5 Effective Tips to Help Ease into the Tax Process in 2021
With the tax filing deadline getting closer everyday, more and more individuals and businesses are making elaborate plans to get maximum returns and file taxes on time. While this seems fairly simple, the process includes many intricacies.
There are most likely various everyday financial things that affect your tax filing process. Nonetheless, it is not too late to make the tax process facile. Given below are a few tips that can help.
Get Your Documents in Order
The simplest way to make sure that your tax return is filed properly is by ensuring complete organisation. Such a process will help you stay prepared. Moreover, keeping documents in order will also help you claim deductions easily. Keeping needed legal files in order also ensures that returns are filed in a timely manner. You will not have to run around looking for documents all over your home or office.
Some necessary documents are as under:
- A compiled list of all your incomes. This includes your salary, rental income, interests, dividends and foreign income. You may need to organise payment summaries for the same.
- A record of your work-related expenses, educational expenses and accountant expenses. Since last year you can also claim deductions on work from home expenses as per new ATO rules. Recording these is also necessary.
- Details around your private health insurance.
- Your spouse and children details (as applicable)
- Sales and purchase records of investments, shares and business.
- A photocopy of your tax return from the previous year.
Keeping these in order and handy will make tax filing more convenient.
Lodge Your Tax Deductions
Every business can claim certain tax deductions. These lead to a heavy amount of savings and reduce your yearly expense. Nonetheless, it is essential to maintain a list of deductions that you can claim and lodge them on time. For this you may need to list out all your deductible expenses. These include:
- Work-related expenses such as –
- Travel expenses
- PPE gear and job specific uniforms
- Work from home expenses on phone, internet, furniture depreciation and electricity used for working from home
- Expenses on laptops and software’s when you work in a corporate office or home office
- Total spending on outdoor equipment including sunscreen, sunglasses, hats and so on when your work is outdoors
- Subscriptions, memberships and educational costs related to your profession, such as textbooks or course fees
- Additional deductions can be claimed on –
- Tax returns of last year if you hired a tax professional
- Investment related expenses including interests and dividends
- Gift and donations to charities
- Personal contributions to superannuation
You can also check out ATO’s guides on industry specific deductions to form a detailed expense list.
Pay all Expenses Beforehand
With the current economic climate, you may estimate your next year’s income to be on the lower side. In such a case, there is a way to increase your earnings by availing tax returns and deductions. Nonetheless, in order to be able to claim these, paying off your current year’s expenses before the deadline of 30 June is a necessity. If these expenses are unpaid, you cannot claim for them before next year.
In order to claim work-related expenses, these need to have been paid by you without a reimbursement from the employer. Besides, these expenses should be related to your earned income that is used to run your livelihood. If these exceed $300, you need to produce proof for the expenses.
Plan Your Budget for Next Year
In order to make sure that the tax process is smooth, you need to have a pre-prepared plan. You need to get enough control over your finances to be able to estimate your spending and your profits. Proper budget planning for the next financial year can help keep a track of your expenses and forecast your tax returns. This makes the filing easier while also helping to keep your financial books in order.
If you are looking for qualified professionals who can help you with tax planning, look no further than Zimsen. Our tax agents and accountants will help you file taxes timely and also keep track of new developments under your occupation or industry. We provide affordable accounting and business consulting services that are suitable to small businesses, professionals and sole proprietors.
Give us a call to book an appointment with our accountants in Melbourne today!