Single mum tax guide – Do I need to lodge a tax return?

Single mum tax tips 2019

Single mum tax guide – Do I need to lodge a tax return?

Expert Opinion Panel

Jason Bryce – Business & Finance Specialist

The end of the financial year is within sight and that means tax time!
But hang on, you may not need to lodge a tax return at all. Plenty of single parents do not need to lodge a return, while plenty of others who earn nothing or very little from employment DO need to lodge. There’s no straightforward general answer to this question.
So, do you need to lodge a tax return in 2019? The answers are here.

Single mum tax tips 2019The Australian financial year runs from 1 July to 30 June. So, tax time is from 1 July to 31 October, which is when you are usually supposed to have filed your tax return for the financial year just finished.

You can lodge a tax return easily and free on the ATO website, or by completing a paper tax return or by visiting an accountant or tax agent if required.

But wait. What if you didn’t work for an income during the year and survived off Centrelink payments? You may not need to lodge a return.

What if you worked a little bit, you got child support, Family Tax Benefits and maybe a small pension or benefit?

If you receive (and/or pay) child support you almost certainly will need to do your tax.

And what about your Child Care Subsidy and Family Tax Benefits? Centrelink needs to assess your annual income to ‘balance’ these payments out, so if you don’t need to do a tax return, you have to tell Centrelink so they can balance your payments.

What is Centrelink’s tax balancing?

Centrelink offices

If you get Family Tax Benefit paid fortnightly or Child Care Subsidy, your payments need to be balanced at the end of the financial year to ensure that you received the right amount.

Changes in income and circumstances during the year or wrongly estimating your income at the beginning of the year can result in underpayment or overpayment of your benefits.

“Parents receiving family assistance will need to lodge a tax return or tell us they don’t need to,” a spokeswoman for Centrelink told Singlemum.com.au.

After you lodge your tax return, or tell Centrelink that you don’t need to lodge a return, your payments will be balanced. Centrelink will then pay you a top-up if you have been underpaid, or commence to recover overpayments from your future benefits.

Right now, you can be preparing for balancing by checking their family income estimate via your online account or the Express Plus app. Your family income estimate needs to include your income and any income earned by your partner. Update the estimate when things change.

But do you need to lodge a tax return this year?

Do I need to lodge a tax returnFirstly, and most importantly: If you worked during the financial year from 1 July 2018 to 30 June 2019 and your employer took tax from your pay packet, you need to lodge a tax return.

Even though the tax-free threshold in Australia is currently set at $18,200, meaning the first $18,200 of your yearly income is tax free, you still need to lodge a return if an employer took tax from your pay during the year.

This is the only way to get that money back, so do your tax return.

“Any earnings that have had tax withheld, no matter how small, are required to be reported on a tax return,” according to a statement from leading tax accountancy group H&R Block.

 “This is the only way to get a refund of the tax paid.

If you do take on part-time or casual work, make sure you tick the box on your tax form to claim the tax-free threshold from each employer.

Is Parenting Payment taxable income?

Centrelink parenting payment

Most Centrelink payments, including Parenting Payment (single and partnered) are ‘taxable income’ and Centrelink will send you a Centrelink Payment Summary at the end of the financial year. It will most likely appear in your MyGov inbox or the Express Plus mobile app.

Is Child Support and Family Tax Benefits ‘taxable income?’

Child Support at tax time

No, these payments are not technically taxable income but if you receive child support you will need to lodge a return (and so will your ex-spouse) so the Child Support Agency can work out the correct rate of child support.

So how do I work out if I need to lodge a tax return?

Single mum tax return

To work out if you need to be preparing to lodge a tax return this financial year, go to the Australian Tax Office’s ‘Do I need to lodge a tax return?’ page and answer the quiz questions. BUT WAIT! Before you do that, understand that this page is updated on the 1 July 2019, so while you can do the quiz now for last financial year, you can only really use the quiz with confidence after the 30 June 2019. The quiz will ask you some simple questions about your payments and circumstances and give you an answer within a couple of minutes.

Centrelink also has a ‘Tax time checker’ survey page that will tell you whether you need to lodge a return. But again, this page is not updated until the 1 July.

“Our tax-time checker will be updated from 1 July 2019 and all parents can use this to help them to check what they need to do at tax-time,” a spokeswoman for Centrelink told Singlemum.com.au.

What you need to do NOW, before the EOFY, to prepare for tax time …

Tax 2019

Right now, before EOFY at the end of June, you can prepare for tax time by:

  1. Create a myGov account (if you don’t have one) and link your Centrelink online account.
  2. Get the Express Plus app or update it to the latest version so you can update details and notify changed circumstances easily and quickly.
  3. Check your family income estimate via your online Centrelink account or the Express Plus app.
  4. Update all your details online or via the app and inform Centrelink of any changed circumstances.
  5. Collect your receipts for work related expenses.
  6. Collect your payment summaries (Group certificates) from any employer.

 

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