The Good, The Bad and The Ugly of doing your own taxes

Saturday, 13th August 2016

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Saving money makes us feel good, and it&rsquo;s no different with our tax returns. With tax time upon us, we are always looking for ways to maximise the money we will get back from the ATO, but can we save money by doing our own taxes? Let&rsquo;s take a look at some of the reasons doing our own tax can be good, bad or downright ugly. The Good There&rsquo;s one very clear advantage to doing your own taxes &ndash; it&rsquo;s free! Additionally, you can do it all from the comfort of your own home by using the ATO&rsquo;s tax software, Mytax. By having all your paperwork on hand, lodging your own tax return is almost as easy as clicking that &lsquo;submit&rsquo; button, albeit there is a chance you could experience a few hiccups along the way. If there have been ANY changes to your personal situation throughout the financial year, i.e. your income type, your personal circumstances have changed or if, like many, you find the tax jargon a little akin to learning a new language, your valuable time could be whittled away by lodging your own taxes. However, if you are entrenched in tax land and you feel entirely comfortable lodging your own tax return, the free ATO software makes it relatively easy for you to do so. The Bad Where do we start? Apart from the monotony and the time thieving that occurs when we undertake this onerous task, there are a number of reasons why doing our own taxes can be &lsquo;bad&rsquo;. A lot can change in a year. Family changes like a marriage or divorce, property investments or reductions, changes to income type (i.e. PAYG), plus many, many more. All of these events may mean you are entitled to make extra claims at tax time, thus increasing your potential return. How do we know if we&rsquo;ve claimed for everything we&rsquo;re entitled to? The tax system is ever changing and our knowledge of allowable deductions may not be as thorough as we would like to believe. We work hard and pay our taxes, so we want to make sure our refund includes all that we are entitled to. By doing our own tax return we may miss the opportunity to include little known deductions, or simply overlook opportunities to claim for expenses we are uncertain of. The Ugly There are possibly a number of words that come to mind when we think of doing our taxes. &lsquo;Ugly&rsquo; probably isn&rsquo;t one of them, but there&rsquo;s certainly some situations we can get ourselves into that could be considered a little ugly. Regardless of your level of knowledge of the tax system, there&rsquo;s always room for error. An error in your tax return can have all sorts of implications; from reducing the amount of money you are entitled to claim, to having to resubmit your tax return, or having to explain your error(s) to the tax man if you find yourself the subject of an audit or on the receiving end of a fine. Understanding these errors without an expert in your corner can be overwhelming and arguably unnecessary. Hiring a tax specialist is like choosing the right tool for the job. The whole thing can be done correctly from the beginning and potentially save you a lot of money in the long run. Using a tax specialist to do your taxes has other additional benefits, too. Like a good family doctor that knows your medical history, building a rapport with your accountant allows them to understand your financial situation and future goals. It also allows you to maintain contact throughout the financial year and be advised of ongoing changes to the tax law that may impact your next return. Visit your ITP specialist this tax time&nbsp;to ensure you maximise your return in the minimum amount of time. Don&rsquo;t be the star in your own spaghetti western.