Paying Taxes in Hong Kong Should be Done RightSystematic to Avoid Any Additional Expenses
A lot of mistakes do not really harm you like when you did not do laundry today. Although, some mistakes can be expensive. Tax blunders are in this category because they cost hundreds or thousands of dollars. You can avoid these mistakes altogether by knowing everything about them. Make sure that when you are paying taxes in Hong Kong, you know all about it to avoid wasting your money. Always do your research about costly tax mistakes to keep yourself from going through a headache.
Not Keeping Track of Your Receipts and Spending
There is a high tendency that you will ignore the spending you do when it is not tax season yet, and you suddenly have to trace every back. You should not wait until the season has started before you start looking through folders and papers for the receipts you need. Your life will be easier if you have a tax folder or box where you can just drop receipts or documents for tax return. For instance, keep the receipts which came from charitable spending and also medical spending to back up any possible deductions. In case you think that you spent a lot on healthcare, it could mean your deductions might be itemized.
Bad math is a very common tax return error that people commit every year. Arithmetic mistakes or transferring figures from the schedule to schedule is going to have an immediate correction notice sent to you. Math mistakes will also lessen the tax refund you have or it could lead to owing more than what you anticipated. Using a program for tax-software which you need to file a return can help in reducing math errors. It has built-in calculators that work properly, subtracting, adding, and putting numbers on extra forms as they are needed. Although, you still have to make sure that the initial numbers you put are correct. It is crucial to get the numbers right because you are sure they are going to double-check the numerical entries against your tax statement copies.
When a discrepancy is present, you will know, and in a lot of cases, they will make the corrections and refigure the taxes. Therefore, always make sure your entries are right.
Not Using Losses to Offset the Gains
It never feels good to pay taxes on capital gains but if you are just sitting on paper losses, they can be used to lessen your taxable gains. For instance, if you have HK$6,000 in gains and then you sell some of the holdings to generate an HK$4,000 loss, you only have to pay $2,000 in gains. In case you have more losses compared to gains, your gains can be wiped out entirely. Then, your taxable income will shrink and it will be up to HK$3,000 of your total losses, and any leftover losses will be carried into the following year. This strategy should apply for the entire year, not only tax time. A specific good time to sell a particular holding for any gain or loss might be the middle of the year, and not when the year ends.
Not Meeting the Deadline
Millions of people who pay taxes do not want to file until the last minute. That is fine as long as the mail is postmarked on the filing deadline. Otherwise, you can hit “enter” to e-file it by midnight on the day it is due.
In case you cannot finish your forms during that time, file another form on the deadline day. You will be given an extension of 6 months to submit all of your tax forms. Make sure to pay any taxes you have according to the extension request you made. If you fail to do so, there are penalties for non-filing or late-filing. No one wants to pay more than necessary to make sure to avoid this.
Not Staying Updated About the Tax Laws
The tax laws of a country can be confusing, and they also go through changes frequently. If you are not keeping up with any tax law changes, you might miss any deductions or credits which you can avail of or you will find out if some of them are not available anymore. For instance, a couple of tax deductions will end this year, and a lot are job-related. Make sure that you are not making any plans or tax decisions according to false assumptions.
Filing Any Status Errors
Make sure that you are using the right filing status for the situation you are in. There are five options you have available, and each of them could impact your final tax bill.
In case this is the first tax-filing season since you got a divorce, it might be better to write “head of household”. What if your marriage is still valid, but you are both considering to file separate tax returns? There are some cases when this is going to work but not in all situations. Make sure that you are aware of with each tax-filing status and pick the one that is most suitable for you.
If you are paying taxes in Hong Kong, you should always take note of these common mistakes. Be aware of other considerations to avoid having to pay more than what is fair and required. Also, if you have a business, you can consult professional tax accountants and enlist their services. This serves as a guarantee to your software.