Did you know that most New Zealand residents overpay their taxes? As efficient as the PAYE system tries to be, there are plenty of times when employers wind up deducting too much over the course of a year. So, before you simply assume that what you’ve paid is what you owe, follow these 5 tips.
You might be surprised to find that there’s extra money with your name on it!
- Look at your income from start to finish If your salary changed during the year (either up or down) you may have paid too many taxes at some point. Remember, our tax rates are based on the amount of money you make. If it takes a little while for your tax information to catch up to your new salary information, you might temporarily pay more than you need to — meaning you’ll be entitled to a refund when tax time rolls around.
- Don’t forget about your debts Your tax rate isn’t just affected by the money that comes in; it’s also affected by the money that goes out. So, if you took a loss on a rental property, had to spend a fortune in student loan payments, or had to deal with any other kind of debt, it will change your net income. As a result, you may end up qualifying for a lower tax rate in the end.
- Add up all of your charitable donations As long as you donated more than $5 to a charity this tax year, the money counts as a tax credit. As a result, you’ll be entitled you to a tax refund when all is said and done. Just remember, in order to take advantage of the tax credit, the charity you donate to has got to meet certain guidelines. It’s got to have approved donee status, be listed as an approved religious organization, be an official state or state integrated school, or be part of a university’s medical research program.
- See if your kids count While the childcare tax credits have officially expired, certain families are entitled to a tax credit for each of their children. If you meet the right guidelines, you can get hundreds of dollars’ worth of tax credits!
- Talk to a professional Trying to keep track of all of the rules and changes can be tough. So, if your numbers don’t seem to be adding up properly, talk to a tax professional. They’ve got the expertise and the resources to figure out exactly what your tax refund should be. Just make sure they charge reasonable rates. After all, you don’t want your entire refund to be eaten up in fees!
Bottom line — as long as you’re willing to do some homework, you’ll be able to take advantage of the best tax return possible!
