Filing income taxes may seem straightforward, especially with the rise of online portals and self-filing tools. However, without the guidance of an expert, many individuals unknowingly commit errors that can lead to financial loss, audits, or penalties. An income tax advisor plays a crucial role in ensuring compliance, maximizing deductions, and maintaining proper documentation. Let’s explore the most common mistakes individuals make when they choose to handle taxes on their own without professional help.
Incorrect Reporting of Income
One of the most frequent errors is incorrect or incomplete reporting of income. Individuals often forget to include freelance earnings, interest from savings accounts, or capital gains from investments. Such omissions can lead to penalties and notices from tax authorities. An income tax advisor ensures that all sources of income are reported accurately, reducing the chances of legal complications.
Overlooking Deductions and Exemptions
Tax laws offer various deductions under sections like 80C, 80D, and 24(b), but many individuals either don’t claim them or claim them incorrectly. Expenses like tuition fees, insurance premiums, and home loan interest are often missed. An income tax advisor has updated knowledge of the tax code and ensures you benefit from every eligible deduction and exemption, helping you saves significantly.
Misclassifying Investments
Many taxpayers misclassify their investments, especially when it comes to long-term and short-term capital gains. Not understanding how different investment instruments are taxed can result in either overpayment or underpayment of taxes. An income tax advisor understands the tax implications of various asset classes and helps in correct classification and reporting, thus avoiding unnecessary tax burdens.
Filing Delays and Missed Deadlines
Submitting your returns beyond the deadline can lead to additional fees and losing a few privileges. Often, when people need to file taxes by themselves, they do not feel motivated and delay it. An income tax advisor reminds you of all important deadlines and looks after your documents effectively, so you do not get stressed during tax season.
Errors in Tax Calculations
People often make errors when filing their taxes by themselves since this process is complicated. A little error in the numbers may create a significant debt or wrongly awarded refund. An income tax advisor relies on special tools and skills to calculate properly so that there are no mistakes likely to arouse interest from authorities.
This content is meant for information only and should not be considered as an advice or legal opinion, or otherwise. AKGVG & Associates does not intend to advertise its services through this.