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Blog » Common Mistakes Tax Preparers Make and How to Avoid Them

Common Mistakes Tax Preparers Make and How to Avoid Them

Last updated: 30 Jan, 2024 By | 6 Minutes Read

Tax Preparer Mistakes

Tax season is stressful for many individuals and businesses, and finding a qualified tax preparer can make the process smoother. However, not all tax preparers are created equal, and even the most experienced professionals can make mistakes. These errors can range from minor oversights to major mistakes that could result in financial penalties or legal consequences.

In this blog, we will discuss common mistakes tax preparers make and provide guidance on avoiding them. The goal is to help you understand the potential pitfalls of tax preparation and how to work with your tax preparer to avoid them. We will cover a variety of topics, including common errors related to filing status, deductions, and credits, as well as mistakes related to record-keeping and communication.

Entrepreneurs Reveal the Common Mistakes Tax Preparers Make

1. Nick Edwards, Managing Director at Snowfinders

Inaccurate Direct Deposit Details

You can deposit a refund directly into your bank account if one is forthcoming. This is a more secure and typically faster method than receiving a paper check for your refund. However, if you provide the incorrect account or routing number, you may lose your refund. It could be transferred to another account or sent back to the IRS. In either case, it is possible that you will be unable to retrieve your refund because the IRS does not have a procedure for replacing lost electronic transfers. Spend additional time verifying your account number and routing number.

2. Anthony Mixides, Managing Director at Bond Media

Not Utilizing Tax Credits and Deductions

There are numerous tax credits and deductions that you may be eligible for. Deductions and credits can substantially reduce or even eliminate your tax liability. These deductions and credits cannot be discussed here. Everyone’s tax situation is unique because everyone’s life circumstances are unique. There are times when online searches and answers to simple tax questions are possible. Use caution when performing this action.

3. Robert Persichitte, CPA at Delagify Financial

Here are the most common mistakes I see on tax returns: 

  • Missing forms. Especially forms related to state marketplace plans. Because, in many cases, the insurance reporting form 1095-B isn’t required, many preparers miss the required 1095-A (required). The IRS started rejecting returns for that mistake last year, so it’s getting better.
  • Failure to report digital currency transactions. This might have more to do with the crypto believer than the tax preparer. Many think these transactions are not taxable and can slip under the radar. This couldn’t be further from the truth. Reporting this information may lower your tax bill if you lost money in crypto (a common theme for 2022).
  • Missing credits. With all the tax changes, I’ve seen some small preparers forget about the benefits and how they could help taxpayers. Your preparer shouldn’t just take your information and throw it on a return. Instead, they should ask questions to see if anything changed or if you had any life events that could help you out.

4. Alex Armstrong-Paling, Managing Director of Toolfit

Not staying up to date with tax laws and regulations

Tax laws and regulations can change frequently, and it is important for tax preparers to stay informed about any updates or changes that may affect their clients. This can be done by regularly reading industry publications, attending continuing education courses, and consulting with other tax professionals.

5. Rene Delgado, Founder & CEO at Shop Indoor Golf

Failing to ask the right questions

Tax preparers must ask the right questions to gather all the necessary information to prepare a client’s tax return. This includes asking about income, deductions, credits, and any other relevant information that may impact the client’s tax liability.

6. Steve Rose, the Vice-President of Intent

Not reviewing the return for errors or omissions

Tax preparers must thoroughly review all returns for errors or omissions before submitting them to the IRS. This includes checking for math errors, inconsistencies in information, and any other issues that may lead to problems or delays.

7. Colin Smith, CPA at CS Accounting Solutions

Missing key life changes or other taxable events

Many CPAs and preparers pride themselves for their attention to detail, but the best way to make sure you prepare an accurate return and limit your liability is to have your clients prepare a tax return checklist and make sure you refer back to it while you’re preparing their return.

Using an incorrect filing status (e.g. Married filing joint, Married filing separately, etc.)

It’s easy to overlook a filing status change if your client has had the same filing status (such as married filing jointly) for years and you don’t have the right processes in place. Thankfully modern tax prep software can automatically apply or notify the preparer of the most advantageous filing status, but less sophisticated programs may require you to check and compare results between two different statuses actively.

Filing too early and then later having to amend a return with a new/missing information

Many preparers and clients like to file as early as possible, but sometimes it pays to wait and ensure that no other information trickles in or that none of your client’s tax forms, such as 1099s or W-2s, were amended. While many of these forms are available to taxpayers by early February, clients often overlook things they didn’t realize you need, and amended statements often come in the first few months of the year.

