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Saving Advice

Teri Monroe

10 Tax Filing Errors Retirees Make During Early Preparation

Social Security IRS Medicare AARP

For many retirees, being organized is a point of pride. The moment the clock strikes midnight on New Year’s Eve, the hunt for the 1099s begins, with the goal of filing as early as possible to “get it over with.” However, as we enter the 2026 tax season, the urge to be an “early bird” could lead to some of the most expensive tax filing errors retirees make. With the historic implementation of the One Big Beautiful Bill Act (OBBBA), the tax code has undergone its most significant shift in a generation, and many of the forms you need simply aren’t ready yet.

The IRS has introduced a wave of new deductions for seniors, but they come with complex “phase-out” rules and a requirement for a brand-new form: Schedule 1-A. If you file your return based on last year’s logic, you risk leaving thousands of dollars on the table or triggering an automatic audit. Before you hit “send” on your 2026 return, check your preparation against these ten common pitfalls.

1. Missing the New $6,000 OBBBA Senior Deduction

The most common error in 2026 is forgetting the temporary “Senior Bonus” created by the OBBBA. If you are 65 or older, you are now entitled to an additional **$6,000 deduction** ($12,000 for married couples) on top of the standard deduction. This is a separate, below-the-line adjustment that must be manually claimed on the new Schedule 1-A.

According to AARP, this deduction is designed to help shield Social Security income from federal taxes. However, it is not “automatic” in most software packages yet, requiring you to specifically check the age box to trigger the calculation. If you file early without double-checking for this specific line item, you could be overpaying your taxes by $1,000 or more in actual cash.

2. Filing Before Receiving All 1099-R Forms

Retirees often have multiple streams of income—from pensions and IRAs to 401(k) withdrawals. A frequent mistake is filing in late January before the final 1099-R from a secondary provider arrives in the mail. Because these institutions have until January 31st to mail the forms, an early return often misses one small distribution.

As reported by TurboTax, the IRS receives a copy of every 1099-R issued in your name. If your return shows $40,000 in retirement income but the IRS computer sees $45,000 because of a forgotten form, an automatic “CP2000” notice will be generated. This leads to a messy amendment process that could have been avoided by simply waiting until the second week of February to file.

3. Miscalculating the $75,000 Phase-Out Cliff

The new $6,000 senior deduction isn’t available to everyone; it begins to disappear once your Modified Adjusted Gross Income (MAGI) crosses a specific threshold. For single filers, the “cliff” starts at **$75,000**, and for married couples, it starts at $150,000. The deduction is reduced by 6 cents for every dollar you earn over those limits.

According to Empower, many seniors accidentally trigger this phase-out by taking a large one-time IRA withdrawal to pay for a home repair or a car. This “income spike” can effectively claw back your entire $6,000 tax break. When preparing early, you must run a “pro forma” calculation of your MAGI to see if you are hovering near these dangerous thresholds.

4. Overlooking the $40,000 SALT Deduction Cap

If you live in a high-tax state like New Jersey, New York, or California, your 2026 return looks very different than last year. The OBBBA has officially raised the State and Local Tax (SALT) deduction cap from $10,000 to a staggering **$40,000**. This means that itemizing may suddenly be more beneficial for you than taking the standard deduction.

As noted by Kiplinger, many seniors have spent years “defaulting” to the standard deduction because they couldn’t beat the old $10,000 limit. Failing to re-evaluate your property and state income taxes under the new $40,000 cap is one of the most expensive tax filing errors retirees make. You must do a side-by-side comparison this year to see which method actually saves you the most.

5. Forgetting the “Double” Bonus for Blindness

The tax code provides an additional standard deduction not just for age, but also for being legally blind. In 2026, this extra deduction has increased to $2,000 for single filers. If you are both 65+ and legally blind, you can “stack” these benefits, but many seniors only check the “age” box and skip the rest.

According to the IRS 2026 instructions, this blindness deduction can be claimed even if you don’t itemize. If you’ve had a significant change in your vision over the last year, make sure your tax preparer knows. Skipping this “stackable” deduction is essentially giving a $2,000 gift back to the government that you are legally entitled to keep.

6. Underestimating the “Medicare IRMAA” Look-Back

Your 2026 tax return will be used by Social Security two years from now to determine your Medicare premiums. This is known as the Income-Related Monthly Adjustment Amount (IRMAA). If your 2026 income is even $1 over the limit, your 2028 Medicare premiums could double or triple overnight.

As reported by Mercer Advisors, the IRMAA cliffs are not pro-rated; they are “all or nothing.” Early filing errors that fail to manage income timing can lead to a “stealth tax” that hits you years later. When preparing, you must look at your total income not just for today’s tax bill, but for the future impact on your healthcare costs.

7. Neglecting the New Auto Loan Interest Deduction

A surprising addition to the 2026 tax code is the ability to deduct up to $10,000 in interest on a new car loan, provided the vehicle was assembled in the U.S. This is a rare deduction that is available even if you don’t itemize. Many retirees who bought a new American-made car in 2025 are completely unaware this break exists.

According to AARP, your lender is required to send you a statement by January 31, 2026, showing the interest paid. If you are filing your taxes in mid-January, you likely won’t have this form yet. Waiting for this specific document could save you hundreds of dollars, especially if you financed a high-value truck or SUV.

8. Mis-Typing Social Security Numbers on Digital Returns

With more seniors using “DIY” tax software, a simple “fat-finger” error on a Social Security number is now a top reason for rejected returns. In 2026, the IRS’s automated filters are more sensitive than ever due to increased fraud-prevention measures. A single wrong digit will result in a “Rejection Code” that can take weeks to resolve.

As noted by Elite Consulting, you should always compare the numbers on your screen to your physical Social Security card. Never rely on your memory or a “pre-filled” form from last year. A manual “sanity check” of every ID number on the return is the best way to ensure your refund isn’t delayed by a simple typo.

9. Failing to Coordinate “Qualified Charitable Distributions” (QCDs)

If you are over 70½, you can send money directly from your IRA to a charity without it counting as taxable income. However, a common error is reporting this as a “Normal Distribution” first and then trying to deduct it later. This is a mistake because the QCD is an exclusion from income, not a deduction.

According to Charles Schwab, if you report it incorrectly, you could artificially raise your Adjusted Gross Income (AGI). This, in turn, can trigger the phase-out of other credits or increase the taxability of your Social Security. You must ensure your 1099-R is coded correctly as a QCD before you finalize your early filing.

10. Ignoring State-Specific “Homestead” and Pension Exemptions

The 2026 federal changes have caused a “ripple effect” at the state level. Many states have updated their own pension and Social Security exemptions to match the new OBBBA thresholds. If you only focus on the federal forms, you may miss a significant state-level break that was just enacted.

States like Colorado and West Virginia have completed their phase-outs of Social Security taxation for 2026. If you file using “default” settings in your software, you might accidentally pay state tax on benefits that are now 100% exempt. Always check your state’s Department of Revenue “What’s New for 2026” page before you sign and date your return.

The Virtue of “Strategic Patience”

In the world of 2026 taxes, speed is often the enemy of savings. By avoiding these ten tax filing errors retirees make, you can ensure that you keep every dollar you’ve earned and every deduction the new OBBBA allows. Take the time to wait for every 1099 form, double-check your Schedule 1-A, and verify that you aren’t about to step over a Medicare IRMAA cliff. A few extra days of “strategic patience” this February can pay dividends that last for the rest of your retirement.

Are you planning to file your 2026 taxes early this year, or are you waiting to see how the new OBBBA forms shake out? Leave a comment below and share your best tax-prep tips for other retirees!