Top 5 Most Common Mistakes When Filing an Income Tax Return

Filing income tax returns may be frustrating but it’s important to get them right. Although completion is annual, people still find the process confusing and most just want to get it over and done with. As a result, every year we see people miss out on tax relief because of simple mistakes. We want to help you save time and money by sharing the most common errors, and how they affect your taxes.

 

1. Failing to file on time
2. Not declaring all income
3. Not taking advantage of all the tax credits available.
4. Missing Out on Allowable Expenses
5. Not Using a Professional Advisor

 

1. Failing to File on Time

A mistake that is all too common is missing the tax return deadline. This can result in interest and penalties which can bring about unnecessary additional costs. This is why we recommend you don’t leave filing your tax return to the very last minute. Also, failing to file your income tax return in the first place, is definitely one of the largest mistakes for anyone to make. Even if your business is not making profits in the first couple of years, you still must file a return. It is worth noting that losses can be used to offset profits in future years.

Those required to file income tax returns include contractors, landlords, taxi drivers, tutors, consultants, small business owners, and proprietary directors, to name a few. Many people don’t realise they must register for self-assessment before they can ever file a tax return.

 

2. Not Declaring All Income

Not only must you submit your self-employment income in your income tax return — you also need to include any other income you have earned in the year. For example, you must declare income such as PAYE income, payments from the Department of Social Protection, dividends/deposit interest received, and foreign income.

You must even declare exempt income in a tax return! Depending on your marital or civil partnership status, you must include your spouse’s income if you are jointly assessed.

 

3. Not Taking Advantage of All the Tax Credits Available

Hundreds of thousands of tax returns are filed with the Revenue Commissioners each year. Tax credits are not automatically applied, so you must apply for these yourself. It’s better to be safe than sorry and we recommend you seek professional advice to make sure you avail of all the tax credits applicable to you. Tax credits can save you a lot of money.

Most people settle for receiving one or two rather than claiming all the credits they are entitled to.

Examples of credits you may be eligible for but aren’t well known :
– Age credit for over 65s
– Widow tax credit with dependent children
– One-parent family
– Home carer’s credit
– Medical expenses

For more information visit the Revenue Commissioner’s website.

 

4. Missing Out on Allowable Expenses

Even the self-employed can have tax-deductible work expenses. For example, if you use your personal car for essential business purposes, you can allow for the business expense. If working from home, you can also claim reasonable amounts for expenses such as heating, light, and phone. Professional advice should be sought here as there may be other tax implications further down the road if you sell your home.

Other expenses you can claim tax back on include fixed assets, e.g. computers and office furniture. Tax back is applied for these over eight years. Don’t forget, you must keep all receipts in a safe place in case Revenue calls on you for an audit.

 

5. Not Using a Professional Advisor

If you are unsure of your entitlements, it is worth seeking a professional to file your tax return. Remember too that the fee you pay for this service is also tax-deductible! Filing income tax returns is like getting your hair cut. You can attempt it yourself but the end result generally confirms that you should have gone to a professional!

We hope this helps you understand the process of filing income tax returns a little better! If you’d like to relieve the stress completely why not hand the task over to our expert team at Tax Return Plus. We take care of all the nasty bits, leaving you to simply enjoy the returns.