submitted, you're the one responsible for any errors or fraud. And if something feels off? Trust your gut and consider filing yourself — tax software makes it easier than ever to handle things on your own, no sketchy middleman required.

If someone's tax advice sounds too good to be true, it probably is. Choose a reputable preparer or file yourself with a trusted tax program.

Avoiding IRS Trouble Starts with the Right Moves

No one wants to deal with IRS penalties, unexpected tax bills, or legal headaches, but the truth is, these mistakes happen all the time — and they're often avoidable.

Whether it's failing to pay estimated taxes, overlooking a final return for a deceased loved one, misinterpreting a filing extension, or trusting the wrong tax preparer, these errors can cost you big time if you're not careful.

Fortunately, a little planning and attention to detail can keep you in the clear. Make estimated tax payments if you're self-employed. Don't assume an extension gives you extra time to pay. Double-check your obligations if you're handling a loved one's estate. And most importantly, only work with trusted tax professionals.

Taxes are complicated, but avoiding IRS trouble doesn't have to be. Take the time to get it right now, and you'll save yourself from costly surprises later.