Tax season 2026 has officially arrived, and it brings a mix of relief and confusion. With the filing window now open (as of January 26), millions of Americans are navigating a landscape shifted by the “One Big Beautiful Bill Act” (OBBBA) passed last July. While this legislation introduced helpful changes—like a higher Child Tax Credit and reinstated reporting thresholds—it also created new traps for the unprepared.

The stakes are higher this year. Recent reports from the Taxpayer Advocate indicate that IRS staffing levels have dropped significantly, meaning customer service delays could be longer than usual. If you make a mistake on your 2025 return, you might be waiting months for a resolution.

Your goal is simple: File accurately, file electronically, and claim every dollar you are owed. To help you do that, we’ve identified the six most dangerous mistakes that could inflate your tax bill or delay your refund this season.

Mistake 1: Panicking Over Venmo & PayPal (The 1099-K Reversal)

For years, gig workers and online sellers braced for the IRS to lower the reporting threshold for third-party payment apps like Venmo, PayPal, and Cash App to $600. That fear caused unnecessary panic for people selling used furniture or splitting dinner bills.

Here is the good news: The new tax law officially reinstated the previous, higher threshold for the 2025 tax year. You should generally only receive a Form 1099-K if:

• You received over $20,000 in gross payments, AND
• You participated in more than 200 transactions.

The Mistake: Many taxpayers are still reporting non-taxable personal transactions (like a friend reimbursing you for pizza) as income because they are confused by the flip-flopping rules. Conversely, some real gig workers assume that if they didn’t get a 1099-K, they don’t owe taxes. Both assumptions are wrong.

The Fix:

• If you didn’t get a form: You still must report all taxable income from side hustles, even if it’s just $500. The law change only affects reporting requirements for the platforms, not your tax liability.
• If you did get a form in error: If you received a 1099-K for personal reimbursement, do not just ignore it. You may need to file a “zero adjustment” on your return to tell the IRS that this money was not income.

Mistake 2: Missing the New “OBBBA” Standard Deduction

Inflation and new legislation have pushed the standard deduction significantly higher for the 2025 tax year. This is a critical number because it determines whether you should itemize (list out your mortgage interest, charity, and state taxes) or just take the flat rate.

For most taxpayers, the standard deduction is now so high that itemizing no longer makes financial sense. Taking the lower itemized amount by accident is literally throwing money away.

2025 Standard Deduction Amounts (Filing in 2026)

Note for Seniors: If you were 65 or older by the end of 2025, you get an even bigger break. Single filers add $2,050 to the amounts above, and married couples add $1,650 per qualifying person.

Mistake 3: Overlooking the Expanded Child Tax Credit

If you have children under age 17, pay close attention. The “One Big Beautiful Bill Act” increased the maximum Child Tax Credit (CTC) for the 2025 tax year. If you rely on old numbers or outdated software, you might underclaim what you are owed.

• New Maximum Credit: Up to $2,200 per qualifying child (up from $2,000 previously).
• Refundable Portion: Up to $1,700 is refundable (the “Additional Child Tax Credit”), meaning you can get this money back even if you owe zero income tax.

The Mistake: Failing to double-check the ages of your children. A child must be under age 17 at the end of 2025 to qualify for the full credit. If your child turned 17 during the year, they qualify for the smaller “Credit for Other Dependents” ($500), not the full $2,200.

Mistake 4: Filing on Paper (The “Black Hole” Warning)

This is arguably the most practical advice for 2026: Do not file a paper tax return unless you have absolutely no other choice.

With reports of IRS workforce reductions reaching nearly 27% in some processing departments, the agency is facing a potential backlog. Paper returns require manual data entry by IRS employees. In a year with staffing shortages, a paper return could sit in a warehouse for months, delaying your refund indefinitely.

“The drop affects every human function at the IRS, from answering the phone to resolving questions about the accuracy of a return… automated systems continue to handle electronically filed returns efficiently.” — Forbes Tax Guide 2026

The Fix: Use IRS Free File, tax software, or a professional tax preparer to e-file. Choose “Direct Deposit” for your refund. This combination is the only way to bypass the manual processing bottleneck.

Mistake 5: Neglecting Last-Minute HSA & IRA Contributions

You have until the tax filing deadline—April 15, 2026—to lower your 2025 taxable income by contributing to certain retirement and health accounts. This is one of the few ways to retroactively lower your tax bill.

Health Savings Account (HSA)

If you had a high-deductible health plan (HDHP) in 2025, you can max out your HSA. This deduction is powerful because you don’t need to itemize to claim it.

• Self-only coverage limit: $4,300
• Family coverage limit: $8,550
• Age 55+ catch-up: Add $1,000

Traditional IRA

contributions to a Traditional IRA may be tax-deductible depending on your income and whether you have a retirement plan at work.

• Standard limit: $7,000
• Age 50+ limit: $8,000

Action Step: Check your bank statements. If you contributed $5,000 to your IRA last year, you still have $2,000 of “space” left. contributing that extra $2,000 now could save you hundreds of dollars in taxes immediately.

Mistake 6: The “Head of Household” Filing Error

Filing status mistakes are common because the names are confusing. “Single” seems obvious if you aren’t married, but if you have a child or dependent, you might qualify for “Head of Household” (HOH). HOH status offers a significantly higher standard deduction ($23,625) and more favorable tax brackets than filing Single.

To qualify for Head of Household, you generally must:

1. Be unmarried or “considered unmarried” on the last day of the year.
2. Pay more than half the cost of keeping up a home for the year.
3. Have a “qualifying person” (usually a child or parent) live with you for more than half the year.

The Mistake: Single parents often file as “Single” out of habit, missing out on thousands of dollars in deductions. Conversely, parents sharing custody sometimes both try to claim HOH for the same child, which triggers an automatic IRS audit.

Professional vs. Self-Guided: Who Needs Help?

With the new tax law changes, you might be wondering if you need to fire your tax software and hire a human. Here is a quick guide.

Stick with Software (DIY) If:

• You have one or two W-2 jobs.
• You take the standard deduction.
• You don’t have complex investments (like crypto wash sales or K-1 forms).
• Your situation hasn’t changed much since last year.

Hire a CPA or Enrolled Agent If:

• You own a business: The rules for expensing equipment and home offices are nuanced.
• You sold significant crypto or stock: Calculating “basis” (what you paid) can be a nightmare if you didn’t track it perfectly.
• You went through a major life change: Divorce, marriage, or receiving an inheritance often complicates your return.
• You haven’t filed in years: If you have back taxes to file, a pro can help you navigate penalties.

Frequently Asked Questions

Final Thoughts for the 2026 Season

This tax season is defined by two things: higher deductions that save you money, and administrative hurdles that could cost you time. The new $31,500 standard deduction for couples and the $2,200 Child Tax Credit are huge wins for families, but you have to claim them correctly to benefit.

Given the IRS staffing challenges, your strategy should be defensive. File electronically to avoid the paper pile, double-check your bank account numbers for direct deposit, and verify you aren’t reporting income you don’t actually have. A few minutes of extra review now can save you months of headache later.

This is educational content based on general financial principles and the tax laws effective as of February 2026. Individual results vary based on your situation. Always verify current tax laws, investment rules, and benefit eligibility with official sources like IRS.gov.

Last updated: February 2026. Financial regulations and rates change frequently—verify current details with official sources.