The average tax refund in Australia is $4,000. Unfortunately, most people do not know how to maximise their tax returns and end up unwittingly forfeiting their hard-earned money. It could be due to a lack of knowledge or proper organisational skills. Whichever is the case, you should learn how to leverage the potential deductions that you are eligible for. However, how do you approach it if you are not a tax professional? Well, filing tax returns is a lot easier today, which goes a long way in ensuring that you do not give up money unknowingly. Here are tips for filing and maximising tax returns.
Determine Your Tax Bracket
Knowing your tax bracket is essential for maximising tax returns. It is the only way that you can accurately calculate your tax obligations, which ensures that you only pay the ATO (Australian Tax Office) what you owe it. The tax agency reviews income tax rates from time to time; therefore, it is improbable that you will remain in the same tax bracket for several years. Whenever the ATO releases new individual and married tax rates, take time to review the changes to understand where you stand. Once you are sure about your tax bracket, you can confidently and accurately review deductions.
Create a Receipt System
It is common for people to throw away receipts or stash them in a drawer. While you can be forgiven for the behaviour as an individual, there is no excuse if you run a home-based business. Receipts are essential when making deduction claims and the fact that they are easy to lose calls for the establishment of a receipt system. Moreover, receipts fade over time, making them useless when filing tax returns. Although you can file your receipts, you can use smartphone applications to digitise, store, and track the records; consequently, you save money during the tax season. In fact, most people are surprised at the number of items they can claim.
Examine Your Deductions
Although some people understand that they can claim certain deductions, they do not know the plethora of eligible deductible items. Unfortunately, the ignorance reduces the amount of money one can claim from their tax returns. Therefore, put your assumptions aside and hire an accountant to help you identify everything that you can claim when filing tax returns. Alternatively, check with the ATO for the full list of deductible items that you qualify for to ensure that you claim all possible deductions. For example, if you run a home business, you qualify for home-related overheads, repairs, maintenance, travel expenses, communication and travel expenses.
To learn more about tax returns, contact a local accountant.
