Death and taxes are, as they say, the only certainties in life. So as tax season is upon us, let’s be certain about the ins and outs of tax filing!
Now, the worst-case scenario could be that you pay too much in taxes by over-filing them. Or, you could also under-declare your taxes (accidentally) and end up facing a penalty of 200% of undercharged tax, or suffer a fine of up to $5,000.
Not fun, in any case. So let’s be really, really certain about how we file our taxes.
If you are a new taxpayer — or a returning one — we’ve assembled a list of common mistakes you might make!
I was unemployed so I don’t need to file my taxes
You have to submit your taxes as long as you are informed by IRAS that you have to. You will notified with a letter or an SMS if you have to file — this can happen even if you have been part of the #FUNEMPLOYED gang, and did not receive any income at all last year.
Submit your tax form in the return envelope provided by April 15 if you’re paper-submitting it. But please, it’s 2020, use the internet and file it via the myTax Portal by April 18.
I’m under the auto-inclusion scheme, so I don’t need to file
Most Singaporeans are under the Auto-Inclusion Scheme (AIS), which means your company will submit your employment income on your behalf. This is compulsory for companies that have more than nine employees.
This will be confirmed with a No-Filing Service (NFS) SMS or letter from IRAS. You’ll be sent a Notice of Assessment (NOA) directly — which is essentially a preview of your tax bill, with pre-filled taxable income and tax reliefs you’re eligible for.
You might think that even if your company is under an AIS scheme, it means you won’t need to file. However, this is not the case, if you do not receive a NFS notification you will have to file your taxes manually.
I received a no-filing service notification, so I don’t need to file
Yay! I got a NFS notification, so I’ll just pay the tax bill, right?
Well, not necessarily. There are some scenarios where you will have to amend your tax assessment — even if you received the NFS notification.
For example, if you earned additional income as a landlord (rental income), or from a photography side gig on the weekends (trade income), you’ll need to declare those.
Your assessed income could also be inaccurate in certain scenarios, like if you switched jobs halfway in the year to a company that isn’t under the AIS scheme. You’ll have to declare the employment income from this new company manually as well.
You can e-File to make the relevant changes online.
My tax reliefs are automatically applied
Most reliefs are automatically granted, such as for NSmen and earned-income relief. However, if you’re claiming a tax relief for the first time, you will likely have to file for it.
For example, if you welcomed a child into the family, you will need to claim for the many different child reliefs. Generally, once successfully claimed, these reliefs will be automatically added to your NOA in the subsequent years.
Conversely, you will also have to remove some claims once they don’t apply, such as child relief claims once your child is working and earning an income exceeding $4,000 in the last year.
Declaring trade or business income incorrectly
According to IRAS, self-employed people (meaning insurance agents and Grab drivers) have, in the past, declared their income wrongly under Employment or Other Income when filling up their tax forms.
For e-Filing individuals, remember to declare your income as a trade income. Other self-employed tax filing mistakes can be found here.
At the end of the day, mistakes will always happen. If you’ve found that you’ve made one or two, don’t panic! Everyone has a chance to re-File within 14 days of their previous submission by April 18.
As tax season opens, remember to check back with this list just to be doubly sure.