Done your tax return yet? Time to get cracking
Just like a Melbourne Cup winner tearing down the outside, the March 31 tax return deadline can quickly rush up on you. The good news is you still have time to get it done, but it’s best to start preparing now if you haven’t already. Leaving it to the last minute as this can lead to mistakes and missed refunds.
With that in mind, it’s a good idea to consider where people tend to go wrong with their tax return.
Here are the five most common errors people make
1. Leaving out some of their income: Make sure you include all your income, consider if you worked a temporary job or earnt some money by renting out a room on Airbnb. It is all taxable and needs to be included in your return.
2. Claiming deductions for personal expenses: You cannot claim the cost of getting to and from work, normal clothes or personal phone calls.
3. Forgetting to keep receipts or records of their expenses: If you can’t prove you bought it, don’t claim it.
4. Claiming for something you never paid for: Sometimes people think they are entitled to a “standard deduction” for things like work expenses. Unfortunately, no such thing exists, so it can’t be claimed for.
5. Claiming personal expenses for rental properties: If you use a rental property for personal use sometimes such a holiday home, make sure you don’t claim for the period you used it.
Likewise, if you have multiple assets under the one loan,say a car or a boat lumped in with your mortgage – make sure you only claim on the relevant portion.
The three golden rules
If you are still confused about what you can claim,there are three golden rules for work related expenses:
- you must have spent the money yourself (and not have been reimbursed)
- It must be directly related to earning your income
- You must have a record to prove it
Good record keeping is the key! If you do make a mistake on your tax return and realise it after filing, don’t panic. Try and get in contact with IRD as soon as possible and let them know where the error is. This will help you avoid, or at least reduce, any possible penalty.
Need help getting kicked into top gear?
Every now and then we’re all guilty of leaving something a little too late and needing an extra (stable) hand.
If you would like a hand with your tax return then please don’t hesitate to get in touch. We would be more than happy to put you in touch with an accountant who can help assist you. A good accountant if you are self employed or own rental properties is worth their weight in gold.
When your financials are completed this is often a good time for a review of your current position.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.