Income Tax News: Given the complexity of self-employment income and tax requirements, filing income tax returns (ITRs) can be intimidating for freelancers. In order to guarantee a smooth tax filing process in 2024, freelancers should avoid these typical errors:
Underreporting Income
All sources of income, including consulting fees, freelancing earnings, and any other payments received throughout the fiscal year, must be accurately reported by independent contractors.
Ignoring TDS on Payments
The Income Tax Department may send letters and produce inconsistencies if freelance income is not reported for Tax Deducted at Source (TDS). Make sure that your ITR accurately reflects every TDS that your clients have deducted.
Not Claiming Deductions
Claimable deductions under Section 80, such as those for business expenses, home office costs, professional development, and health insurance premiums, are frequently overlooked by freelancers.
Incorrectly Filing Tax Slabs
Penalties or an inaccurate tax liability may arise from miscalculating the applicable tax slab or reporting under the improper category (individual vs. business income).
Delaying Tax Filing
Tax returns that are filed at the last minute may contain mistakes and omissions. It is best to file your ITR well in advance of the deadline in order to guarantee timely processing and prevent fines.
Mixing Personal and Business Expenses
It’s critical to keep personal and corporate costs distinct. Neglecting to keep accurate records and paperwork can make deductions more difficult and draw attention.
Forgetting to File Revised Returns
Freelancers should file a revised return as soon as possible to correct any inaccuracies found after filing in order to correct income reporting issues or to claim more deductions.
Ignoring Tax Professionals
Due to the complexity of tax regulations and deductions, expert guidance is necessary. To maximize tax benefits and assure compliance, consider hiring a tax adviser or utilizing dependable tax filing software.
By avoiding these traps, freelancers can ensure regulatory compliance and maximize tax savings while streamlining the tax filing process.
