Only death and taxes are certainties in life.
Say what you will, but nobody looks forward to the tax season, well, except for the taxman. With this love and hate relationship with taxes, we always file them, maybe because we’d like to think of ourselves as outstanding citizens.
However, when exercising this civic duty, people make some common mistakes with filing taxes. This article will look at seven of them and how to avoid them. Read on and find out.
1. Missing Tax Filing Deadlines
While filing tax returns is very important, it’s the last thing on most taxpayers’ minds. This is seen by the rush to submit returns as the tax filing deadline approaches. There’s no issue with last-minute filing so long as the returns bear the deadline day stamp.
To avoid getting into trouble with the authorities, don’t wait until the last minute to file. If you miss the deadline, you may have to pay missed deadline fines as well as interest on the tax you owe. Also, it could even get worse as the taxman may close down your business, depending on the severity of your case.
2. Math Errors
Math errors are by far the most common tax filing errors made. They can have far-reaching consequences like reduced refunds or even be indebted to the taxman. Imagine getting a correction notice or finding out that you owe the taxman an extra amount, all because of arithmetic mistakes.
The good news is there are so many tools available to help you with your tax returns. You can use software programs while filing your returns and reduce math errors.
You can also consider hiring a tax consultant to handle all your returns. This will ensure that your taxes are filed error-free, and tax examiners won’t find any discrepancies requiring a tax audit.
3. Forgetting Important Tax Return Paperwork
Most people can’t wait to be done with filing their tax returns; some file early while others file later on. Whenever you file your tax returns, you should always ensure that you submit the necessary supplementary forms.
For example, in Hong Kong, supplementary forms to tax returns were introduced in 2019. Since then, the supplementary forms have been part of the tax returns and should be filled with the tax return.
Ensure that you attach all the necessary tax return paperwork with your returns. You should also ensure that the paperwork is correctly filled and duly signed.
When preparing for tax season, consider all the activities you did that resulted in you being issued a tax document. Ensure you have all the necessary paperwork before you begin filing your returns. They can have a good impact on the tax you owe.
4. Incorrect and Misspelled Names
While the taxman is primarily concerned with numbers, letters are also important, names. If you file your returns with different or misspelled names than the ones on record, the taxman may delay the processing or kick it out.
This problem is more common than you may think. Recently married women, and depending on where you are, same-sex couples end up changing their surnames. If the name change wasn’t communicated with the tax authorities, that could be a huge issue.
Ensure that you correctly spell your name on your tax returns to avoid slow processing. Also, if you’re newly married and have changed your surname, notify the tax authority beforehand. This will ensure the smooth and timely processing of your returns.
5. Choosing the Wrong Filing Status
Choosing the correct status when filing your returns could have a huge impact. All the deductions you’ll be claiming, your tax bracket, and credits will have an impact on the tax you end up paying. There are several filing statuses to choose from, and you should ensure you select the one that correctly fits you.
All the different filing status have their own set of rules. The rules apply to you as a taxpayer, and you might find that you qualify for more than one filing status. The choice you go with may be the difference between paying more in taxes and collecting a higher refund.
6. Missing Out on Tax Deductions
Depending on your status, did you know you might be eligible for tax deductions and credits? This may influence the tax you pay and also the refunds you get. Can you imagine missing out on tax deductions and credits because you weren’t aware, what a bummer?
The tax authorities are very vigilant and will catch you trying to pay less than you owe. On the other hand, they aren’t as willing to let you know of any deductions or credits you have available. This is why you need a tax consultant.
7. Failure to Include International Assets and Income
In a bid to grow your portfolio, you might end up having international assets or income. These assets and income work well to ensure you achieve your financial stability goals, failure to report them can derail the same goal.
You should get acquainted with the tax code so that you don’t end up being on the wrong side of the law. Hire a tax consultant to advise and help you stay on top of your tax obligation.
Avoid These Mistakes With Filing Taxes and Stay Compliant
Learn these common mistakes with filing taxes and avoid getting into trouble with the tax authorities. This will give you peace, knowing that you don’t have any nasty surprises to shock you.
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