Tax season is officially here—the IRS begins accepting 2025 returns on January 26, 2026, with the deadline looming on April 15. Thanks to the sweeping changes from the One Big Beautiful Bill (signed into law in 2025), millions could see bigger refunds through new perks like no tax on tips, no tax on overtime, no tax on car loan interest, and an extra $6,000 deduction for seniors (age 65+). But these exciting updates come with a catch: they’re claimed on a brand-new form called Schedule 1-A, and getting it wrong could trigger delays, penalties, or lost savings.
Don’t let excitement turn into regret. Here are the top 5 tax mistakes taxpayers (especially self-employed, gig workers, tipped employees, and seniors) are likely to make this year—and exactly how to dodge them.
1. Forgetting (or Messing Up) Schedule 1-A – The New Form Everyone Needs
The biggest newbie trap: Ignoring or incorrectly filling out Schedule 1-A. This two-page add-on to your Form 1040 is required to claim the OBBBA’s headline deductions:
• Up to $25,000 in qualified tips (phases out over $150K MAGI single/$300K joint)
• Up to $12,500 in qualified overtime pay (phases out similarly)
• Up to $10,000 in car loan interest on a qualified vehicle
• An extra $6,000 deduction for seniors (phases out over $75K single/$150K joint)
Why it hurts: Skip it or enter wrong amounts (e.g., including non-qualified tips or forgetting phase-outs), and you could overpay thousands—or face IRS questions later.
How to avoid it:
• Gather proof early: W-2s/1099s showing qualified tips/overtime, loan statements for car interest, and birthdate verification for seniors.
• Use tax software that auto-populates Schedule 1-A or consult a pro.
• Double-check eligibility—qualified vehicles need U.S. final assembly, and tips must be from customary occupations.
2. Missing Retroactive No-Tax-on-Tips or Overtime Claims
These deductions apply retroactively to 2025 income, but many won’t track it properly. Tipped workers (servers, drivers) or overtime earners might forget to separate “qualified” amounts from regular pay.
Cost: Thousands in lost refunds—especially for gig economy folks like rideshare drivers or delivery workers.
Fix it fast:
• Review pay stubs/1099s now.
• Employers must report qualified amounts (look for new codes on W-2s).
• If self-reporting tips, use Form 4137 if needed.
3. Underpaying or Skipping Quarterly Estimated Taxes (Huge for Self-Employed & Gig Workers)
Self-employed? Gig side hustle? You owe self-employment tax (15.3% for Social Security/Medicare) plus income tax—no employer withholding. Many skip or underpay quarterly estimates, leading to penalties.
Common scenario: New freelancers or Uber/Lyft drivers ignore estimates, then get hit with a surprise bill + interest.
Prevention tips:
• Pay quarterly (deadlines: April 15, June 15, Sept 15, Jan 15 for 2025 income).
• Use Form 1040-ES to calculate.
• Safe harbor: Pay 100% of last year’s tax (110% if AGI > $150K) to avoid penalties.
4. Not Tracking or Misclassifying Gig Economy Income & Expenses
Gig workers often forget small payments (even cash/Venmo) or misclassify personal expenses as business ones. With 1099-K thresholds dropping and digital asset reporting via 1099-DA, the IRS is watching closer.
Risk: Audits, penalties, or missed deductions like home office, mileage, or supplies.
Smart moves:
• Track everything: Use apps for mileage/expenses.
• Report ALL income—even if no 1099.
• Deduct legit biz costs on Schedule C.
5. Wrong SSN Entry or Basic Filing Errors That Delay Everything
Simple but deadly: Typos in SSNs, missing signatures, or math errors delay processing—especially with IRS staffing changes potentially slowing things down.
Bonus headache: Paper filers face longer waits; direct deposit is phasing out paper checks.
Quick wins:
• File electronically for faster refunds (often 24 hours via “Where’s My Refund?”).
• Double-check all entries.
• Use IRS Free File (starts Jan 9 for eligible) or trusted software.
Final Thought: This 2026 season could deliver “gigantic” refunds for many, but only if you prep smart. With new rules, new forms, and potential delays, acting early is key.
Ready to maximize your savings and avoid these costly pitfalls? Schedule a consultation today—let’s review your situation and ensure you’re claiming every dollar you deserve. Drop a comment: Which mistake worries you most? 👇
#TaxMistakes2026 #Schedule1A #TaxSeason2026 #NoTaxOnTips #SelfEmployedTaxes
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