How to Avoid Tax Mistakes and Enjoy Senior Tax Breaks

Disclaimer: We are not tax professionals. Please consult with your accountant or CPA for tax advice.

Tax season is ________.  

If you’re like many taxpayers, you might’ve filled in the blank with “frightful.”

All of us can make mistakes, but when it comes to our money, well… we want to be right on the money. We’ve gathered common tax mistakes as well as easy tax breaks for seniors to make your 2026 tax season as painless as possible.

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Common Tax Mistakes

1. The wrong Social Security number‍

This is a common mistake – you can miss one number without realizing it, but it can cost you. You’ll have to file an amended tax return before you can get any credit or tax breaks. Even if you have a professional doing it, it’s easy for them to transpose incorrectly, so make sure you double-check those numbers before it gets sent off to the IRS.‍

2. The wrong bank account number

‍Don’t give away any tax credits to a stranger – make sure your routing and account numbers are correct. Direct deposit is the fastest way to receive tax refunds, but make sure you check (and double-check!) those numbers.

3. Missing forms‍

While hiring a tax professional to prepare your taxes can help avoid mistakes, be careful about missing forms. Double-check you have brokerage forms for investments and any necessary retirement account forms.‍

4. Ignoring the dotted line‍

For your tax return to be filed, you have to sign it! Forgetting to sign could mean late penalties and fines. You could also be subject to an audit.

5. Forgetting about Required Minimum Distributions (RMDs)‍

As of 2025, if you were born between 1951 and 1959, you must start taking RMDs at age 73. If you were born in 1960 or later, your RMD age is 75.  

If you don’t withdraw the required amount, you could face a 25% penalty (down from 50% due to Secure Act 2.0). If you forget, file Form 5329 and request a waiver.

6. Waiting until April 14‍

If you’re a procrastinator, we’re talking to you! Tax Day is April 15, and it can be tempting to put things off until the deadline. The consequences are expensive – most tax preparation services will charge you extra for waiting, if they’re willing to take on your return at all.

If you’re doing the return yourself, rushing can cause mistakes like swapping a 6 for a 9 or forgetting about that deduction. Get it out of the way early and be done with it!

7. Spelling names wrong‍

The IRS advises you to compare your name on your tax return to the name on your Social Security card. Be sure they match exactly to avoid any setbacks! If you want to decrease the number of silly mistakes, consider e-filing rather than sending in a paper return.

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Senior Tax Breaks

1. Retirement Contributions‍

Many seniors over age 65 continue working, and as long as you have earned income, you can keep contributing to retirement accounts. This includes making tax‑deductible contributions to a traditional IRA or contributing to a 401(k) if you meet eligibility rules. However, Roth IRA contributions are not tax‑deductible.

For 2026, individuals age 50 or older may contribute up to $7,500 to an IRA, and may also make an additional $1,100 catch‑up contribution, for a total of $8,600 per person.  
A married couple in which both spouses are 50 or older, and eligible, may together contribute up to $17,200. [irs.gov]

Beginning in 2026, under SECURE Act 2.0, workers whose Social Security wages exceed $150,000 must make their catch‑up contributions as Roth (after‑tax) instead of pre‑tax. [merceradvisors.com]

2. Healthcare Expenses‍

If you have a Medicare Supplement, you may not have enough expenses for this deduction to be useful, but it’s worth checking.

You can deduct out-of-pocket healthcare costs above 7.5% of your adjusted gross income (AGI), including premiums, prescription drugs, coinsurance, and dental bills. Use Schedule A to itemize these deductions.

3. Selling Your Home‍

If you’ve built up equity in your home and decide to sell, tax laws allow couples to exclude up to $500,000 in profit from their taxable income ($250,000 for single filers).  

No capital gains taxes apply unless your profit exceeds these limits. Read the specific rules and limitations about this here.

4. Qualified Charitable Distributions (QCDs)‍

If you're 70½ or older, you can donate up to $111,000 per year directly from your IRA to a qualified charity through a Qualified Charitable Distribution (QCD). The amount donated is excluded from taxable income and can satisfy your RMD, making this a highly effective tax‑saving strategy for charitably inclined retirees. [irs.gov]

5. Just Being 65+‍

If you’re 65 or older, you get an extra standard deduction. To find out just how much, visit this IRS resource.‍

6. New Cryptocurrency and Digital Asset Reporting‍

Starting with transactions occurring on or after January 1, 2025, new IRS regulations require brokers to report digital asset activity using Form 1099‑DA. Taxpayers will begin receiving these forms during the 2026 filing season.  

Be sure to accurately report all cryptocurrency transactions — even if you don’t receive a form — to avoid IRS penalties. [cnbc.com], [irs.gov]

7. Check State-Level Tax Breaks‍

Some states are eliminating or reducing taxes on Social Security benefits and retirement income. If you live in a state that still taxes retirement income, consider moving to a tax-friendly state or researching available exemptions.

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Conclusion

We hope this tax season will be the easiest one yet. Get it done early, and treat yourself to a night out for being so proactive!