Filing your income tax return (ITR) as a freelancer can be complex, and making tax filing mistakes can lead to penalties, delays, and unnecessary stress. In this guide, we’ll explore the most common errors freelancers make and provide tips on how to avoid them.
Common Freelance Tax Filing Mistakes
1.Not Saving the ITR in PDF
Save Your ITR: After submitting your ITR, be sure to save it as a PDF. Additionally, print or store your tax returns online using Dropbox or Google Drive. This will create a backup in case your eBIR software or computer fails. Consequently, keeping a digital copy ensures that your tax files are both safe and accessible.
2.Wrong Taxable Year
Correct Taxable Year: Ensure that you select the correct taxable year on your ITR. If you use the wrong year, it may lead to errors and complications with your tax filing. Therefore, double-check this detail to avoid potential issues.
3.Wrong BIR Form
Choose the Correct BIR Form: Freelancers must use the appropriate BIR form based on their income type. For instance, those using the 8% Income Tax Rate Option should use BIR Form 1701A, while Mixed-Income Earners need BIR Form 1701v2018. Using the wrong form, in turn, can lead to incorrect calculations and delays.
4.Not Using BIR Form 2307
Utilize BIR Form 2307: If you received BIR Form 2307 during the taxable year, make sure to use it as a tax credit or deduction. This form is provided when local clients withhold tax from your payments, which can help reduce your tax liability. Consequently, neglecting to use this form could increase your tax burden.
5.Failure to Deduct the P250,000 Non-Taxable Income
Deduct Non-Taxable Income Properly: For freelancers using the 8% tax rate, manually input the P250,000 non-taxable income deduction. If you fail to do so, you will end up with a higher tax due. On the other hand, for Mixed-Income Earners, this deduction is already handled by your employer.
6.Failure to Deduct Quarterly Tax Payments
Include Quarterly Payments: Ensure that your ITR includes any tax payments made in previous quarters. Otherwise, your total tax liability might not be accurately reflected.
7.Wrong Email Address
Provide the Correct Email: The email address you provide is crucial for receiving your BIR confirmation. Therefore, make sure it is accurate to avoid missing important communications and proof of your filing.
8.Wrong Taxpayer Type
Verify Your Taxpayer Type: Most freelancers are categorized as Professional; however, it is important to check your BIR Certificate of Registration to confirm your taxpayer type. Using the wrong type, consequently, can affect the accuracy of your tax return.
9.Not Paying Your Tax on Time
Timely Payment is Essential: Pay your tax only after you receive the BIR email confirmation. If you make late payments, even if you file your ITR on time, you risk incurring penalties. Therefore, process your payment by the deadline to avoid penalties and complications.
Avoid Costly Tax Filing Errors
Avoiding common freelance tax filing mistakes ensures a smoother and more accurate tax filing experience. Paying attention to these details helps you avoid penalties and ensures compliance, making the process less stressful and more efficient.
For a hassle-free tax filing experience, download our FREE complete guide for all your tax filing needs this year, use our Income Tax Calculator, and book a Free Tax Consultation Call today.
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