Tax season is that wonderful time of year where we feel like we have everything in order, only to find out on the last day and in the final hours of submission, that we quite clearly do not have everything in order.
Here's how to get ready for this year's Tax season!
It’s 2019 and yes, it does feel like we’ve only just finished eating our Christmas pudding and still waiting for it to digest, but the plain truth is that we’re already in February and before we know it, it’s going to be Tax season!
Let’s change it up a bit this year and take the time to strategize a bit beforehand, so as to avoid the unnecessary stress and face-reddening panic that evidently affects us all at that time of year.
Keeping track of your income & expenses for tax purposes
There’s no doubt that we would all like to make the most of our tax deductions, so in preparation for that, you would need to ensure all your paperwork is in order. Bear in mind that the sooner you start keeping a file with all your slips and receipts, the simpler this process is when that day arrives! An attempt to rustle through all your desk drawers, the secret compartments in your vehicle, and even your wallet, is only going to leave you flustered! This process repeats itself year on year and is not new to Australians, so it should grow to be a household practice.
Your paperwork will be required by your personal accountant unless of course, you do it manually from the comfort of your own home online. Typically, individuals like to use an accountant, because as legislation changes, so the accountants become aware such amendments, ergo your tax returns get amended to best suit you!
Can't keep track? Let someone else do it for you!
Of course, as surveys will show, individuals struggle to feel ease during the tax season, but it needn’t be a bad experience simply because you have shocking admin skills. Let someone help you keep a log of the documents you will require, or instead try managing taxes on a monthly basis.
During the course of May and June, you have enough time to gather your paperwork and spend time due time sifting and sorting before you set your meeting with your accountant.
No matter how prepped you deem you are, it doesn’t negate the fact that you might be in need of some handy tips to make the exercise a little smoother each year!
TIPS for planning the optimum tax return
Tip 1: Claim for all your Tax deductions
Have knowledge of what your deductions are. A deduction translates to anything that reduces your income that is taxable. Deductions can include any job-related expenses, an interest that might have been paid on a student loan, home renovations and a lot more. Please research more examples if you’re still unsure. Once you have an understanding of what they are, be sure to keep a detailed spreadsheet of your assets and claim your tax deductions.
Deducting bad debts for Tax
Bad debts are tax deductible, and if you feel you’re in a position where this might apply to you, then speak to someone (your accountant) and determine whether you’re eligible for it or not.
Tip 2: Determine the credits you are potentially eligible for
Should you be eligible for credits on taxes, this will directly entitle you to a reduction of the total figure that you have to pay your taxes. Not sure if you’re one of them? An example might be child tax credit, earned income tax and student tax credit.
Tax benefits for business owners
In addition to this, business owners are also entitled to tax benefits, should their business generate a turnover less than $2 million. Such benefits include capital gains tax, income tax and fringe benefits tax to name a few. The bottom line is that having a well-rounded understanding of these credits could significantly benefit you in getting the most out of your tax deductions.
Tip 3: Evaluate your financial position
Always try to keep a stable financial position when it comes to matters related to your financial life and your business. This will ultimately lead you to have a better nights’ sleep each and every night just by knowing that you have no existing financial burdens. From business loans to your mortgage and Taxes, keep your affairs in order by developing good habits. Stay on top of it at all times and you’ll positively reap the rewards.