Do you want to lodge an Individual Tax Return in Sydney? You might feel overwhelmed to handle the process on your own, particularly with the continuous changes in tax regulations happening every now and then. It might appear to be quite easy to lodge a tax return. However, even minor errors can lead to penalties, audit or delayed refund for you. If you are going to file your individual taxes for the first time, expert tax returns service providers like Prowess Business Advisers would always advise you to avoid these common mistakes, to ensure a smooth, stress-free experience.
1. Missing All Income Sources
Do not fail to report all your income. This is one of the commonest mistakes that many people make, while trying to file taxes for the first time. It might be easy for you to remember the salary of your main job but do not forget to include income from even secondary sources like rental income, investment earnings or freelance work. Also include government payments like Youth Allowance or JobSeeker.
Keep in mind that the ATO (Australian Taxation Office) gathers data from employees, banks and other institutions. If there is any difference between their records and your return, it could raise red flags for sure. You should try to collect all your income documents before filing individual tax returns, to avoid any such issues.
2. Overlooking Deductions
Do not avoid claiming all eligible deductions. From charitable donations and self-education fees to home office costs and work-related expenses, you might be entitled to more deductions than you might expect. However, first-time taxpayers often end up underclaiming or overclaiming, due to lack of knowledge or out of confusion. When you opt for professional services, you can get proper guidance on what kind of deduction you are eligible for, depending on your specific situation. Make sure that they are documented properly.
3. Filling Up Personal Details Erroneously or Improperly
While it may appear to be basic, many tax returns end up getting delayed or rejected due to mistakes in personal information. Do not make any mistake while entering your name, bank details, address information, Tax File Number (TFN) and other crucial data. In case of any such errors, your return might be held up or you can find your refund being sent to the wrong account.
Always double check the details that you submit, before you lodge your individual tax return. If you use the Individual Tax Return Services Sydney of a company like Prowess Business Advisers, you can rest assured that all information will be properly submitted on your behalf.
4. Lodging too early
Many taxpayers file their returns in a hurry, as soon as the new financial year starts on July 1. However, if you lodge your returns too early, before the ATO can pre-fill all your income data, there can be problems of incomplete returns and missed income. Banks, employers and various institutions may need a few weeks for reporting all the earnings to the ATO. If you file too early, there can be mistakes and amendments might be needed later. To be on the safe side, wait until late July or early August.
5. Not keeping receipts and records
If you do not have valid documents with you, it can be quite risky to claim deductions. If the ATO requests proof for any deductions that you claim to be eligible for, without furnishing proper documents you can get your refund reduced or even face penalties. That is why, you should store mileage records, work logs, invoices, receipt etc to back up all your claims.
If you are not very strong in documentation, you can opt for the services of a company like Prowess Business Advisers. Its professionals can help you with organising and storing all your tax documents for the previous year. It can make the entire tax process much easier for you during the tax filing period.
6. Ending up with DIY mistakes
It is common for first-time individual taxpayers to make errors in misreporting capital gains, missing carry-forward losses or calculating deductions. Try to avoid these DIY mistakes as much as possible, due to lack of your understanding or experience in lodging tax returns. It is better to get qualified and professional tax agents who can help you to maximise your return and ensure full compliance with ATO guidelines.
7. Not declaring foreign income
If you are making foreign income or earning from cryptocurrency investments, you should be aware that you need to report these while filing your tax returns. You could face penalties if ATO discovers that you failed to disclose these incomes. With advanced data-imaging systems, ATO can easily track your undeclared earnings.
Conclusion
Lodging your individual tax returns in Sydney can be quite easy, if you avoid all these mistakes. If you do not want to handle your taxation for fear of making errors, consider hiring the expert tax professionals of Prowess Business Advisers and rest assured about the accuracy of your tax filing process.