Many mistakes, such as entering the wrong word in a crossword puzzle in pen, or calling someone by the wrong name, can be annoying and even embarrassing. Some errors, though, can be extremely costly. Many tax mistakes fall into that category.

Here's a look at a bunch of common tax mistakes that can cost you hundreds or even thousands of your hard-earned dollars. If you can avoid making them, you can minimize costs and hassles and increase your financial security.

the words common mistakes printed on lined paper and surrounded by blue ink blots

Image source: Getty Images.

No. 1. Not keeping track of your spending and receipts

You'll regret it if, throughout the year, you don't hang on to receipts for expenses that you may be able to deduct. Come tax-prep time, you'll either spend way more time looking for that documentation than you want or need to, or you'll just proceed without it, losing out on deductions.

Make your financial life easier by maintaining a "taxes" folder throughout the year, into which you drop any receipts or other documents that will support your tax return. For example, keep receipts from your charitable giving and medical spending to support possible deductions, along with child-care receipts and travel receipts for deductible expenses. When tax time comes, you'll be ready.

No. 2. Not taking advantage of retirement accounts

An easy way to lose out on hundreds or thousands of dollars in tax savings is to not make use of tax-advantaged retirement savings accounts, such as IRAs and 401(k)s. There are two main kinds of each -- the Roth and the traditional -- that offer two different kinds of tax breaks. The traditional IRA or 401(k) shrinks your current taxable income and gives you an upfront tax break, while the Roth IRA or 401(k) offers tax-free withdrawals in retirement. For 2018, the contribution limit for both kinds of IRAs is $5,500 for most people and $6,500 for those 50 and older. Meanwhile, a 401(k) has a much more generous contribution limit. In 2018, the limit is $18,500, plus an extra $6,000 for those 50 or older.

The table below shows what you might accumulate over various periods if you sock away funds aggressively and your investments average 8% annual growth:

Growing at 8% for

$5,000 invested annually

$10,000 invested annually

$15,000 invested annually

5 years

$31,680

$63,359

$95,039

10 years

$78,227

$156,455

$234,682

15 years

$146,621

$293,243

$439,864

20 years

$247,115

$494,229

$741,344

25 years

$394,772

$789,544

$1.2 million

30 years

$611,729

$1.2 million

$1.8 million

35 years

$930,511

$1.9 million

$2.8 million

40 years

$1.4 million

$2.8 million

$4.2 million

Calculations by author.

If you contribute $10,000 to a traditional 401(k) and you're in a 24% tax bracket, you'll avoid paying $2,400 in upfront taxes. If you accumulate $400,000 in a Roth IRA over many years, you may withdraw it without paying taxes on any of it.

No. 3. Ignoring your holding periods when investing

We tend to think a lot about when to buy a stock and when to sell it, but we often ignore how long we've been holding it. Your holding period matters in the tax world. At the moment, most of us face long-term capital gains tax rates (for qualifying assets that were held at least a year and a day) of 15%. Short-term capital gains face your ordinary income tax rate, which could be more than twice as high. Don't base any selling decision solely on taxes, but do include taxes in your thinking. If you're planning to sell a stock you've held for 11 months, consider whether it makes sense to hang on for another month and a day.

No. 4. Failing to offset gains with losses

Would you believe there's a bit of an upside to capital losses? Well, they can often be used to shrink your taxable gains -- potentially to zero. For example, imagine that you have $7,000 in gains and you sell enough holdings to generate a loss of $5,000. That would leave you facing taxes on only $2,000 in gains. If you have way more losses than gains, you can wipe out all of your gains and then shrink your taxable income with up to $3,000 of your losses, and then carry over any leftover losses into the next year. This strategy is best applied throughout the year, not just at tax time. A particularly good time to sell a certain holding for a gain or loss may be in February or August, not right at the end of the year.

Note that if you plan to buy back any of the losing stocks you sold, be sure to wait at least 31 days, lest you end up with a "wash sale" that doesn't count.

Criss-crossed yellow tape, with the word warning printed repeatedly on it

Failing to take available tax credits can cost you thousands. Image source: Getty Images.

No. 5. Not taking tax credits available to you

Tax credits are sometimes less understood than tax deductions, which is a shame, since they're far more powerful. While a $1,000 deduction can save you $240 if you're in a 24% tax bracket, a $1,000 tax credit can reduce your tax bill by a full $1,000.

