1. According to Forbes magazine, 7 million people fail to file their income taxes at all each year. This is dangerous, as the IRS is able to impose a penalty of 5 percent each month, up to a maximum of 25 percent, of the unpaid tax due each year.
2. Mathematical mistakes are also common. In best-case scenarios, the IRS will let you know about the mistake and allow you to correct it. However, uncaught mistakes can present a skewed view of your finances that may come back to haunt you later.
3. Failing to include all deductibles is also common. For example, in 2016, IRA contributions up to $5,500, or $6,500 if you are over the age of 50, could be deducted assuming you didn’t have a retirement plan through work and met the associated income limits. The US tax code contains many deductions like this that taxpayers fail to take advantage of.