6. Using the refund like a bonus

Every year at tax time, most of the people think about how to spend their tax refund, as if it's a festive bonus. This is horribly unsound thinking. If you get a refund, it means that the government has held on to your money for most of the year. Moreover, tax refunds are not easily predictable, so it's dangerous to assume you will be getting a certain amount.

The smartest move is to budget as if no refund is coming. It may even help to set aside some funds in case you owe the taxman. If you do get a refund, resist the urge to get a refund anticipation loan, which can take out hundreds of dollars in fees.

7. Not including all eligible deductions

Many taxpayers don't know about all the possible options under Section 80C. Besides the investments, there are several expenses that are also eligible for deduction, such as school fees of children, housing loan repayment and stamp duty and registration charges paid for a house.

8. Maintaining poor records

Records are crucial to everything from proving wages, properly valuing investments, and identifying business expenses. When you get wage statements from your employer, keep them handy. The same goes for any statements relating to your brokerage accounts and retirement plans.

Numbers like your salary and retirement contributions aren't things you want to guess on, as they have a direct impact on how much tax you pay. It's also important to save previous years' returns. Also keep records of any investments or major things you buy.