7 Mistakes You’re Making with Your 2026 Taxes (and How to Maximize Your Tax Refund)

NEW HAVEN, CT – JOSE'S TAX SERVICE – FEBRUARY 26, 2026

The 2026 tax filing season is officially underway. As taxpayers in New Haven and across the country begin gathering their documents, many are unknowingly following outdated strategies that lead to smaller refunds or, worse, IRS audits. At Jose's Tax Service, we see the same errors repeated every year. Tax laws are dynamic, and the regulations governing your 2025 return (filed in 2026) have seen significant shifts that require a proactive approach.

If you want to maximize your tax refund and avoid the stress of an IRS notice, you must identify where your filing process is failing. Below are the seven most common mistakes taxpayers are making this year and the exact steps required to correct them.

1. Ignoring New 2026 Tax Credits and Deductions!

Tax laws rarely stay stagnant. For the 2026 filing season, several adjustments to credits and deductions have been implemented. Many taxpayers rely on "what they did last year," which is a guaranteed way to leave money on the table.

The Mistake: Failing to research or ask a concierge tax pro about legislative updates regarding energy credits, student loan interest adjustments, and updated Individual Retirement Account (IRA) contribution limits.

How to Fix It:

• Review updated limits: The IRS has adjusted the phase-out ranges for many popular credits.
• Claim education expenses: Ensure you are utilizing the American Opportunity Tax Credit (AOTC) or the Lifetime Learning Credit (LLC) if you or your dependents are in school.
• Document energy-efficient home improvements: If you installed solar panels or high-efficiency HVAC systems in 2025, you may qualify for the Energy Efficient Home Improvement Credit.

Check the Jose's Tax Service Small Business Learning Center for a breakdown of recent legislative changes.

2. Over-Reliance on the Standard Deduction!

For years, the standard deduction was the most beneficial path for nearly 90% of taxpayers. However, for the 2025 tax year, policy shifts have made itemizing a viable and often superior option for many homeowners and high-income earners in Connecticut.

The Mistake: Automatically selecting the standard deduction without running a comparison against itemized deductions on Schedule A (Form 1040).

How to Fix It:

• Calculate the SALT update: The State and Local Tax (SALT) deduction cap has been raised to $40,000 for many filers, a significant increase from the previous $10,000 limit.
• Aggregate your expenses: If your total property taxes, state income taxes, mortgage interest, and charitable contributions exceed the 2025 standard deduction threshold, you must itemize to maximize your tax refund.
• Maintain receipts: Keep digital copies of all charitable donations and medical expenses that exceed 7.5% of your Adjusted Gross Income (AGI).

3. Failing to Update Your W-4 Withholding!

Your Form W-4, Employee's Withholding Certificate, dictates how much money is taken out of your paycheck. If this form is outdated, you are either giving the government an interest-free loan or setting yourself up for a massive tax bill in April.

The Mistake: Leaving a W-4 on file that does not reflect your current marital status, number of dependents, or secondary income sources.

How to Fix It:

• Perform a mid-season check: Use the IRS Tax Withholding Estimator to see if you are on track.
• Adjust for life changes: File a new W-4 with your employer immediately if you got married, had a child, or bought a home in the last 12 months.
• Account for side income: If you have a side gig, increase your withholding at your primary job to cover the tax liability of your additional earnings.

4. Underreporting "Gig Economy" and Side-Hustle Income!

The IRS has increased its focus on digital payment platforms. If you receive payments via Venmo, PayPal, or Cash App for business services, the IRS likely already has a record of that income via Form 1099-K.

The Mistake: Assuming that small "side-hustle" payments are invisible to the IRS or failing to report cash tips and 1099-NEC income.

How to Fix It:

• Track every dollar: Maintain a dedicated business bank account for all freelance or gig work.
• Reconcile 1099s: Ensure the income reported on your 1099-K or 1099-NEC matches your personal records. Discrepancies are a primary trigger for automated IRS flags.
• Deduct valid business expenses: While you must report the income, you can offset it by deducting home office expenses, mileage (using the 2025 standard mileage rate), and equipment costs.

5. Holding Tax-Inefficient Investments in Taxable Accounts!

Investors often focus on returns while ignoring the tax bite. If you are selling stocks, bonds, or real estate, your "net" profit is what matters, and the IRS wants its share of your capital gains.

The Mistake: Selling assets held for less than a year (triggering high short-term capital gains rates) or holding high-dividend funds in a standard brokerage account.

How to Fix It:

• Practice Tax-Loss Harvesting: Offset your capital gains by selling underperforming assets at a loss before the end of the fiscal year.
• Utilize Tax-Deferred Accounts: Prioritize placing "tax-heavy" investments, such as high-yield bonds, inside your 401(k) or IRA.
• Consult a concierge tax pro: Professional tax preparation in New Haven should include a review of your investment portfolio to ensure you aren't paying unnecessary taxes on your wealth growth.

6. Ignoring Connecticut-Specific Tax Credits!

Taxpayers often focus so heavily on their federal return that they neglect state-level opportunities. Connecticut offers several specific credits that can significantly reduce your local tax burden.

The Mistake: Failing to claim the Connecticut Earned Income Tax Credit (CT EITC) or the Property Tax Credit on Form CT-1040.

How to Fix It:

• Claim the Property Tax Credit: If you are over age 65 or have dependents, you may be eligible for a credit against your Connecticut income tax for property taxes paid on your primary residence or motor vehicle.
• Research the CT EITC: Connecticut’s version of the Earned Income Tax Credit is a percentage of the federal credit and can result in a substantial state refund for qualifying low-to-moderate-income working individuals.
• Stay Local: Working with a local expert for tax preparation in New Haven ensures you are utilizing every state-specific deduction available to residents.

7. Filing Too Early with Inaccurate Information!

There is a rush to file as soon as the IRS begins accepting returns in late January. However, haste often leads to errors that delay your refund by weeks or months.

The Mistake: Filing before receiving all 1099s, W-2s, and 1098-T forms, or entering incorrect bank routing numbers for direct deposit.

How to Fix It:

• Verify Social Security Numbers: A single transposed digit in an SSN will result in an immediate rejection of your e-file.
• Match your ID precisely: Ensure the name on your tax return matches the name on your Social Security card exactly.
• Wait for all documents: Financial institutions often send corrected 1099 forms in mid-February. Wait until you have a complete documentation set before hitting "submit."
• Use Direct Deposit: This is the fastest and safest way to receive your refund. Double-check your account and routing numbers twice.

Why a Concierge Tax Pro is Essential in 2026

The complexity of the 2026 tax landscape means that DIY software often misses the nuance of your specific financial situation. A concierge tax pro does more than just enter numbers into a spreadsheet; they provide a comprehensive review of your financial health to find hidden savings.

At Jose's Tax Service, we specialize in high-touch, professional tax preparation. We don't just look at what happened last year; we plan for your financial future. Whether you are a small business owner in New Haven or an individual looking to maximize your tax refund, our team is here to ensure your filing is accurate, optimized, and stress-free.

Don't let these seven mistakes cost you thousands of dollars this year. Tax season doesn't have to be a source of anxiety. With the right preparation and professional guidance, you can file with confidence.

Ready to get your 2026 taxes done right?
Visit josestaxservice.com to book your appointment today. For more tips on managing your business finances, explore our Small Business Learning Center.

Practical Reminder: The deadline to file your 2025 federal income tax return is Wednesday, April 15, 2026. Ensure all documents are submitted to your preparer at least three weeks prior to the deadline to guarantee timely filing. Failure to file or pay on time may lead to penalties and interest charges.

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