We review a lot of tax returns.
Filing your taxes isn't the same as optimizing them.
The same five mistakes show up over and over - costing many households $5,000–$10,000+ per year.
None of them require a complicated strategy to fix.
Here's the list ↓
These aren't exotic tax shelters.
They're accounts and elections most people already have access to - and either don't know about, don't use correctly, or set up once and never revisited.
We see these regularly when reviewing returns.
#1: Thinking the employer match means you've maxed out.
It doesn't.
- The employer match gets you free money (which is really YOUR money)
- The 2026 employee 401(k) limit is $24,500.
Most people stop at the match threshold.
The IRS limit allows much more.
The math. (Illustrative - actual savings vary by income and filing status.)
4% match on $150k = $6,000 contribution to capture it.
The 2026 limit is $24,500.
That $18,500 gap at 22–24% is up to ~$4,440/year in foregone federal tax savings.
#2: Ignoring the HSA - or having one and missing the deduction.
2026 HSA limits:
→ Self-only: $4,400
→ Family: $8,750
Above-the-line deductions - reduce AGI whether you itemize or not.
At 22–24%: ~$968–$2,100/year in federal tax savings.
Plus FICA savings if contributed via payroll.
The other HSA mistake: treating it like a debit card.
Pay expenses out of pocket. Let the HSA compound.
Reimburse yourself years later.
No IRS deadline on reimbursements for qualified medical expenses.
A $500 expense in 2026 unreimbursed until 2046 may be $500 of tax-free income — if used for qualified expenses.
The HSA: the only triple tax advantage account:
- Contributions deductible
- Growth tax-free
- Withdrawals tax-free for qualified expenses
#3: Ignoring the FSA - or not knowing the 2026 limits changed.
Healthcare FSA: $3,400
Dependent Care FSA: $7,500 - raised from $5,000 under the OBBBA effective Jan 1, 2026.
FSAs are employer-sponsored. Not all plans offer them.
Note: A standard healthcare FSA and HSA generally can't be held simultaneously.
If you have kids in daycare, after-school, or summer camp and aren't using the dependent care FSA - you're paying those expenses with after-tax dollars you didn't have to.
At 22% (illustrative):
→ $7,500 dependent care FSA → ~$1,650/year in federal tax savings
→ $3,400 healthcare FSA → ~$748/year in federal tax savings
Money you're spending anyway.
Pre-tax.
#4: Paying avoidable penalties.
The ones we see most:
- Early 401(k) withdrawal: 10% penalty + ordinary income tax (exceptions apply)
- Underpayment: IRS charges interest on tax not paid quarterly
- Late filing: 5%/month on unpaid tax, up to 25%
Every dollar in penalties went to the IRS instead of your plan.
Most are avoidable with basic planning:
- Adjust withholding before year-end
- Set quarterly estimated payment reminders
- Never tap retirement accounts without understanding the full cost
#5: Never updating the W-4 after a life event.
Marriage. Divorce. A new child. A spouse returning to work. RSUs vesting. A side business taking off.
Every one of these changes your tax situation.
None of them automatically update your withholding.
Two outcomes we see:
1. Over-withheld: a large refund that felt like a win.
It wasn't. Interest-free loan to the IRS all year.
2. Under-withheld: surprise bill in April - with penalties - because nobody adjusted after income changed.
None of these are some secret strategy.
None require complicated planning.
They require knowing the accounts exist, using them correctly, and updating when your life changes.
Many households may be leaving $5,000–$10,000 on the table every year.
Because nobody ever walked them through it.
Quick 30 minutes of understanding the tax code can save you thousands in the long run
TL;DR - 5 Tax Mistakes We See Regularly:
- Mistake 1: Stopping at the employer match - the 2026 limit is $24,500
- Mistake 2: Ignoring the HSA/missing the deduction
- Mistake 3: Skipping the FSA/Dependent Care FSA on money being spent anyway
- Mistake 4: Paying avoidable penalties (underpayment, late filing, early withdrawal)
- Mistake 5: Never updating the W4 - overwithheld or blindsided at tax time
- Combined annual cost is potentially 5-10k for households hitting most of these
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