Proper management of taxation liabilities is essential for the long-term stability of your finances and future. If your owed taxes are not paid on time or the process is handled incorrectly, you might be subjected to significant financial penalties. Also, if you are not keen during the lodgement of your applications, you could miss out on important refunds. Under ideal circumstances, you should engage a qualified accountant to help you manage your tax return process. However, if this is not possible, you can perform the taxation tasks at home using DIY accounting tools. If you are planning on handling tax returns alone for the first time, consider using these below-outlined basic guidelines for optimal success.
Collect Critical Records
You should have the right information on your financial status and activities before completing your tax return forms and applications. In general, you should collect all your statements, summaries and records relevant to the process before commencing for high accuracy and accountability. As you might expect, you will need to have your bank statements and payment summaries. You will also need to have investment statements for accurate calculation of your capital gains and losses. Other important documents for the tax return process include rental property records, foreign financial details and health insurance policy statements.
Declare Your Income
You should understand the income you must declare during the tax return process. In simple terms, you should make a list of your sources of funds and determine whether the government requires taxation payments to be remitted for the pertinent income streams. Oversights during your calculations can attract some significant fines. In general, you must declare your employment, investment, business and foreign income when lodging your tax return applications. Annuities, super pensions, crowd funding and returns from the sharing economy should also be presented during the lodgement process. Additionally, you might have to declare some prices, discounted employee shares and compensations from insurance claims.
Claim Your Deductions
Finally, you should remember that you are entitled to claim some deductions for your expenses. These deductions can help you reduce your taxation liabilities. Simply speaking, a deduction can cause a reduction of your taxable income, allowing you to pay less tax. It is important to understand the expenses for which you can claim a deduction. In most cases, you can claim this reduction if the expense is work-related, and you can provide proof of the payments. The applicable deductions will depend on individual circumstances. Therefore, you should consult an experienced accountant for professional guidance and advice.