Ahhh. tax time is back – that time when we all look forward to remitting our dues to the tax authorities to ensure that we are compliant. Well, maybe that’s how the Tax Administration would like us to feel as the March 15 annual income tax deadline draws near, but the reality is that nobody really likes paying taxes!

This year, the deadline will be extended to March 16, as the statutory date falls on a Sunday. If you haven’t given your taxes a thought yet, it’s still not too late to do something about it. Here are some tips to make the tax payment process a little easier:

Does everyone need to file an income tax return?

If you are employed with no other source of income, and your Pay As You Earn (PAYE) tax is already being deducted by your employer, then you don’t have to file a tax return. Also if you are an individual who has earned less than the income tax threshold of $196,872 JMD for 2008, then you are not required to pay income tax.

Who should file a return?

Employed persons with other income sources, such as rent from a residential property, should file a return indicating their additional earnings. Self-employed persons with their own businesses, such as hairdressers, taxi operators, musicians, doctors and lawyers, as well as part-time workers whose income is not taxed at source, are subject to pay tax. Companies, partnerships and other legal entities must also file income tax returns.

How do I calculate my tax obligation?

If you have not been keeping track of your profit over the year, it’s best to seek help from an accountant or tax professional. The Tax Administration is offering a taxpayer assistance programme to help small business owners and self-employed persons to complete their tax forms.

If you need to use this service, contact the local tax collectorate, call 1-888-tax-help or visit www.jamaicatax.gov.jm to find the tax help site that is nearest to you. Have all your business documents on hand such as bank statements, invoices, receipts, and other records used in your operations, and bring along your Taxpayer Registration Number (TRN).

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If you have been using an accounting package such as Quick Books and are on top of your records, then get the appropriate return form for your type of business from any of the 28 offices of the Inland Revenue Department across Jamaica, or online at the Tax Administration’s website. Just put the details in the relevant boxes and it will help you to calculate the amount of tax owed.

Not all of your expenses will reduce your tax obligation, as only reasonable expenses incurred in generating the business are allowed. If you operate out of your home, only a fraction (approximately one-third) of household costs such as rent and utilities can be used. If your motor vehicle is used for both business and personal purposes, then these expenses should also be split.

Even if you have made a loss in your business operations, you still have to file a return. Your business losses can be offset against future profits for tax purposes. In addition, a company which is not active must file a nil return.

What if I can’t make the March 15 deadline?

To give you more time, the Tax Administration will be extending the opening hours at selected locations for the last two or three days. Verify the closing times before you go. If you are unable to visit an office during the week, then the Portmore Tax Office is open on Saturday from 10:00 am – 4:00 pm. There are also electronic deposit boxes at six locations – King Street, Constant Spring, Cross Roads, Spanish Town, Mandeville and Montego Bay – that can be used to drop off your return or cheque payment.

Even if you miss the deadline, submit your returns as soon as possible. The Tax Administration now has an Integrated Computerised Tax Administration System that can automatically detect businesses and persons who should have submitted returns. The system will generate a reminder notice, and if after 30 days there are still outstanding payments, it will generate a notice of estimated assessment with penalties. Continued refusal to pay your taxes can lead to a court date, fines and even imprisonment.

If you are unable to pay the amount of your tax obligation, you can make arrangements to pay outstanding amounts in installments. You will have to visit the compliance unit at your local Inland Revenue office, where they will help you to arrive at a reasonable payment schedule.

Are there any other taxes to be paid?

Along with your income tax return for 2008, you have to submit an Estimated Income Tax Return for 2009 by March 15. These estimated amounts must be paid quarterly by the 15th of March, June, September and December. Education tax, which is calculated at two per cent of your statutory income, is also required to be paid.

For more information on paying your taxes contact 1-888-tax-help or visit www.jamaicatax.gov.jm.

Copyright © 2009 Cherryl Hanson Simpson. No reproduction without written consent.

Originally published in The Daily Observer, March 12, 2009

Cherryl is a financial consultant and coach, founder of Financially S.M.A.R.T. Services. See more of her work at www.financiallyfreenetwork.com and www.financiallysmartonline.com. Contact Cherryl