The Tax Problems I See Most Often — and How to Stay Out of All of Them
By Paul D. Diaz, EA, MBA ·
After enough years at this desk, the tax problems stop surprising you. The names change; the mistakes don't. Here are the ones I see most, and what I tell people about each.
If you own a business
1. Deductions taken past the line. Deductions exist so a business can write off what it actually spent to run the business — equipment, client gifts within the limits, legitimate travel. They do not cover the family vacation where you happened to mention work at dinner. The rules on what qualifies, how much, and under what circumstances are published. Claim something questionable and you'll be asked to justify it; if you can't, you end up worse off than if you'd never tried.
2. Deductions never taken at all. The mirror image, and it costs just as much. People run business expenses through personal cards, pay cash on the road, keep no receipts — and then quietly donate their legitimate write-offs back to the Treasury. A dedicated business account and a habit of keeping records fixes this. Knowing exactly what you can and can't write off is what a professional is for.
If you're an individual
3. The wrong preparer. The cousin who "does taxes," the storefront that promises a specific refund before seeing a single document, the shop whose fee is a percentage of your refund, the operation that materializes in January and vanishes on April 16 — every one of these is how people end up with penalties, fraud on their record, or a stolen refund. Do your homework. If a preparer has victimized you, report it to the IRS and get representation immediately.
4. Filing late. Late filing means penalties, and rushed returns mean errors, which mean more notices and more delay. If lateness is a recurring theme and prior years are still open, it also undermines the accuracy of the current return and can cost you refunds and credits you're owed.
5. Not filing at all. The worst option on the board. People reason that since they can't pay, they shouldn't file. Backwards. The failure-to-file penalty is far harsher than the failure-to-pay penalty. File the return, then deal with the balance — an installment agreement spreads the payments, and an extension buys time to file (not time to pay). Both are dramatically cheaper than silence.
6. Math and paperwork errors. Transposed Social Security numbers, missed boxes, wrong forms, arithmetic slips. Each one is a processing delay or a notice waiting to happen. Slow down and check — or hand it to someone whose job is getting it right.
Every problem on this list is cheaper to prevent than to fix, and I've fixed all of them for people who learned that the expensive way.
If you want the full playbook, the free sample chapter of my Guide is at /book. If you already have a problem in hand — a notice, unfiled years, a mess from a prior preparer — attach what you have with the paperclip in the chat, and we'll scope and quote the work in writing after intake.
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