Most taxpayers are shy to approach a licensed tax practitioner for assistance regarding their tax form preparation and prefer to do their own tax preparations. Are you also doing your own tax preparations?
Granted, you will save a couple of hundreds by taking the D-I-Y route. And you are not alone in this.
Is this the right way to go?
Well, some taxpayers out there might not view the question kindly, thinking I am biased because I am probably asking from a tax practitioner point of view with the aim to try and change your way of thinking.
But what will happen in the event that you happen to forget to report in your tax return the dividend income you received from your investment at ABC bank? I’ll tell you what the Internal revenue people will think. The Internal Revenue office (from now onwards, “the taxman”) might misconstrue your innocent omission as a tax evasion, and slap you… very hard… with an administrative penalty, or jail term, to teach you and others like you a lesson you will never forget!
And what’s more, this means you will end up paying hundreds in fines… that includes the money you were trying to save in the first place by side-stepping the paid services of a qualified tax pro… and opting to take the dangerous D-I-Y route.
For your information, most paid tax practitioners I know (I confess, I’m one of them myself) are not monsters just waiting to pounce on you and rob you of your money. They are normal and caring people just like you and me, and they want to help you as best as they can so you can keep off limits from the tax man’s hot waters and remain a good tax-paying citizen of your country.
Even if some of the bad guys out there pretend to be good guys and overcharge for their ‘services’ while you get nothing in return for your money, you still have the taxman in your corner. In short, no bad deed will remain out of reach of the long arm of the law for long. All you have to do is to complain to the authorities, and if your complaint is found to be legit… the tax pro concerned will simply kiss their license goodbye, provided they had one in the first place, so to speak.
In conclusion, let me ask the question I asked a while back: “Is doing your own tax preparations the smart way?
Let’s find out…
Back in 2008 I received a call from a lady teacher who had just received her tax assessment results. She had also chosen early retirement in November 2007. Yes, you guessed right… she had taken the D-I-Y route to save money for her retirement.
According to the contents of her assessment, she was required to pay an extra R32000 (R=South African Rand or currency) on top of what she normally paid during the previous years – give of take a couple of hundreds. After checking her documents, I asked her if she had earned any extra income apart from her teaching and she said No!
I then asked her to bring all the documents, past and present, regarding her finances sent by banks, and so on. After another check which lasted for almost half an hour I reported that she was currently receiving a pension from her late husband’s employer which the taxman already knew about but she had failed to report that income in her tax form. She agreed.
So just because you know where each item goes in the tax form, don’t think for a moment that you’ve become a smarter taxpayer than your friends or coworkers overnight. Sure you will save a packet here and there. But what if… ?
Well, if you happen to be walking the D-I-Y route yourself, let me give you a piece of advice. D-I-Y routes only apply successfully if they’re done in your own backyard. I know what I’m talking about. I have been there. And I have felt the heat, and it’s not pleasant. To prove my point, that’s the reason I decided to become a tax pro with the aim to help others avoid the heat, so to speak.
So don’t take chances with the taxman – he bites (literally, that is).
Get a tax pro on you side. You will save a lot money in the long-term. Money that you need to put in a savings plan for your own wealth creation purposes.