Do Your Own Tax Refund

Do Your Own Tax Refund


A business accountant says people are misled by tax refund websites which charge percentage fees for a service which people can do just as easily themselves.
NZ Accounting proprietor Michael Levertoff says people who want a tax refund can go directly to the Inland Revenue Department (IRD) website to fill out a form and get their tax refund.

However a lot of people are going to the well advertised tax refund websites which get people to give them their details which they pass onto the IRD - something people can directly do themselves.

"The sites make money by charging a percentage fee, so if you get a $900 refund, you might be paying $200 to the tax refund site when you could have done it for free in five minutes by yourself," he says.

Many people use tax refund websites because of the commonly held belief that if you approach the IRD you may also have to pay tax that you owe.

However the IRD has an electronic calculator online where people can work out whether they’re due a tax refund for a certain year, or whether they owe the IRD money, and it is the individual’s choice whether they let the IRD know either way.

“Individuals can go online, make the calculation and walk away if they want to. We do not have a system whereby we’re tracking the individual and their activity on the website,” the IRD says.

It also strongly advises that people using tax refund companies read the small print before they hand over any personal details to a company.

For example www.taxrefunds.co.nz and www.mytax.co.nz charge 12.5% of the tax refund to a maximum of $500 and myrefund.co.nz charges on a sliding fee scale with a maximum of $500.

The success of these tax refund companies is displayed on their websites.

mytax.co.nz says "our average tax refund is around $478 dollars, but often people receive thousands. Around 76% of our applicants receive tax refunds".

myrefund.co.nz even says that the IRD suggests you speak to an accountant or tax agent such as themselves.

Chief executive of taxrefund.co.nz Adair Craik says the main difference between its website and the IRD is that it provides a free estimate of the tax refund.

"One of the incentives for people is that we're not the IRD. Some people are apprehensive about dealing with the IRD and we help with that stress."

Craik says taxrefund.co.nz has 430,000 people on its database and the average refund is $250 which they get $25 from.

She says many people are not sure about what they should include in their application, what expenses they should claim and whether certain income should be included.

However the IRD annual report says it has made it easier for customers to self-manage their tax affairs.

"We have stepped up the promotion of online services while developing new services for families, individuals, businesses and intermediaries that make it easier for them to access and manage their tax affairs online."

The IRD says people just need to go to its website, www.ird.govt.nz, where they are guided through the process from the front page.

Levertoff agrees that the IRD has a very good system anyone could use and the only time people should get help is if they hit a snag trying to do it themselves.

"I'm making an instruction manual that can be downloaded to help encourage people do it themselves," he says.

By Jenha White, netprophet
 http://www.netprophet.co.nz/news/tax/do-your-own-tax-refund.html