Income Tax | 10 Things a Tax Payer Should Know. Don’t Gamble, Understand the Basics Income Tax Filing in Malaysia

You cannot file your Income Tax successfully in Malaysia if you don't understand the basics, especially if you're a foreigner doing it for the first time

One important duty of a citizen is to pay tax to the government which is used for the general good of the citizens. In Malaysia, there is no exception as it is expected that citizens pay up their taxes and this includes paying income tax.

By the way, what exactly is income tax? For the benefit of those who are just coming of age or young professionals, it is simply the tax that you have to pay to the government and it is normally based on the income you earn. For example, one way to look at is paying an amount on an income that has exceeded a certain range.

Are you getting a car benefit from the company you are working at? Read also: Company Car Benefit | Should I declare it on my income tax filing in Malaysia?

In Malaysia, it is important to note that taxpayers can now submit their income tax returns through e-filing and this can be done from the 1st of March every year. The system of e-filing is simple and user friendly and that is why it is fast becoming the most popular for taxpayers in the country.

One good thing about the e-filing system as adopted by many Malaysians is that it can automatically calculate your tax instead of having you print out income tax forms and calculating it manually like the traditional tax filing system. Therefore, questions that border on how to calculate your tax returns would become easier to answer. Besides, the e-filing system will give you more time to file your taxes when compared to the traditional filing system with deadline normally on the 30th of April.

In all these, the most important thing is to stick with the requirements and guidelines to have a successful season. Since this is the case, we have compiled some important things you should know about income taxes.

Filing Basics: You cannot file your tax successfully if you do not understand the basics. In fact, even if you have to engage a financial income tax advisor, the basic filling understanding of the tax return is very important. This means that you have to fully understand what to report in a tax form. Do not forget to include your mailing address, correct name and your identification number. However, things may be slightly different for the e-filing system as you may need to add an account number for direct deposit as well as payment.

Types of Forms: It is important to note that there are different types of form that can be filed but it depends on a lot of factors. For example, it could depend on your filing status, taxable income, dependents etc. For business, the type of form will likely depend on the structure of the business that applies. Therefore before filing an income tax, it is important to understand the category you belong and file it accordingly.

Filing Requirements: The requirements are not the same for everyone because it varies according to the type and amount of earnings of the taxpayer. Some people could qualify for exemptions while others may not. Therefore, to avoid mistakes, checking before filing is very ideal.

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Reporting Income: Not all income is taxable and this is where the difference lies. There are non-taxable incomes and knowing this is very crucial in filing taxes. There is a possibility of
making costly mistakes if you do not know clearly what your taxable and non-taxable incomes are.

Tax Compliance: There is no doubt that avoiding paying tax is illegal in Malaysia and many other countries; therefore, it is important you comply. Besides, always ensure that your income tax is filed on time
Lower Income Taxes: Tax issues can change from time to time and it is good to take advantage of it. As a taxpayer, it is important to monitor the latest changes on tax issues and see how you can lower your tax if possible.

Choose your Filing Option: There is a traditional option of manually filing taxes and there is also an e-filing system which is being embraced by a lot of people these days. However, the
e-filing option is easier and quicker since it is done over the internet. Note that if you are not comfortable with e-filing for your income tax, then you can stick with the manual means.

Monitor Tax Law Changes: Like mentioned earlier, tax laws change from time to time and it will be your duty to monitor these changes all year round to possibly reduce your tax payment. A change in tax laws could favour you in such a way that reduces your tax bills.

Seek for Good Advice: The reality is that there are a lot of people who get confused with taxes and everything associated with it. If you happen to be in that category, then looking up for financial income tax advisor would not be a bad idea as this would help you avoid possible mistakes in the long run.

Declare, Sign and Send: This is probably the last thing you may need to do when filing your income tax returns. You need to declare that whatever information is put out there is nothing but the truth. For those using the e-filing system, you will have to sign the file electronically before sending it. However, it is important to note that using the wrong information or trying to manipulate the system is an offence.

It is important to mention that for those who may be new to taxes and have not filed using the e-filing system, then you can check apply and register for income tax filing. After registration, you will get a pin from Inland Revenue Board of Malaysia and this would enable you to use the e-filing system. Then log in and choose the right income tax form to start. Follow the procedure and get it completed. It is important to note that the deadline is different for a different type of taxpayers, therefore check where you belong and find out the deadline.