The most significant mistake taxpayers are likely to make during the 2025 tax season is failing to accurately report income from new or nontraditional sources. This includes income from gig work, side hustles, cryptocurrency, and digital payments received through platforms such as Venmo, PayPal, and Cash App. With the IRS implementing stricter reporting rules and increasing enforcement—particularly concerning Form 1099-K—many individuals may unintentionally underreport their income. This can lead to audits, penalties, or delayed refunds. Experts suggest maintaining thorough records, utilizing tax software, or seeking professional assistance, and ensuring that even minor or irregular income sources are accounted for.
- CPA Australia urges taxpayers not to rush their DIY tax returns
- Rushing means mistakes and missing out on legitimate claims
- Update your details – don’t just copy and paste from last year
Australia’s largest accounting body, CPA Australia, says one of the biggest and most common mistakes taxpayers will make this tax time is rushing to lodge their returns early.
Last year, approximately three million individual tax returns were filed by July 23, and this number increased to 5.8 million by August 20, according to data from the Australian Taxation Office (ATO)
CPA Australia’s Tax Lead, Jenny Wong, is urging taxpayers to take the time to gather evidence of work-related expenses over the next few weeks and wait for the ATO to pre-fill their information before lodging.
“Rising costs may prompt some to file tax returns quickly for refunds, but it’s crucial to be patient, collect evidence, and claim all entitled deductions,” she said.
“Firing the starting pistol on your tax return too quickly means you could end up shooting yourself in the foot.
Many believe that filing early guarantees a faster refund, but the reality is more complicated. It’s common for people who lodge early to end up having to amend their returns later anyway, so it’s best to wait. It’ll save you in the long run.”
Ms Wong says another common mistake people make is not giving enough thought to how their circumstances have changed over the past 12 months.
“Some people go into autopilot when they do their tax returns,” she said. “They cut and paste from their last return and fail to consider any changes to their circumstances.
“Turn off the autopilot and take time to seriously consider what’s different about your expenses this year and think about what you could claim.
You may have traveled more for work and were not reimbursed by your employer for meals or other travel essentials. Or you started a new job where you had to buy tools, subscriptions, or pay for training and security clearances, for example.
“Check what type of expenses you could claim that are relevant to your type of work. The ATO has a comprehensive guide to industry and occupation types. We strongly advise against using AI advice when preparing your tax return.”
CPA Australia encourages taxpayers to consider seeking professional advice on their returns, especially if they have complex financial and earning activities, such as owning rental properties and crypto assets. This cost is itself tax deductible.
CPA Australia’s tips to help complete your tax return are:
- Out of pocket? Any out-of-pocket work-related expenses could be tax deductible, but you’ll need evidence in case you are asked in an audit. Think about what you’ve had to purchase for work. Check your bank statements.
- Find the evidence. Hopefully, your receipts aren’t hidden at the back of the couch, but they might be stored in your email and phone apps. Or maybe the junk draw?
- Consider your working-from-home expenses. You can claim expenses like internet costs, printing ink, and paper if they are legitimately attributed to work use.
- Methods matter. Which work-from-home expense type makes the most sense for you (fixed rate or actual cost method)? If you’ve been good at keeping records throughout the year, the actual cost method may be more beneficial.
- If you use your car for work, you need to identify and justify the percentage of your vehicle expenses that you are claiming as business use. To ensure accurate claims, it’s essential to maintain a logbook or diary that clearly distinguishes between private and business travel.
- Consider buying your essentials now. You still have until June 30 to purchase any essential work items and claim the deduction this tax time.
Ms Wong reminds taxpayers not to exaggerate work-related claims.
“Getting your tax return correct is your responsibility,” she explained. “This means you need to declare all of your income and claim the appropriate expenses.
Failing to accurately declare your income increases your risk of an audit by the ATO. Moreover, not claiming all your entitlements means you will receive a smaller refund than you could have.