You don’t want to miss extra cash as you could file an average tax return of $ 2820. Find out where the problem can occur.
This year is the year of bumper tax and Australians are expected to recover an average of $ 2820 from this year’s returns.
Tax offsets are expected to return money to many Australians as follows: $ 1080 savings Introduced for people with incomes less than $ 126,000.
However, while many are looking forward to putting extra cash in their accounts, Australians are making mistakes and face fines that prevent them from getting higher or worse returns. There is a possibility.
Monetary expert and financial critic Vanessa Stoykov said more people are likely to file tax returns this year as most Australians are tight on money due to the pandemic. ..
“Most people file their tax returns honestly, but even a simple mistake can result in an audit, which can result in fines or at least delays in depositing money into a bank account. It’s important because it’s there, to get it right, “she told news.com.au.
“If possible, we strongly recommend that you use a professional accountant if you can submit the return. Not only will it help you avoid errors, but the fee will be tax deductible on your next return. . “
According to Stoykov, these are the top five mistakes made during tax purposes, according to the Australian Tax Office.
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1. Omit part of your income
Forgetting the money earned from part-time jobs and side hustle is a big problem, and the tax office is cracking down on it, Stoykov explained.
“If a babysitter or pet makes money by sitting a few times or doing a freelance job with a full-time job, it’s important to include all of this in your income when you stay.” She said.
Many people turned to the gig economy during Covid-19 to achieve their goals, added Elinor Kasapidis, senior manager of tax policy at accounting institution CPA Australia.
“ATO is aware of these side hustle and matches data from platforms such as Uber, Airbnb and Airtasker to personal tax returns. This is because jigs are rising in the upcoming gig economy. Means, “she warned.
Gig economy workers often work as independent contractors, but she added that the term also includes a wide range of people who make money from bartering and sharing.
“If you drive people, do strange or freelance jobs, rent a car or storage space, run a social media account, or sell a product, you can use this income on your tax return. You have to declare it, “she explained.
“The good news is that your expense to earn this income may be deducted.”
Gig workers can claim a deduction for most of the costs incurred to earn income. Examples include travel, vehicle, marketing, funding and home office costs.
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2. Request a deduction for personal expenses
Stoykov states that there is a delicate line between what can and cannot be deducted. For example, many people try to claim the distance traveled from home to work, but it must be for traveling from your office to another work-related meeting, she said.
Mark Chapman, director of tax communications at H & R Block, says that as a general rule, daily commuting costs are not deductible, so it’s up to you to get on the train or car.
“As far as ATO is concerned, everyday work starts when you get to work and ends when you leave work. Therefore, the time to get in and out of work is essentially private, and the cost of train fares, gasoline, etc. It takes, I can’t argue, “he said.
But the good news is that there are exceptions. If you need to carry bulky tools or equipment, or if you are a “patrol” worker (who does not have a fixed workplace that moves to different workplaces every day), you may be able to file a complaint.
“But if you claim to fall under one of those exemptions, expect the ATO to watch carefully,” he warned.
Similarly, you only need to bill your work phone, not the entire bill. This could be a high percentage of personal calls, Stoykov added.
3. Forget expense receipts and records
It is a well-known fact that the ATO can ask you to submit a receipt and proof for up to 5 years from the date you file your claim.
“Submitting an item without a receipt is a surefire way to put a red flag on your claim,” Stoykov warned.
“This sounds painful, but there’s an easy way to stay on top of it all year long using platforms like myDeductions for individuals and Hnry for self-employed and contractors. All financial management. We put them all in one place, “she advised.
Documents to summarize include proof of work-related expenses, bank interest statements, and rental property income, to name a few.
4. Trying to use the deduction when you didn’t pay it
According to Stoykov, many Australians consider themselves eligible for a “standard deduction” and are trying to claim what they didn’t actually pay for, such as dry cleaning, where many are audited each year.
If there is nothing to support a standard deduction, be aware of the standard deduction, warned William Buck’s tax officer, Greg Travers.
This includes areas such as $ 300 work-related costs, $ 200 accessories, and $ 150 laundry costs.
“If you make these claims, be prepared to answer questions from the ATO about how you actually spent your money,” he said.
The Australian Tax Office has reported that it is wary of anyone trying to charge a large amount of telecommuting costs while maintaining or increasing their charges for cars, travel, clothing, etc.
However, among these standard claims, there are few known rules that people can use in their favor.
Most people know that they are eligible for a charitable donation tax deduction, but it is not common knowledge that there may be an option to extend the donation deduction to five years through elections, Moore Australia Tax Affairs said. The committee chair, Davide Costanzo, said.
5. Billing for personal expenses of rental property
Stoykov said he couldn’t try to claim money when he used his property himself.
“For example, if you usually rent your property, but decide to move between tenants for a few months, you can’t claim how long you’ve lived there,” she said.
However, according to BMT Tax Depreciation CEO Bradley Beer, investment property often includes tax credits worth tens of thousands of dollars.
Depreciation is the natural depletion of an asset or asset. This is one of the best tax credits available to real estate investors who can charge for up to 40 years.
“Older properties, or even damaged properties, may require discreet rewiring and re-plumbing. These items can generate a total depreciation deduction of $ 16,000.” He said.
“It is these hidden deductions that can generate valuable deductions for older properties. Even if the previous owner has completed the improvement, the current owner can request them.”
Five Common Mistakes Australians Make on Tax Returns
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