Owing SARS money can be an issue, but it’s important to remember that there are solutions, so find out what to do if you owe them money!
Let’s face it, tax season can be stressful. But what happens when you open that assessment and discover you owe the South African Revenue Service (SARS) money? It’s a situation no one wants to be in, but it’s important to remember that there are steps you can take to address the issue and get back on track.
Let’s talk about the solutions and how to avoid this situation in the future, so you can have a more peaceful process next time. Also, if you want to check out more financial tips on our website, you can click on this link!
Why You Might Owe SARS Money?
Here are some common reasons that might put you in this situation:
- Miscalculations: sometimes, honest mistakes happen. You might have miscalculated your income, deductions, or credits on your tax return;
- Missing Documents: if you didn’t submit all the required documents to support your tax return, SARS might assess additional taxes;
- Late Filings: late filing your taxes causes penalties that can quickly add up;
- Estimated Tax Payments: If you’re self-employed or have significant income outside of your salary, you’re responsible for making estimated tax payments throughout the year. Falling short on these payments can result in a tax debt;
- Unreported Income: if you earned income that wasn’t reported to SARS, you’ll be liable for the tax owed on that income, plus penalties and interest.
What To Do If You Owe SARS Money
The absolute worst thing you can do is to ignore it. There are different approaches you could have to solve this problem, but doing nothing will only make things worse. Penalties and interest will continue to increase, and SARS has a range of collection measures at their disposal, including garnishing your wages or seizing your assets. Here’s what you should do instead:
- You must contact SARS immediately, via phone, email, or in person at a branch, giving you an opportunity to start working towards a resolution sooner than later;
- Request a detailed breakdown of your tax debt. This will include the amount owed, the reason for the debt, and any penalties and interest charges;
- Be honest and upfront about your situation. Explain why you owe the money and if there are any extenuating circumstances;
- SARS then offers various payment options to help you settle your debt. You can make a lump sum payment, set up a payment plan, or apply for an instalment agreement;
- If your tax situation is complex, consider seeking help from a registered tax practitioner. They can advise you on the best course of action and represent you in your dealings with SARS.
How to Avoid It In The Future?
Here are some proactive steps you can take to avoid finding yourself in this situation again:
- Keep Accurate Records: maintain clear and organized records of your income and expenses throughout the year. This will make it much easier to file your tax return accordingly;
- Understand Your Tax Obligations: familiarize yourself with the tax laws and filing requirements that apply to you;
- File Your Tax Return on Time: don’t wait until the last minute to file your tax return. Filing late will result in penalties;
- Consider Making Estimated Tax Payments: if you’re self-employed or have significant income outside of your salary, make estimated tax payments throughout the year to avoid a year-end tax bill surprise;
- Seek Professional Help: if you’re unsure about anything related to your taxes, consult with a registered tax practitioner. They can help you ensure your tax return is accurate;
- Utilize Technology: SARS offers a user-friendly eFiling platform that allows you to submit your tax return electronically. This can save time and help reduce errors. There are also various tax preparation software programs available that can simplify the filing process.