Just like other businesses out there, rental property owners must submit their taxes. But due to the complexity involved in tax matters, you can easily make mistakes in your tax calculations and returns. Though errors are inevitable, you can significantly reduce them by working with a tax accountant. Below are four tax mistakes many rental property owners often make.

Failing to Have Your Property Licenced for Renting

As much as you are the legal owner of your property, you should never assume that you can rent it out whenever you want. There is a procedure that you must follow to avoid getting in trouble with the local authorities. First, you need to find out whether the area allows owners to rent out their living spaces. If they do, that will be considered a lodging business, meaning that the tax authorities must collect tax from you. You also need to be registered and licenced to operate the business.

Not Collecting Tax from Your Guests or Tenants 

Ideally, you should collect tax from those renting your property. But you might not have an idea of how to go about it. Usually, a certain percentage of every amount you collect goes to the city, county, and state.

Also, you must file your taxes within the stipulated time. Indeed, these processes look enormous, even for someone who has been in the industry for a long time. The only way you can ensure that you are filing each of these taxes on time and in the right way is by hiring a tax accountant.

Failing to Meet Deadlines

Most property rental owners assume that all taxes are paid as the year ends or together with income taxes. You will probably put together your rental income with the annual income, which is not proper. Keep in mind that income tax is usually between you and your guests hence separate from yearly taxes. Therefore, you should submit the taxes therein separately. If that sounds confusing, a tax accountant can take care of everything for you.

Charging the Wrong Tax Amount

It is vital to charge the correct tax rates to avoid paying hefty penalties in the future. As earlier mentioned, a certain percentage of the taxes go to the city, county and state. But there could be a lot more you need to do but are unaware of it. A tax accountant will ensure that such mistakes never happen since they are well versed with the tax requirements in your region.

Unless you have accountancy skills, you should never attempt to file your taxes by yourself. You need the help of a tax accountant to avoid the above mistakes.