Who doesn’t love a tax refund? Even I get excited at the thought of getting some money back from the government – it feels like ‘free money’.
So when we see all the ads on the TV for the wahoo moment, of course we sign up to get our money back in the form of a tax refund!
However, here’s some additional things to think about:
- You don’t always get a tax refund. Sometimes there’s tax to pay. The ads promise only 10% have tax to pay but if you’re one of those 10%, that’s a bit unpleasant. I recently spoke to a man whose wife got a $700 refund and they were so excited he immediately applied for his refund and he got a $2,000 bill. That’s got to sting a little.
- Another case study recently was a young man, new to business, who had spent the last few years as an employee. He didn’t realise that being in business meant he could claim his business expenses as well as account for his business income. So he filed for a wahoo tax refund which he’ll get – but it will be significantly less than if he had claimed for all his legitimate business expenses.
So, if you receive any self employed income, or you work in business then you might like to think about these 3 things:
- Have you claimed everything you’re entitled to? Check out our Claimable Expenses Fact Guide.
- Are you in the best business structure? Company, sole trader, partnership or trust – what’s the best for you. Check out our Business Structures blog.
- What’s the difference between a Working for Families Tax Credit and an Independent Earner Tax Credit? How does that affect you? Check out this FAQ page on the Inland Revenue website.
Besides the generic information provided in these free resources, it always pays to check your particular situation with one of our friendly accountants – so give us a call on 0800 755 333.