It’s tax season for individuals!
For some, doing their tax returns can bring about a feeling of dread, knowing that they’ll need to pay money they can’t really afford to SARS. For others, it’s as joyous an occasion as finding money you thought you’d lost, or taking out a personal loan without the burden of having to pay it back.
Whichever way you feel about tax season, it’s important to know the basics of personal income tax returns so that you’re not caught on the wrong side of the law, and so that you can get the most out of your returns. Who knows – maybe you’ll have a little extra cash in your budget this year!
Here’s all you need to know to tackle your returns like a pro.
Do you need to submit a return?
Before you get started, it’s important to determine whether or not you even need to submit a return. SARS makes it easy to figure this out with a series of questions that you can answer here, such as whether your income was from a single employer, and if you’re under 65 years old. Once you’ve answered all the questions, it’ll let you know if you need to submit or not.
Tax is confusing for anyone who’s not an expert, and the complicated names they give to the forms don’t help! As a salaried taxpayer, what you need to know about the IRP5 form is that you can’t submit a return without it. It contains your personal info, details of the money you’ve earned (including your salary, bonus, and any fringe benefits you’ve received), and the PAYE tax you’ve paid over the last year. PAYE stands for ‘pay as you earn’ and it is the money that is taken off your salary each month and paid over to SARS.
If funds are taken off your salary every month for things like medical aid, these will also reflect on the form.
It’s up to your employer to make sure that the information on this form is correct and complete on time. If your company has not prepared your IRP5, you can report them to SARS as they have a legal duty to do this.
This can be a good way to do your returns each year. It’s an online platform that lets you submit without having to step out of your door. It’s free to register, secure, and is easy to navigate. You have two options with eFiling – you can either submit the return yourself or have a registered tax practitioner submit it on your behalf.
DIY or tax practitioner
Whether or not you should submit your return yourself or rely on a tax practitioner to do it depends on a number of factors, such as the complexity of your individual tax situation, how much time you have on your hands, if you can afford a tax practitioner (or afford not to have one), and your access to the internet. If you have income from a single source and no fringe benefits, you’re probably better off doing it yourself via eFiling. If you get stuck, you can get real-time online assistance from their experts during working hours. If you own multiple properties, or receive benefits like a car allowance, you’re probably better off using the help of a reputable professional.
What should you do if you get money back?
What you do with your money is entirely up to you, but we’ve got some helpful suggestions:
- Use it to pay off debt. If you owe money on your credit card or are paying off a car, that little extra money can help you improve your budget for the rest of the year.
- Save it. Let’s face it – saving money is probably the least exciting thing you can do with it but when you need it most, you’ll sure be glad you put it away.
- Have fun with it. Not all money needs to sit in the bank or in investments. If your current financial situation is looking good, there’s nothing wrong with spending the money on a well-deserved holiday, a clothing spree, or something special for your loved ones.
- Donate it. Consider giving some of the money to a cause that really needs it.
Remember, if you need a little financial help but aren’t getting money back on your tax return this year, Budget Insurance offers competitive interest rates, no unnecessary paperwork and fixed repayments on personal loans. Contact us today to apply!
The information in this blog does not constitute professional advice and is for informational purposes only.
Information obtained from: http://www.fin24.com/Money/Money-Clinic/Tax/Tax-advice-for-beginners-20130429