How Do I Know If I Did My Taxes Right?

Filing taxes can be stressful, especially if you’re unsure whether you did everything correctly. Mistakes can lead to delays, penalties, or an unexpected tax bill. Ensuring accuracy helps prevent these issues and ensures you’re not overpaying or underreporting income.

Several steps can help verify your tax return’s accuracy, including reviewing documentation, checking calculations, validating deductions, and monitoring tax agency communications.

Reviewing Your Documentation

Before confirming your tax return is accurate, ensure you have all necessary documents. Missing or incorrect paperwork can cause discrepancies that may trigger an audit or delay processing. Start by gathering all income-related forms, such as W-2s, 1099-NECs for freelance work, and 1099-INTs or 1099-DIVs for interest and dividends. If you had multiple employers or income sources, confirm that each issued the correct forms and that the amounts match your records.

Other documents also impact tax accuracy. Mortgage interest statements (Form 1098), student loan interest reports, and records of estimated tax payments should be reviewed. Contributions to a traditional IRA or HSA require Form 5498 or other relevant statements. For stock sales or cryptocurrency transactions, brokerage statements and Form 1099-B are necessary to report capital gains or losses correctly.

Employers, banks, and investment firms sometimes issue corrected forms, which can change reported income or deductions. If you receive a revised document, compare it to what was originally filed to determine if an amendment is needed. Keeping organized records throughout the year prevents last-minute scrambling and reduces the risk of mistakes.

Checking Calculations and Forms

Errors in tax returns often stem from miscalculations or using the wrong forms, leading to misreported income or incorrect tax liability. Even small mistakes, such as transposing numbers or entering figures in the wrong section, can delay processing or trigger an IRS notice. Tax software helps reduce mathematical errors, but it’s still important to double-check each entry, especially when manually inputting numbers.

A common issue is incorrectly calculating taxable income. While gross income is straightforward, adjustments such as self-employment tax deductions, IRA contributions, and student loan interest deductions must be factored in correctly. If any of these are miscalculated, the adjusted gross income (AGI) will be inaccurate, affecting tax brackets and eligibility for certain deductions. For example, in 2024, the standard deduction is $14,600 for single filers and $29,200 for married couples filing jointly. An incorrect AGI can lead to overpaying or underpaying taxes.

Selecting the right tax forms is just as important. Many taxpayers mistakenly use the wrong version of Form 1040 or fail to include necessary schedules. Those with self-employment income must file Schedule SE to report self-employment tax, while individuals with capital gains or losses need Schedule D. Omitting these forms or using outdated versions can lead to processing delays or IRS adjustments.

Validating Credits and Deductions

Claiming tax credits and deductions can lower your tax bill, but errors in eligibility or calculation can result in an audit or adjustments to your return. Each credit and deduction has specific qualifications, and misapplying them can lead to penalties or repayment demands. The Earned Income Tax Credit (EITC), for example, requires meeting income thresholds and filing status criteria, while the Child Tax Credit (CTC) provides up to $2,000 per qualifying child based on age, residency, and dependency status.

Many tax benefits phase out at higher income levels. The Student Loan Interest Deduction allows up to $2,500 in deductible interest payments but begins phasing out for single filers with modified adjusted gross income (MAGI) above $75,000 and disappears at $90,000. The American Opportunity Tax Credit (AOTC) phases out for individuals earning over $80,000 and is eliminated at $90,000. If your income has changed since the previous tax year, reviewing updated phase-out limits is necessary to avoid misreporting.

Documentation is required to substantiate deductions and credits. Charitable contributions over $250 must be supported by receipts or written acknowledgments from the organization. Medical expense deductions apply only to unreimbursed costs exceeding 7.5% of AGI, and detailed records such as invoices and payment confirmations are needed. Business owners claiming home office deductions or vehicle mileage must maintain logs and receipts that align with IRS guidelines. Failing to keep proper documentation can result in denied deductions and potential penalties.

Monitoring Communications From Tax Agencies

After filing, stay alert to any correspondence from tax authorities. The IRS and state tax agencies may send notices regarding missing information, verification requests, or discrepancies that require clarification. These letters typically arrive by mail rather than email or phone, as official agencies do not initiate contact through those channels for sensitive matters. Ignoring or delaying a response can lead to penalties or additional scrutiny.

Some notices are routine, such as a CP2000, which indicates that reported income does not match IRS records. This does not necessarily mean an audit but may require supporting documentation or an explanation. More urgent letters, like a Notice of Deficiency (90-day letter), signal that the IRS intends to assess additional tax unless the discrepancy is resolved or formally disputed in Tax Court. State tax agencies send similar notices, particularly for issues like sales tax compliance or residency-related tax obligations.

Evaluating Your Refund or Balance Due

Once your return is filed, the amount you owe or expect to receive as a refund can indicate whether your taxes were done correctly. A significantly larger or smaller refund than expected may signal an issue with withholding, estimated tax payments, or incorrectly claimed deductions. Large refunds often result from over-withholding, meaning the government held onto money that could have been used elsewhere. Conversely, owing an unexpectedly high amount may suggest that too little was withheld from paychecks or that taxable income was underreported.

Comparing your current tax return to prior years can help identify inconsistencies. If your income and deductions remained stable but your refund or tax due changed drastically, it may be worth reviewing your calculations. For example, if you typically receive a $1,500 refund but suddenly owe $2,000, check whether tax credits were missed or if withholding adjustments were made during the year. Self-employed individuals should also ensure that quarterly estimated payments were calculated correctly, as underpayment penalties can apply if payments were insufficient. The IRS provides a Tax Withholding Estimator tool to help determine if adjustments are needed for the following year to avoid surprises.