To avoid the headaches, prepare the returns as early as possible, but consider waiting until early- to mid-March to submit the filing. This is still a fairly early time to file, but it provides an adequate buffer of time to catch any missing information.

8. Steve Pogson, Founder & E-commerce Strategy Lead at FirstPier

Failure to Verify the Correct Name, Social Security Number, and Date of Birth

Although it may seem obvious, filing with the IRS frequently involves making this mistake. Spend a little extra time making sure that all names are spelled correctly, that each person’s social security number is correct, and that their birthdate is accurate. Do this after the tax return is prepared for mailing or electronic filing since you can accidentally modify a social security number when cycling through input fields on tax software.

9. Alice Hall, Co-Founder & Creative Director at Rowen Homes

Not Communicating with Clients

Many CPA firms commit the error of failing to inform their clients of any modifications that must be made before the start of tax season. Communication is crucially important. When it comes time to file taxes, CPA companies need to be in touch with their clients to find out if any changes to their business need to be taken into account. If this isn’t done, a client can contact you during tax season to let you know about the changes.

You will experience tension due to having to evaluate the modifications throughout the hectic tax season. Therefore, it is preferable to communicate with your clients well before the start of tax season to find out about any recent changes or advancements in their company.

    10. Jamie Penney, Owner of MyHomeDwelling

    Mathematics blunders are quite prevalent. Mistakes in calculation or transposition of numbers are common but can have dire implications for the client in the form of fees or other punishments. Checking one’s computations twice before submitting a return can help ensure that no such oversight occurs. Tax preparers also commonly do not double-check their work before handing it in. The resulting mistakes and omissions might cause a submission to be delayed or even rejected. If you want to be sure your return doesn’t get rejected by the IRS, double-check it and have someone else look at it too.

    Incorrect use of Social Security numbers is another frequent oversight. If the preparer makes a mistake by switching around figures or entering incorrect information, the return may be delayed or even rejected. Therefore, it is crucial to double-check all Social Security numbers and other identifying information before sending in return to avoid this oversight.

    The use of erroneous deductions or credits is another frequent oversight. It is crucial for tax preparers to keep up with the ever-evolving body of tax law and regulation. To add insult to injury, preparers risk legal action if they advise a client to take a deduction or credit to which they are not entitled.

    11. Andrew Lokenauth – Founder & CEO – Fluent in Finance LLC

    Failing to Report Income: One of the most common mistakes that tax preparers make is failing to report all of their income. This can happen for a variety of reasons, such as failing to keep accurate records or not understanding the tax laws. To avoid this mistake, it’s important to keep detailed records of all of your income and to work with a tax professional who is well-versed in tax laws.

    False Claim of deductions: Another common mistake is claiming deductions or credits you’re not eligible for. This can happen when tax preparers are not familiar with the tax laws or when they are trying to maximize your refund. To avoid this mistake, it’s important, to be honest about your deductions and credits and to work with a tax professional who is familiar with the tax laws.

    Worker Classification: Another mistake tax preparers make is not correctly classifying workers as employees or independent contractors. The IRS has strict rules in determining who qualifies as an employee and who qualifies as an independent contractor, and failing to classify them properly can lead to significant penalties. To avoid this mistake, you should work with a tax professional familiar with the tax laws related to worker classification.

    Not filing taxes on time: Another common mistake tax preparers make is failing to file taxes on time. This can happen for various reasons, such as failing to keep accurate records or not understanding the tax laws. To avoid this mistake, it’s important to keep detailed records of all of your income and to work with a tax professional who is well-versed in tax laws.


    In short, tax preparers need to be alert to the potential pitfalls that arise throughout the tax preparation process and take measures to prevent them. This involves tax preparers staying up-to-date with tax laws and regulations, asking clients for all necessary documentation, double-checking calculations, properly identifying and reporting income, and having a second person evaluate the return before submission and double- and even triple-checking computations and personal identifying numbers.

    Taking these measures may improve the likelihood that your customers’ tax returns will be handled quickly and accurately. Additionally, you can consider outsourcing your tax preparation services to a trusted partner like Cogneesol.

    Cogneesol is a leading service provider that offers customized, professional, and cost-effective tax preparation services to businesses and CPAs worldwide. Get in touch with an expert to better understand your needs and get access to top-quality services. Call us at +1 833-313-3143 or email [email protected]