To help the self-employed correctly fill out their Income Tax Return, by avoiding errors that can cost them financial penalties, here we bring the 7 most common self-employed tax mistakes they make when submitting their Income Tax Return and how to avoid them.
In Spain, anyone who works as self-employed (autónomo) or runs a business is required to pay their taxes, a process that usually entails a large number of regulations, rules and, on many occasions, errors. According to data from the Agencia Tributaria, the self-employed are more exposed to making more errors than any other taxpayer when filling out the Income Tax Return, due to the wide variety of data that they must provide and that is not included in the draft.
Let’s see which ones they are:
1. Not having enough time to file the Income Tax Return
The good thing about being self-employed is that nobody tells you what you have to do but, instead, everything depends on you when it comes to managing the Income Tax Return process. When submitting the Income Tax Return, it is important that the documents are submitted on time and in accordance with the legislation, otherwise, the Tax Agency may impose serious sanctions on the taxpayer.
It is important to keep in mind that it is not only necessary to file the Income Tax Return on time, but to do it correctly. Therefore, if a self-employed person needs help with tax-related legal procedures, it is important that they hire an accountant or a tax specialist to reduce mistakes and save on taxes.
2. Not preparing the tax forms correctly
To save time and money when filing your Tax Return, it is possible to have a professional check how it is done. But, if the self-employed worker decides to do the process on their own, it is very important that these tax forms are created correctly. Not doing it so can result in the tax return rejection or even being flagged for a tax audit, both very costly mistakes.
When creating tax forms, it’s important to remember that each form has specific requirements, such as including the correct routing and account numbers. It is also important to double-check the completed form and ensure that it has been signed correctly because an unsigned form is usually invalidated by the Tax Agency.
3. Not including the correct deductions or allowances when filing the Income Tax Return
The self-employed are entitled to many bonuses that can help reduce their taxes. It is important to correctly relate all the bonuses and deductions in order to leverage them with the Tax Agency and thus save on taxes, giving them an adequate explanation of why these deductions are applicable.
On the other hand, forgetting to include deductions, omitting important information or even providing false information, can lead to serious sanctions by the Tax Agency, which could be avoided if the self-employed person was careful enough when filing the Income Tax Return.
4. Deduct all expenses.
In the Income Tax Return, the self-employed can deduct from their annual income most expenses such as life, medical or civil insurance, excluding all those expenses that are strictly personal or that are not related to the business, or that are not considered a business expense.
It is also important to note that not all expenses are deductible, even if they are directly related to the business. For example, the Tax Agency may not accept expenses related to luxury items such as wine or travel, regardless of the size of the business or income.
5. Not using the entry option
When filing the Income Tax Return, if the Tax Agency owes money to the worker, it is possible to choose the direct deposit option as a way to receive the money as soon as possible. It is important to include the correct routing and account number when filing the Income Tax Return to ensure that the money is sent to the correct place.
6. Making accounting errors
It is very important that self-employed create their accounting system correctly to avoid making accounting mistakes. Using programs such as those provided by the Tax Agency, such as the SII (Suministro Inmediato de Información) is a reliable way to avoid making mistakes when filing the Income Tax Return.
In fact, making accounting errors can lead to sanctions imposed by the Tax Agency, as well as expenses to regularize accounting. Therefore, it is important to use the right program to manage accounting records and keep them in order.
7. Paying late the Income Tax Return
In Spain, self-employed workers must submit their Income Tax Return no later than June 30 of each year. Not doing it on time will result in a fine imposed by the Tax Agency, which will be higher if the self-employed person does not receive an accreditation from the Tax Agency stating that he must return the money.
Without a doubt, it is very important to take into account that self-employed workers are more exposed to making mistakes when filing the Income Tax Return due to the large amount of data they must provide. Therefore, to avoid making costly mistakes, it is important to read the regulations correctly and make sure you keep up to date with the latest legal changes, so that self-employed workers can correctly and responsibly file their Income Tax Return in 2023.
Want to avoid these Self-employed Tax Mistakes?
In Entre Trámites we invite you to know about our services, including the service of filing the Income Tax Return of 2022.
We want to listen to you and know what your questions are about your taxes in Spain and if there are other procedures you wish to do. Count on the advice of our experts to clarify all your doubts. Fill in our contact form and we will call you to help you as soon as possible or simply text our WhatsApp.
