Every new financial year brings about the joy of submitting your annual tax return declaring last year’s income. But especially when you are doing your tax return for the first time as a freelancer, mistakes can easily happen. On this page you will find the 5 most common mistakes when filing your tax return – and tips on how to avoid them.
Mistake #1: You enter wrong information
This is a typical mistake: You mistype your tax number, misspell the name of your business, or forget a zero when you enter your income for the previous year. These are all mistakes that can happen quickly and are easily fixable without any repercussions – as long as you notice them and correct them as soon as possible.
This is especially true for incorrect data concerning your self-employment income. If you have gained an advantage here, i.e. you have a lower tax burden due to the missing information, then you should contact your tax office as soon as possible and correct the error.
You generally have 3 options for this:
- If you have not yet received your tax assessment (Steuerbescheid), you can contact your tax administrator and ask them to stop processing your tax return in order to submit a correction.
- If you have already received the tax assessment, you can request a correction. Usually, you will be given an additional time period to correct the error.
- You can file an appeal up to 4 weeks after you receive your tax assessment. If the tax office agrees with your appeal, you can file a corrected tax return.
Mistake #2: You forget to deduct an expense
Another common mistake is forgetting to declare a business expense. This might cause a tax disadvantage for you, since your tax burden is not reduced by an additional expense.
In this case, you can file an application to amend your tax assessment and submit your missing business expense.
💡Tip from Accountable: Not sure if you can deduct an expense? Our tax calculator can help! Just search for a specific expense and we’ll tell you if you can claim the cost for tax purposes. ➡️ Click here to go to the expense calculator.
Mistake #3: You miss the deadline
Self-employed people not only have to deal with professional deadlines, but also have to adhere to a few tax filing deadlines. This also applies to the annual tax return. Here, as for all other employees, the deadline is July 31 of the following year.
However, you can also ask for an extension of this deadline if you don’t have enough time to complete your tax return. All you have to do is send an informal letter to your tax office asking for an extension of the deadline. However, you should do this as early as possible to avoid penalties for late filing.
If you do miss a deadline, you will be charged a late fee of 0.25% of the tax due, with a minimum of 25 euros per month that you are late.
➡️ Freelancing in Germany? Put these dates in your calendar!
Mistake #4: You forget your surplus income statement
As a freelancer, you also have to submit an income statement (Einnahmenüberschussrechnung) in addition to your tax return. In this statement, you compare your income with your expenses and thus transparently disclose your income to the tax office.
➡️ How to submit your Einnahmeüberschussrechnung in Germany
The EÜR is done in a separate document that you have to fill out and submit – and that can be quite easy to forget. But don’t panic, there is an automatic reminder within ELSTER that reminds you to submit the surplus income statement.
➡️ Everything you need to know about Elster
Mistake #5: You are missing receipts for business expenses
Finally, it can always happen that you want to deduct a business expense but no longer have the receipt for it. This is not relevant for the tax return at first – but can cause real problems in the event of an audit up to 10 years after submission. In Germany you are obliged to keep your tax documents for 6 or 10 years.
For 6 years you have to keep all correspondence, e.g. e-mails or letters regarding late payments, contract offers, time sheets or travel expense reports.
For 10 years, you are obliged to keep invoices received, your individual tax returns and receipts for business meals.
How to avoid mistakes in your tax return
Mistakes can happen to anyone, but there are definitely a few precautions you can take to reduce the likelihood of errors in your tax return.
First off, working with a tax advisor can be extremely helpful – especially if you are filing your tax return for the first time as a self-employed person.
On the other hand, apps like Accountable can help you digitize your receipts and keep track of your invoices, income and expenses. Just save all your receipts and income for free in our app and you will never have to search for an invoice again.