There are tax credits for all kinds of things, such as education expenses, energy-efficient home improvements, the adoption of children, the care of children and dependents, and much more. A particularly valuable credit, if your income is low enough to qualify, is the Earned Income Tax Credit, which might shrink your income by more than $6,000. If you have kids or other dependents, you have more tax credit possibilities: The Child and Dependent Care Credit offers a credit of up to $3,000 for the care of one eligible dependent and up to $6,000, total, for two or more. And the Child Tax Credit offers $2,000 for every qualifying child you have who is under the age of 17 (as of the end of the tax year) -- subject to some rules and restrictions again, of course.

No. 6. Not using a Flexible Spending Account (FSA) or a Health Savings Account (HSA)

If you have a lot of healthcare expenses -- and even if you only have a modest amount of them, consider making use of a Flexible Spending Account. It accepts pre-tax dollars and lets you spend them tax-free on qualifying healthcare expenses. Note that you need to use most of your contribution each year, or you lose it. Still, if you plan well, this can save you a lot in taxes. For instance, if you're expecting to pay $2,000 on braces for your child this year, sock that much into your FSA and you can avoid paying taxes on it. The contribution limit for Health FSAs is $2,650 for 2018.

Better still is a Health Savings Account, which requires you to have a qualifying high-deductible health insurance plan. You fund it with pre-tax money, lowering your tax bill. That money can be used tax-free for qualifying healthcare expenses and it can accumulate over years, too, invested and growing. Once you turn 65, you can withdraw money from an HSA for any purpose, paying ordinary income tax rates on withdrawals. In other words, it eventually turns into an additional retirement savings account. HSA contribution limits for 2018 are $3,450 for individuals and $6,900 for families. Those 55 or older can contribute an additional $1,000.

No. 7. Not taking your Required Minimum Distribution (RMD)

If you're getting close to age 70 and you have any retirement accounts, such as traditional IRAs and 401(k)s, that feature required minimum distributions, be sure to start taking them on time, and then take them each year. The deadline to take your distribution each year is December 30, except for the year in which you turn 70 1/2. For that year, you have until April 1 of the following year to take your RMD. (It can be better to take it before the end of December regardless, though, lest you end up taxed on two distributions in one year, which might push you into a higher tax bracket.) Many people like setting up their accounts so that their RMD is sent to them automatically each year.

Fail to follow the RMD rules, and you can face costly penalties. The penalty is a whopping 50% of the amount you didn't withdraw on time, so if you were supposed to withdraw $8,000, you're looking at forfeiting $4,000! (Note that the IRS does let you appeal for a waiver.)

No. 8. Increasing your odds of being audited

You may not realize it, but you might be doing various things that boost your likelihood of being audited. For example, failing to file a return, or reporting having no income can trigger an audit. If you fail to file a tax return for any reason, the IRS may contact and question you. You need to file a return even if you have no income or no taxes due.

Being messy with your tax return or having mistakes in it can also increase your chances of being audited. If the IRS's computers or workers can't determine whether a certain squiggle is a 6 or an 8, your return may be flagged for a closer look. If the IRS's math differs from yours, that can also trigger an audit. Double-check your math and be sure you're entering correct numbers -- and that you're parking them in the correct boxes. One way to improve the accuracy of your return is to use tax-preparation software instead of preparing your return by hand -- and to electronically file your return. Remember to sign your return, too -- as unsigned returns can also draw the attention of the IRS.

Don't omit any required information, either, such as data from the 1099 forms your brokerage and other financial institutions send you. Failing to report any income or omitting any other information can raise flags at the IRS and get you audited. Entities that pay you generally send a report of that not only to you but also to the IRS -- whether they're reporting salary payments, dividend income, interest paid, or something else. The IRS then expects your return to include all of these payments.

No. 9. Not hiring a professional

A final common -- and potentially costly -- mistake many that people make is not hiring a tax pro to prepare their returns. Sure, it will cost something -- but the benefit can more than make up for the cost. After all, most of us don't know the tax code inside and out, and we only think about taxes for a few weeks of the year, at most. A savvy tax pro keeps up with changes to the tax code, is good at strategizing and finding ways to shrink tax bills, and is immersed in the tax world all year long.

Don't hire just anyone, either. Ask around for recommendations, and consider hiring an "Enrolled Agent," a tax pro licensed by the IRS who is authorized to represent you before the IRS if need be. You might find one through the National Association of Enrolled Agents website.

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