Tax Return Tips: 5 Ways to Avoid Making Mistakes When Filing Your Taxes
- Written by NewsServices.com
Filing your taxes is often one of the most complicated and stressful things you'll have to do each year. Not only are you required to collect a whole bunch of documents from the last twelve months and turn them into a single logical return, but you also have to be careful not to anger the ATO while trying to get the best refund possible.
All that adds up to plenty of opportunities to make mistakes, which can be costly. With that in mind, we've compiled this list of tips for avoiding mistakes when filing your taxes. Avoid these blunders, and you can reduce your tax season stress while, hopefully, keeping a bit more money in your pocket:
Get Expert Assistance
Regardless of your financial situation, lodging an online tax return in Australia is a lot easier if you've got a professional in your corner. A slight miscalculation or incorrect categorisation can have serious consequences. So it's always best to have multiple checks and balances in place.
For example, by lodging online, you've got the assistance of machines doing calculations for you. However, by bringing in a tax accountant, you'll be able to sort out your deductions properly, leading to less stress and a better outcome.
Know What You Can Claim
Speaking of deductions, it's important that you're aware of what you can and cannot claim on your tax return. Forgetting to claim a particular deduction means that you'll end up with less money in your refund. If you claim something you shouldn't, however, you could be forced to pay funds back and may even face charges due to the incorrect entry. So it pays to be clear on what you can and can’t legally claim.
Keep Receipts
It’s crucial to keep receipts for every expense you intend on claiming back. This is because the ATO really does care about a couple of cents, and if you're rounding or estimating your figures, you could find yourself coming unstuck pretty quickly. You'll also need a place to store these receipts for at least a few years, as audits can occur at any time, and you want to be prepared if you end up having to deal with one.
Don't Forget About Other Sources
Another thing to remember is that your main income may not be the only thing that incurs tax. Interest earned in a savings account, for example, is not considered tax-free income. Neither are any dividends that you receive from stocks you may own or profits from any other form of asset. The specifics of how you'll be taxed on these will differ depending on the type of asset, so be sure to seek professional assistance if you're at all confused.
Overseas Doesn't Mean Tax-Free
Finally, if you're an Australian resident for tax purposes, it doesn't matter where you made your money – you still have to pay the Australian government their share of your income. Many people get caught out with this one because there's a common misconception that income earned overseas is covered if you pay taxes in that country. This is not quite right, as you still have to declare everything you make to the Australian government. If you don't, the ATO can be quite harsh, so it's better to ensure you're upfront with all income.
Now that you know what to avoid, lodging your taxes should be a far less stressful process.