By Rick Waechter, Founder

As we all feverishly collect tax documents to file our 2025 tax returns, I want to focus on avoiding mistakes. I wrote a similar blog two years ago, but this bears repeating.

Whether you use Turbo Tax or a professional tax preparer, the most likely mistake is the same.

And it’s easy to avoid.

Think hard about what changed in 2025 compared to your 2024 return. That’s where you’ll find the potential mistake. Some examples:

• • You opened a new investment account. You’ll need a 1099 tax form from the new account and from the account which may now be closed.
  • You took a distribution from your IRA or company retirement plan (401k, 403b, etc.) for the first time ever.
  • You started taking distributions from a deferred compensation plan.
  • You sold your house or bought a new house with a mortgage. The sale will trigger tax on any gain over $250,000 ($500,000 if filing married). The new mortgage will generate a Form 1098 to report interest expense. Don’t forget that tax forms may come to your old address. Make sure you are forwarding mail and providing a new address.
  • You sold another real estate property. All gain is taxable unless it was your primary residence for at least two of the last five years, or if you did a 1031 exchange(following the detailed procedures to defer tax on the gain). If the property was your primary home for two of the last five years, the above $250k/$500k limits apply.
  • You sold a private investment that hasn’t generated any reportable income in recent years.
  • You invested in a new business or partnership, and it has already created a reportable income or loss.
  • You made a big gift to a relative – something you have not done in the past. This may trigger a Form 709 to report the gift if it is over $19,000 to any one individual ($38,000 if you and your spouse split the gift.)
  • You contributed to a donor-advised fund or to non-profits that are not part of your regular giving program.
  • There was a death. The rules here are complicated, and you may need professional advice. We recently wrote about steps you need to take, here. There’s also a checklist, here.

  Many of these activities will generate a tax reporting document, but not all will. Especially if you work with a third party to prepare your taxes, they won’t know what they don’t know.

  They (and TurboTax) will know to ask you for your W2, assuming you received one last year. They’ll ask for the 1099 from your Schwab investment account, assuming you received one last year. They’ll ask for your 1098 reporting mortgage interest, assuming you had one last year for that property. And so on.

  Of course, your tax preparer will have sent you a 20- or 30-page questionnaire trying to uncover every possible source of taxable income or deduction. But I have never met anyone who reads those. And if you’re doing TurboTax, you will, at some stage, lose patience and just click through questions where they are fishing for the same information.

  Tax filing is painful. Whether or not you outsource it, you need to spend time looking for the potential mistake. It is almost surely from a change.