What mistakes should be avoided when filing freelance taxes in the Philippines?
- Presenting incomplete and incorrect data
- Miscalculating the tax due
- Not declaring every income earned
- Missing the deadline
Filing taxes as a freelancer in the Philippines can be difficult and confusing. Plus, the introduction of the TRAIN law certainly doesn’t help matters. Amidst all the puzzling forms and complicated math, it’s only natural to make mistakes when you’re filing your taxes.
Of course, they should still be avoided because even though they might not lead to an audit – unless they were made deliberately – it is still in your best interest to be as accurate as possible.
Mistakes can cost you; it can delay your tax return for a significant amount of time. Even though filing your taxes can be a huge headache, you should set aside the time to accomplish them perfectly. Below are the usual mistakes people make when filing their taxes so that you know what not to do:
Presenting incomplete and incorrect data
This is probably the most common mistake taxpayers commit. This usually happens when they file their taxes close to the deadline, leaving them with little time to review their forms.
Often, they leave out relevant information like the tax period, date of filing, TIN, and even their signature! It is also possible for them to incorrectly record their SSS number, registered address, name, and other important details.
The smallest error can be grounds for incorrect filing and may get you in trouble, so make sure to review your forms and do them way before the deadline!
Miscalculating the tax due
Doing your taxes involves a ridiculous amount of math and a few dozen formulas. This is where freelancers, especially new ones, make the biggest mistakes. Mathematical errors are normal, but you still shouldn’t have any on your tax forms.
This may be your greatest hurdle as a freelancer, but it is only difficult in the beginning. As you do it more, you are less likely to make mistakes. Be sure to double-check all of your computations down to the tiniest details. Of course, you may also use some tools such as an online tax calculator that will do the work for you!
Not declaring every income earned
Although it isn’t usually done on purpose (hopefully!), some taxpayers make the mistake of not declaring all their income. This is a big no-no because failure to declare all taxable income will lead to consequences and may even result in an audit.
Every peso that is directly related to your business or profession should be declared. Even if you didn’t receive a documentation or even if payment was given to you in cash, you are still legally required to report it.
Don’t try to leave something out thinking that the BIR won’t notice because it’s bound come back and bite you in the end.
Missing the deadlines
Missing deadlines can result in penalties that include additional payment. Instead of rightfully getting your tax return, you might find yourself paying extra because of your mistake.
You can avoid this by marking deadlines on your calendar and setting alarms on your devices weeks or even months ahead. In addition, you should also file your taxes prior to the deadline so you don’t have to cram, which as you know could lead to mistakes.
You’d be surprised at the number of mistakes people make when they file their freelance tax in the Philippines. The worst part is that these errors are easily avoidable if people just take the time to sit down and focus on their tax filing.
If you want to avoid scrutiny from the BIR and a possible audit of your business, then avoid making the mistakes written above. Be sure to also check this list every now and then when you’re doing your taxes to see if you’re on the right track!