Tax season is here, and it’s time to prepare for the annual task of filing your taxes. Whether you’re expecting a refund or anticipating owing money, you can make the most out of the tax season by avoiding common mistakes that can lead to unnecessary complications and financial losses.
Here are seven mistakes accounting firms in Sydney will tell you about the best to avoid and some tips to help you navigate the process successfully.
Don’t be fashionably late when it comes to filing your tax returns. In Australia, the tax season typically runs from 1st July to 31st October each year. During this period, individuals and businesses must submit their income tax returns to the Australian Taxation Office (ATO) for the previous financial year, which runs from 1st July to 30th June. It’s essential to meet the deadline to avoid any penalties or late lodgment fees.
Missing the October tax filing deadline can result in penalties. To avoid this mistake, contact your accountant and gather your tax-related documents in order by late May. This will give you ample time to submit your returns or request an extension, ensuring you stay on the deadline.
Your filing status impacts various aspects of your tax return, including your tax bracket and eligibility for credits and deductions. Accounting firms in Sydney can ensure you select the correct filing status by using the ATO’s free online tool to help you decide. This simple step can significantly impact your tax outcome and save you from errors.
Entering Information Incorrectly
Even the most careful individuals can make mistakes when filing their taxes in Australia. Simple errors like entering your Tax File Number (TFN) incorrectly or misspelling your name can cause problems when the Australian Taxation Office (ATO) processes your return. To avoid these issues, double-check all the information you enter, verify it against your payment summary or other relevant documents, and review last year’s return for accuracy. Consider hiring a tax professional to ensure your return is error-free and compliant with the Australian tax system.
Math errors can range from simple miscalculations to omitted entries and unsupported claims. These mistakes can trigger math error notices from the Australian Taxation Office (ATO) and result in adjustments to your return. Take time to check your calculations, use tax software to minimise errors, or hire an accounting firm in Sydney to handle the entire process. Avoid letting math errors cost you money or delay your refund.
The tax code provides opportunities to lower your tax bill through deductions and credits. Ensure you claim all the deductions and credits you qualify for, whether by itemising your expenses or taking advantage of available credits. Research available options or seek guidance from tax software or a tax professional to maximise your tax benefits and keep more money in your pocket.
Forgetting to sign and date your tax returns can invalidate them. If you realise you’ve missed your signature, submit a new copy with the required signatures and dates to the ATO. Alternatively, file your taxes electronically and digitally sign the documents to avoid this issue altogether.
Mailing your tax returns increases the chances of making mistakes. From sending your return to the wrong ATO office to forgetting to include important documents, there are several potential pitfalls. Opt for electronic filing through the ATO website or tax software to minimise mailing mishaps and ensure your returns are submitted correctly.
Failing to include essential tax forms, such as payment summaries, receipts of work-related expenses you wish to claim, investment income reports or other income documents, can lead to discrepancies in your Australian tax return. Ensure that your tax preparer or accountant in Australia gathers all the necessary forms and double-checks that the information matches what you report on your tax return to the Australian Taxation Office (ATO).
Not Keeping Proper Records
Good record-keeping is essential when it comes to taxes. Keep copies of all relevant documents, including receipts, invoices, bank statements, and tax forms. Having organised records can help you accurately report your income and deductions, substantiate your claims in case of an audit, and ensure compliance with tax regulations.
Tax season is a prime time for scammers to take advantage of unsuspecting taxpayers. Be cautious of phishing emails, fraudulent phone calls, or deceptive tax preparation services. The ATO will never contact you via email or phone to request personal or financial information. Protect yourself by staying informed about common scams and taking precautions to safeguard your sensitive data. If you get into trouble, a tax accountant in Sydney can help you navigate the situation.
Navigating the complexities of taxes can be challenging, which is why seeking professional help can be beneficial. Consider hiring a tax professional from an accounting firm in Sydney. These experts stay updated on tax laws and regulations and can provide tailored guidance based on your circumstances. They will help you avoid common mistakes, accurately file your returns, identify missed deductions and credits, and provide valuable tax planning advice.
By being proactive and seeking professional assistance, you can approach tax season with confidence and ease. Remember, it’s your hard-earned money, so take the necessary steps to keep as much of it as possible in your pocket.