Imran Kamal, Accountants First, is a Practising Accountant and business development specialist.
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Imran Kamal - Tax returns DIY or use a professional
1. Tax Returns – D.I.Y. or pay a pro?
- Advice from Tax consultant Imran Kamal
Everyyear NewZealandtaxpayerspayIRDmore thantheyare requiredto;notout of a sense of civic
generosity,butbecause theydon’ttake advantage of everydeductionthatthey are entitledto.
Filingforall deductionsrequiresthatyou’re well-informedandupto date,because changeshappen
withinthe tax systemregularly.
Of course,tax isnot complicatedif youjustwantto satisfyIRDthat youhave met their
requirements,butif youwantto claimeverythingyouare entitledto? Thenthingscanbecome
more complex. So, whenisitOKto calculate yourtaxesyourself? Andwhen isitworth payingfora
professionaltodoit?To getan ideaof whichcourse is bestforyou,start by askingyourself these
questions:
How complicated is your financial situation?
If you are notsimplya wage earnerbutyou have multifaceted incomestreams, orlive in
complicatedcircumstances;say youownyourownbusiness,hold many investments,are divorced
and payingchildsupport, orworkingfreelance,forexample - you’llprobablybe financiallybetteroff
usinga tax professional. I’ll explainwhyinamoment.
But as I say,if youearna regularwage at a single full-time job, you’resingle,renting,etc.thenI
suggestyou file yourown tax return.Online tax software isquite easytouse if yourcircumstances
are notcomplicated.
If you thinkyourtax will be fairly simple,butwantto be sure you’re gettingthe mostbackon your
tax return,Isuggestthat you try both fora year,and compare the results. Whenyouuse online tax
software youdon’thave to actuallyfile the return,justuse ittomake the calculations.Youcan then
compare it to whata tax advisorsays you can claim.You’ll quicklysee whetherit’sworthdoingit
yourself infuture,orwhetheryou’re betteroff payingaprofessional.
Have your financial circumstances altered since last year?
Didyou recently buyahouse,getmarriedor have a child? If you didthenyou’ll needtomake sure
that youare aware of all the tax parametersaround these new situations.Youwanttoknow the tax
deductionsandcreditsthat come alongwiththe changes;thiswill take some research.
If you haven’tgotthe time,or the inclinationtogeta handle onthe taxation-relatedchanges inyour
life, thenatax professional ismore likelyto pickupon the thingsyou’ve missed. Evenabrief chat
withsomeone whoknowsthe insandoutsof the tax system couldtriggerideason otherthingsthat
have changed for yousince youlastfiledareturn.
So if yoursituationisnotstraightforwardor yourcircumstanceshave changedinthe past year,take
the time to sitdownwitha tax specialistsoyouknow forsure that youare not payingmore tax than
youreallyneedto.
- Imran Kamal is a certified Accountant and Tax Advisor in Wellington, New Zealand.