Click a button and see if the tax amount to be paid goes down is a human response to filing online your own tax return. Is it the right thing to do?
Click a button and see if the tax amount to be paid goes down
This is human behavior that comes naturally. But is it the right thing to do? Probably not. The court ruled last April that a person claimed to have met the rules for the entrepreneur tax credit. In fact he did not, but if you tick that box, sometimes you no longer need to pay tax, or you get even tax back. Who will notice? The tax office will notice.
How will the tax office notice you ticked a box that is not for you?
In the above mentioned situation the turnover of the company was in 2014 EUR 3.326. The conditions for the entrepreneurs deduction are: spending at least 1225 hours on the company. The profit of the company was the majority of the income in 2014. Then a EUR 7.280 (2014) credit can be claimed.
Obviously the computer parameters of the tax office have been set such that ticking this box with EUR 3.326 turnover implies an audit. Audit took place. The entrepreneur claimed to have spent 1337,50 hours on the EUR 3.326 turnover. The entrepreneurs deduction was denied.
Mind the time line involved. In 2015 this tax return was probably filed and now in April 2022 the court ruled over this silly EUR 7.280 deduction claimed. The energy involved does not stand in relation to the tax benefit. The tax payer can also not simply state: I pushed the button as that saved me tax, but I was aware I did not qualify. Then you filed a false tax return and problems only get bigger.
Can you find for me the loopholes, the deductions others cannot?
This is a common question to be asked to us. But we think that is a question from the 80’s. In the current age with the online tax filings there are no loopholes. Times have changed. Filing a correct tax return is sometimes more complex than filing one in the 80’s using loopholes. And in the end, a loophole is a loophole. Does not exist and can bite you. In the above example seven years after you triggered the loophole. Seven years of time and costs made to fail to get something you are not entitled to.
Tax is exciting
We think tax is exciting. We are always excited to provide you with a correct income tax return. Our client base is well aware of the fact that it is better to pay the correct amount of tax instead of lying awake if the tax office caught you or not. Getting caught implies paying back, with penalty and interest. The whole thing of claiming too much tax is that you can spend more. In other words, you are maybe not able to pay back the tax. We think such situations are not exciting at all.