With tax time well underway, it is a good time to discuss deductions – especially deductions that are often missed by taxpayers like you.
We surveyed our senior accountants and asked them “what are the top 5 forgotten deductions on individual tax returns?” – That is, deductions people can claim, but often forget or don’t know about…
We’ve compiled the survey responses to create the Top Five Forgotten Tax Deductions.
Take a look below – do any of these deductions apply to you? Are you keeping proper records to make sure you get the best possible tax refund?
- Cost of managing your tax affairs
Did you use JR Corporate Accountants or another tax agent to prepare and lodge your tax return last year? If you did, then you can claim the amount you paid on this year’s return. Simply put the amount you paid in 2015 into section D10 – Cost of Managing Tax Affairs on your tax return.
- Union/Membership fees
Are you part of a union? How about a membership body related to your profession? If you pay union or membership fees and they are related to your current occupation then you can claim the cost of these fees at item D5 – Other work-related expenses on your tax return.
- Work related Car Expenses
If you use your car for work, it’s possible that you could claim work related car expenses on your tax return. To claim these expenses you should know or estimate your ‘business kilometres’ travelled.
The ATO defines business kilometres as kilometres travelled in your car in the course of earning assessable income. Remember, you must be the owner of the car and you can’t claim the cost of driving from home to work or vice versa. Claimed travel must be part of your working day – e.g. between offices, special trips to the post office or bank (not including stop-offs on the way home) or from one job site to another – not from home.
There are several methods for calculating your work related car expenses. Depending on your personal circumstances, one may be better than the other. If you’re unsure which method to use, please contact us on firstname.lastname@example.org and one of our accountants will discuss which method suits you best.
- Home computer use
Do you ever find yourself working from home? How about checking and responding to your work emails in the evening or on the weekend? If you do, then you may be able to claim the cost of using your personal computer as a tax deduction.
Bonus Forgotten Deduction – Internet Expenses:
If you ever work from home and you have your Internet connection in your name, then it’s likely you could claim your Internet expenses as a deduction. How? Simply estimate your monthly work use as a percentage of the total household use.
Sally lives on her own and pays $60 per month for her Internet connection that is in her name. She estimates that 40% of her home Internet use is for work purposes.
40% of $60 = $24 per month
$24 x 12 = $288 per year
Sally can claim $288 of Internet deductions on her tax return this year.
Please note: If you share the cost of internet with a spouse, partner or housemate, you should only calculate the percentage of total internet cost that applies to you. For example if you live with your partner it would be assumed, you each pay half of the bill. Therefore in the example above, Sally would only use 50% of the total Internet cost ($30 per month) in her expenses calculation as her partner would use the other 50% on their tax return.
- Mobile Phone Expenses
Do you use your mobile phone for work purposes? Are you sometimes required to call clients or other staff members on your personal mobile phone?
If you answered yes, then you can claim these cost of these calls as a deduction on your tax return.
Remember you can only claim the cost of your work related calls, not your entire phone bill.
George pays $49 per month for his mobile phone plan. He estimates that 50% of his monthly phone calls are work related. Therefore:
50% of $49 = $24.50 per month
$24.50 x 12 = $294 per year
George can claim $294 on his tax return as a deduction for mobile phone expenses
Is it worth it?
While some of these items may seem small, when added together they could save you big $$. For example, if we used just the examples we listed in item 4 and item 5 we would have almost $600 of extra deductions to add to a tax return. For someone earning $50,000 per year this could see an increase in his or her tax refund by $180!
So when you start preparing for your 2016 tax return, make sure you don’t forget any of these deductions.
Call JR Corporate Accountants on
4577 3938 we are at 394 George Street, Windsor
and we can assist you with these deductions and more.