One of the beauties of Dubai is its tax-free nature. Unfortunately, some of us still have to file a tax return in our home countries. I’m lucky and only have to submit a “mini” tax return. The supporting documents, receipts and forms are already available and kept in one folder. It shouldn’t take my accountant too long to complete it. It’s not always this easy to get ready for tax season.
I’ve had my years where I scrapped for the receipts to get the most out of the different allowances and deductions. The stress of knowing that I had it but couldn’t find it drove me nuts. Until I changed to a system of collecting and sorting tax-relevant documents throughout the year, tax season always had a reputation. Please note this is not tax advice, just general information: Here are my tips to make tax season easier for you:
- Use a checklist kindly published by Smead or a similar one for your home country. As we’ve such a base of expats in Dubai and the region, you may want to check with the tax authority in your home country. They’ll advise you of the specific requirements for your unique situation. Review which sections of these checklists are applicable for you.
- If you are not comfortable completing the tax return documents yourself, consider tax preparation software or engaging a tax accountant or consultant. Software packages have expanded and now also cover expat filing. A tax accountant or consultant can answer any of your questions and may be more appropriate if you have a complex tax return.
- Find out the deadline for submitting her your tax return. Decide when you want to hand in your tax documents. In case there’ll be an issue with their website, don’t wait until the last day (or the day before). The same applies when working with a tax accountant who’ll prepare the tax return for you. Remember it’s their busiest period of the year and you won’t be their only client.
- Set a timer (e.g. one hour) and start gathering your tax documents. Be intentional during this period. Turn your phone on silent and reduce other distractions. Put all tax documents in one place. If you didn’t find all receipts or certificates, schedule another session until you have everything you need for your checklist of required documents.
- Next, sort these documents by category. You generally have 2 types of categories which will be subdivided: 1) Income and 2) Expenses.
Examples of income are your salary, if you’re employed, benefits, rent from your property or dividends and interest from your investments.
Expenses could be mortgage, educational expenses, medical savings account contributions, depreciation of office equipment, insurances or charitable donations, for example.
- As a general note, keep all tax-relevant documents or their electronic versions (e.g. an external hard drive or memory stick) in a fire resistant safety box. You should also keep other important documents like passport, birth certificate and insurance documents in there.
- Make use of last year’s tax return if you’re stuck entering some data or want to verify previous numbers.
- Before you throw out any old tax documents, check the retention policy in your country. Your tax authority or your accountant can help you answer this question. Once the document is no longer needed, don’t just throw it in the bin. Shred it! You don’t want others to get access to your confident and personal data.
- For the next tax season, start collecting and organising documents as they come in. Choose a binder, a hanging folder or a box to store them. You can divide it either in 12 sections for each month or categories according to the tax deductions. Whatever system works for you, make sure you just have 1 system. Don’t overcomplicate it.
- Keep a zip lock bag and a pen in your car. Every time you’ve made a purchase or meet a client, write down the specifics, put it in the bag and at the end of the month, move it into your preferred storage binder, hanging folder or box, chosen in the previous step. It will make it easier for the next tax return.
Is the thought of this year’s tax season making you cringe? Are you feeling overwhelmed and frustrated by organising your tax documents? If so, contact me to find out how I can take out the stress of organising your documents and make it a smooth tax season 2016 for you.
Until next time,