Do I have to declare income tax?
There are no income tax requirements to be registered with us. Income tax must be paid and if a person is not registered or not paying the correct amount, then income tax evasion may be an offence and a criminal matter.
If you are self-assessing and decide to become registered with us, we will ask for your tax details.
We may ask questions about other income sources such as wages and investment income if they affect your income tax situation, even if the tax is not due yet.
Where is it written that income tax is due from the start of the tax year?
The tax system does not require you to pay income tax for the tax year from day one. Under most circumstances, income tax is payable by your due date for that year. This due date, for most tax years, is 7th April. Your tax liability will depend on the amount of money you earned.
Many people think that their tax bill is due on the 1st April, however, they have to account for any income they may have earned in the first quarter of the tax year, and any investment income or capital gains. In other words, income earned between January and April is not taken into account for that year.
How much income tax must I pay?
The rate of income tax in US is over 15%.
In order to work out your potential tax liabilities, you need to find the amount of your income. If your income is $40,000 and you earned $45,000 in your tax year, your tax bill would be $7,500. This example applies to individuals (that is, if your income comes from one source only).
In order to calculate your liability to pay income tax, it is important that you keep records for your income for each financial year. We strongly encourages taxpayers to ensure they keep track of their income so they can accurately complete their returns.
How do I claim deductions?
You can claim deductions for costs, like business travel and home office costs, or interest you paid on your home loan.
You can claim deductions on a post-tax basis, for the first $20,000 of interest on your home loan. In other words, you can deduct the interest you have paid so far in the year, but not the interest you will pay when you remortgage your home.
How do I claim tax back?
If your tax liability is more than what you have paid, you can claim tax back. You can claim back that difference on your income tax return for the tax year that it was paid.
What is income averaging?
If you are between 25 and 34 years old, your average income is capped at $150,000 per year. The idea of income averaging is to spread your income over a longer period of time, rather than taking it all in one hit. You may be subject to some income averaging, for example if you remortgage your home and take out a new loan.