The increase in the tax free threshold from $6,000 to $18,200 is a welcome relief for those entering the workforce, however there are potential traps to be aware of for certain workers. What we have seen over the years are people who either change jobs frequently or have more than one job, but claim the tax free threshold with each employer when they fill out their paperwork upon commencement of the new job. This has always been a problem but we see that problem multiplying by 3 with the increase in that tax free threshold. Example:
Jim Bob works for 3 different employers during the tax year and claims the tax free threshold for each job. He only ever earns about $15,000 before he leaves and goes to the next job. So in total he has earned $45,000 for the year, however, none of those employers have remitted tax on his behalf. So when Jim Bob gets his tax return done he has to come up with the money to pay the tax bill on $45,000. When Jim Bob realises what has occurred, he seeks out his former employers, blaming them for his own deficiencies, creating an uncomfortable situation for the unsuspecting business owner.
If you are a business owner who does not want to be caught up in a similar situation then help is at hand. Call Tate Laycock at Boston Accounting today.
