The most common error when claiming the Earned Income Tax Credit (EITC) is claiming a child who does not meet the strict age, relationship, or residency tests. Other top mistakes include incorrectly filing as single or head of household while married, and misreporting income.
Your Child Doesn't Qualify
Most errors happen because the child you claim doesn't meet the qualification rules: Relationship: Your child must be related to you. Residency: Your child must live in the same home as you for more than half the tax year.
The IRS uses a combination of automated and human processes to select which tax returns to audit. Not reporting all of your income is an easy-to-avoid red flag that can lead to an audit. Taking excessive business tax deductions and mixing business and personal expenses can lead to an audit.
Avoid These Common Tax Mistakes
What are the most common reasons why an e-filed tax return might be rejected?
Once you are satisfied all the information is correct, begin the e-file steps again to resubmit your return. When resubmitting a return after it is rejected, you will be prompted to enter your credit or debit card information during the filing steps.
An IRS notice may alert you to a mistake on your tax return or that it's being audited. You can verify the information that was processed by the IRS by viewing a transcript of the return to compare it to the return you may have signed or approved. You can access your tax records through your account.
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Businesses that show losses are more likely to be audited, especially if the losses are recurring. The IRS might suspect that you must be making more money than you're reporting. Otherwise, why would you stay in business? Most likely to be audited are taxpayers reporting small business losses.
The IRS will never initiate contact demanding immediate payment via gift cards, prepaid debit, or wire transfers; threaten immediate arrest or deportation; or contact you first by email, text, or social media; these tactics, especially involving urgent demands for specific payment types or threats, are key signs of a tax scam, as the IRS always mails a bill first and allows time to appeal.
If the IRS decides that your return merits a second glance, you'll be issued a CP05 Notice 1 . This notice lets you know that your return is being reviewed to verify any or all of the following: Your income. Your tax withholding.
The EITC is designed for people whose earned income is under $68,675 for the 2025 tax year (tax returns generally filed in early 2026). The amount you get will depend on your adjusted gross income, the amount of investment income earned, your filing status, and whether you have a qualifying child.
Common credit report errors can be sorted into three categories:
IRS audits are triggered by discrepancies the IRS's automated systems catch, like unreported income from 1099s, claiming excessive deductions (charity, business meals, home office) compared to your income bracket, large business losses, math errors, significant income jumps, or claiming hobby losses as business expenses, with higher-income earners generally facing more scrutiny.
The biggest tax mistakes people make include filing late, math errors, incorrect personal info (like Social Security numbers), forgetting deductions/credits (like EITC), misreporting income, not signing forms, and making errors with bank details for direct deposit, all leading to delays, penalties, or missed savings, with using tax software or professionals helping avoid these common pitfalls.
Many business expenses are 100% deductible, including advertising, employee wages, rent, supplies, and certain business meals like company parties or meals for the public, while personal deductions like student loan interest or charitable donations (depending on the type) can also be fully deductible for individuals. The key is that the expense must be "ordinary and necessary" for your trade or business or meet specific IRS criteria, often differentiating from the 50% rule for client meals.
You know the IRS might be investigating you through official mail (first contact), phone calls (often with automated messages to IRS.gov), or in-person visits, but signs of a criminal probe include contact with IRS Criminal Investigation (CI) agents, subpoenas to you or your bank, questions to your accountant/bank, unusual account activity (freezing/refusing transactions), or agents suddenly going silent after an audit. Key indicators are official IRS letters, contact from CI special agents, third-party inquiries, and formal summonses for records, signaling serious scrutiny beyond a simple audit.
When your amended return has completed processing, the IRS will issue a new refund. Allow 8 to 12 weeks for your amended return to be processed; however, in some cases, processing can take up to 16 weeks.