A column by TAXBugnoms

Hi-Light: 

• Even if tax has been deducted from your income payment already, you should still report it to be safe.
• If there's been a tax deduction then save the proof of tax (withholding tax certificate) and update your bookkeeping to prepare for the end-of-year tax filing.

"Will my income from this work be taxed, Khun Nom?"

When I get questions like this, I know it's time for some straight talk. As a tax professional, this question really scares me because it shows there is a basic misunderstanding. First of all, the words "not taxed" are misleading and have two possible meanings, which are:

• Tax was not deducted, but there is an income statement and documentation showing a tax owed of 0 baht because the income did not create any gains.
• Tax was not deducted because the income was somehow paid outside normal business channels and there is no income statement.

Therefore, if a freelancer asks, "In which case is the income not taxable?" then I would say that in the first case, even if tax was not deducted already, but there is evidence of income and a revenue statement, we must report it or there will certainly be a problem because the Revenue Department will have our income data on file.

In the other case, when there is no proof of income, and we go by the word of law, then you must also report the income, even if it was taxed already, because legally there are no exemptions from reporting all the income we receive. Although the Revenue Department will not get a report from the payer about this income, they still may investigate. Please understand this.

So, to be clear about the main points and to answer the question, if you want to be safe, no matter the case with income from your work, I suggest you report it fully when filing taxes.

I always think think to myself, “I don't want to be bothered, I'll just pay the tax!" I am not trying to say I am a really moral person, but it is understood in these times that paying taxes is a duty and it sets a good example for others to follow. Hmm... If a tax professional avoided paying his fair share of taxes, then he would not be a very good one.

What to deduct then? First you need to understand that revenue is an integer. For example, if you were paid 10,000 baht for your work, then the tax to deduct is 3%, which is 300 baht. You made 10,000 baht, but actually only get 9,700 baht, with the other 300 baht going to prepay your taxes. Next, you just wait to file your tax return at the end of the year. Then, after you figure out the total amount of tax you owe and subtract the amounts you prepaid, you will find out if you will get a refund or if you still have to pay a little more.

Lets say the total amount of tax you owe at the end of the year is 2,000 baht, then you will only need to pay 1,700 baht because you prepaid that 300 baht earlier. Or, if you do not owe any tax, then you can ask for that 300 baht back from the Revenue Department at the end of the year.

Let's summarize the important points for freelance life after taxes:

1. Even if a tax has already been deducted, your income should be reported fully.
2. If a tax has been deducted, keep the proof of the deduction (withholding tax certificate). Maintain good bookkeeping records to help you prepare your tax returns at the end of the year.

These are the two simple principles. Please do not make the mistake of thinking that income which has not already had taxes deducted is income that you do not have to pay taxes on, or think that having tax withheld from your income means you have already fully paid your taxes. It is always our responsibility to file complete tax returns at the end of the year.

In conclusion, always make a careful review of your income with special attention on deductions from tax withholdings, tax pre-payments you make and tax you may still owe as a percentage of your income.