How to make preparation of your tax return less burdensome
Lockdown is tough. Kids or no kids, work or no work, it’s hard to get motivated, especially for something like tax returns...
Here are a few tips on how to get your tax return wrapped up whilst in lockdown
Tip 1 – Plan it & chip away
Break down the tasks into manageable chunks, perhaps a few tasks per day. For example:
Day 1 AM
Review tax checklist to identify what should be gathered - download our Tax Checklist below
Day 1 PM
Gather expense receipts for possible deductions
Day 2 AM
Categories receipts and add them up
Day 2 PM
Check relevant bank statements for forgotten transactions
Day 3 AM
Collate investment property income and expenses
Etc. Etc.
If you’re not using an accounting software or spreadsheet to keep track of your employment or business-related transactions, you could find yourself missing out on a multitude of possible deductions.
We often have our clients download their bank statement into CSV (excel) format and assist them with allocating the transactions to relevant deduction buckets.
Do you have any expenses that cross over between personal and business? It is important to establish a rule as such on how you will treat these. For example, go through a few months’ worth of Phone bills to determine what percentage is commonly business.
Tip 2 – Chat with your accountant
If your accountant has not already been in touch with you, reach out and have a chat with them. Tell them about your past year and they will likely suggest possible deductions and documents or calculations that may be required.
Home office expenses can often cause a bit of confusion, speak with your accountant on what system would best suit your needs. Certain deductions can trigger capital gains tax. Your accountant will be able to let you know if it is in your best interest to do a occupancy and running expenses as a deduction or not.
Tip 3 – Check last years’ return
Often checking prior year tax returns bring to our attention deductions or income that we could/should be claiming. Dig up last years’ tax return and look through the deductions section for example. This will give you clues as to what receipts & calculations you may need to find or prepare.
Take a look at if any of your activities have changed, if you’ve obtained any new assets or sold an asset.
Tip 4 – Start sooner than later!
The more information you can provide your accountant with, preferably not in the form of a shoebox of receipts…the cheaper, faster and more efficient your return can be prepared. You don’t want to have to pay your accountant to perform work of a bookkeeper come end of year, the cost will have you reeling.
So start gathering information and make an appointment with your accountant earlier rather than later. This will at least get the ball rolling, whether fast or slow.