8 Mistakes to Avoid on your Tax Return This Year

For taxpayers who submit their tax returns on paper rather than online there are just days left to complete the self-assessment form and send it back to Revenue by October 31st. Although the filing deadline shares a spot on the calendar with Halloween, it doesn’t have to be a scary time for small business owners and taxpayers. If you want to make sure you get your return right this year, watch out for these 8 pitfalls;

1. Expenses –

Be careful not to claim expenses that can’t be claimed: There are complex rules governing what expenses you can deduct, and there are costly penalties for incorrect claims. Often people try to claim expenses like client entertainment, personal expenses such as clothing, holidays & flights, meals etc…

2. VAT-

Some business owners, especially if they are not using a bookkeeping package, forget to deduct VAT from their expenses and so incorrectly over claim. So, for example if you buy a computer for your business for €500 remember to deduct the VAT element in your tax return.

3. Not declaring all income-

As the Form 11 & Form 12 have lengthened over the years a common mistake is failing to complete all the pages you need to in relation to your income. For example, people often omit income such as deposit interest or dividend income.

4. Pensions-

Most people forget you can claim relief for pension top-ups made in 2015 against your 2014 tax liability.

5. Rental income wear and tear allowance-

The most common form of mistake for rental income is not claiming the 12.5% wear and tear allowance correctly or at all. This is a deduction you can make every year which reduces your taxable income. It should be made, over 8 years against the value of new capital items in the house such as a new boiler or kitchen etc.

6. Rental income mortgage interest-

A common rental income mistake is claiming the full mortgage payments instead of just claiming 75% of the interest paid on the mortgage. You are only allowed to claim for the 75% of interest payments and not the capital repayments.

7. Returning capital gains-

In terms of capital gains tax – often people pay the correct CGT in 2014 when disposing of an asset but then forget to include the details of this on their return.

8. Trading losses-

Revenue allows you to offset losses on trading in different ways — you can carry them forward or offset against your other sources of current year income. It can be complex to work out which is best for you and each person may vary in terms of the best way to offset losses.

If you are baffled by the tax system, consider taking professional advice from an accountant. Their fees can be offset against tax. To make a query, just click HERE.

 

 

Date published 29 Oct 2015

This article is intended to inform rather than advise and is based on legislation and practice at the time. Taxpayer’s circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this article, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.