Most of us wait till the 11th hour to file our income tax returns, but it’s worth getting a head start on them now. We explain how to keep on track…
- File on Time. You don’t want to file too late.. A lot of people, it seems to be something they definitely don’t want to do and not their favourite time of year so they put it off as long as possible.”
- Avoid paying extra. If you file past the October 31st deadline, you’ll have to pay interest on any tax owed, but filing late could also increase your odds of being audited.
- Make sure you have all paperwork. On the flip side, filing too early can be a problem if you don’t have all your documents. Some items might not be ready straight after your tax year end (Dec31st), so it’s worth waiting for all the necessary slips so you don’t have to follow up with an adjustment.
- Double check your bookkeeping. Don’t make mistakes. Making bookkeeping mistakes on your tax return will get you noticed — and not in a good way. The best way to accomplish this is to…
- Buy a computer program. These days, it doesn’t make sense to do it by hand, unless you have the simplest of returns. A good program will notify you of errors, keep you up to date on recent tax changes, and even point out deductions you may be missing. If you don’t have a computer, hire a professional.
- Declare all your income, especially if you are self-employed.
- Don’t make up deductions, especially if you are self-employed. Be honest. Revenue has ways of computer cross-checking your claims.
- Keep track of your receipts. Revenue may notice any deviations from your usual year-to-year filings, so make sure you have documentation to account for them.
- Large VAT refunds – VAT refunds over a certain amount are automatically looked at by an auditor. (When setting up a business you will mostly always have a VAT refund as you purchase assets, stock etc). So an idea would be to attach an explanation to the VAT 3 if there is a large refund.
The only difference between a tax man and a taxidermist
is that the taxidermist leaves the skin.— Mark Twain
*And don’t do this
Anonymous information – Bragging about what you have and how little tax you pay has an odd way of finding its way back to the Revenue.
The revenue use a system called reap to profile every taxpayer in the country. This system collects information on taxpayers from many sources, including the taxpayers tax returns under all headings, ie income tax, VAT ,PAYE etc.
The reap system is used to access which businesses/tax payers should be audited.
A major element in deciding to audit is the compliance history of the taxpayer.
If you have a record of late filing of returns you are more likely to be selected.
The key to reducing your risk of an audit is to ensure your returns are submitted on time all the time.
In 2010, 465,804 audits and assurance checks yielded a further €492.7m. Revenue put a particular focus on ‘cash’ businesses.
http://www.rte.ie/news/2011/0420/revenue-business.html
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JUN
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