The term “iTax” can make anyone feel a little anxious. The knot in your stomach is a familiar feeling. You’re not alone in this. Many Kenyans find the process confusing. But here’s the good news. Most problems stem from a few simple, repeatable mistakes.
The goal is to file your returns without stress. You want to avoid those scary KRA penalties. Maybe you even want to claim a tax refund. It’s all possible.
Today, we are breaking down the 5 most common iTax mistakes. We will give you clear, easy-to-follow advice. Let’s turn that tax fear into confidence.
1. The Deadline Dash: Missing Your Tax Return Date
This is without a doubt the champion of all mistakes. Life happens. Work gets busy. The kids need attention. Suddenly, you remember. The tax return deadline was yesterday. That sinking feeling is awful.
The KRA does not take deadlines lightly. Late filing attracts an automatic penalty. This is often a minimum of kshs. 1,000 or a percentage of your tax due. It’s money you could have kept.
Why does this happen so often?
Many people think the deadline is only for those with a pay-as-you-earn (PAYE) job. This is false. If you have a KRA PIN, you must file a return. This includes students, freelancers, and stay-at-home parents with a PIN.
The key date for individuals is June 30th every year. Don’t wait for a reminder from the KRA. By then, it might be too late.
How to Avoid This Mistake
The best way to avoid this mistake is to mark your calendar. Right now, take out your phone. Add a recurring annual event for filing income tax returns for December cases, applicable to any period before June 20th. This will give you a 10-day buffer. Do not wait until the 30th of June.
Set a Reminder
Tell your spouse or a friend to remind you. Accountability works. Aim to file early, not perfectly. Is your paperwork messy? File with the information you have. It is better to file on time with a reasonable estimate than to file late, trying to be perfect. You can always amend a tax return later.
2. The Vanishing Refund
Many times, tax refunds vanish because of incorrect bank details. Who does not love a surprise cash injection? A tax refund is precisely that. It is your own money coming back to you. But many Kenyans make errors.
They enter incorrect bank account details on the iTax. The KRA will process your tax refund. But it has nowhere to send the money. The transaction fails. Your money vanishes into a bureaucratic limbo. Getting it back means making endless calls or visits.
How to Avoid This Mistake:
a. The Double-Check Rule
Before you hit the “submit” button on your tax return, go to your iTax profile. Navigate to the “Bank Details” section. Is your account number correct? Is the bank name right? Check it twice.
b. Confirm Account Activity
Is that bank account still active? Sometimes we forget about old bank accounts. Use a bank account you use regularly.
c. Update Changes Immediately
Did you switch banks from one to another? Update your iTax profile the same week that you make any changes. Do not wait until the next filing season. Make this a habit.
3. The Forgotten Document
A critical document that people forget is the PIN certificate. Your PIN certificate is more than just a PDF. It is your business and financial identity in Kenya. You need it for almost every significant transaction. Think about applying for a tender. Or getting a loan from the bank.
You may buy a piece of land. The first thing you will be asked for is your valid PIN certificate. The certificate should be valid, not expired. An expired certificate can cause your application to be rejected instantly.
How to Avoid This Mistake:
a. Renew Annually
Make it a habit to renew your certificate before it expires. Every January, log in to iTax and download your current PIN certificate. The KRA updates them as long as you have cleared all your tax liabilities. Having a renewed certificate is crucial.
b. Save Smartly
Keep a soft copy in a dedicated folder on your phone and computer. Call it “Important Documents.” Also, you can print a copy and keep it in a physical file.
c. Check the Details
When you download the certificate, look it over. Is your physical address correct? Are your tax obligations listed accurately? If not, update your profile.
4. The Tax Confusion
Many people confuse withholding tax and income tax.This one is a major headache for business owners and freelancers. The terms are confusing. Withholding tax is not your income tax. Let us simplify.
Withholding tax is the amount of tax that is deducted when another person or company pays you for a service you have provided. The deducted money is then remitted to the KRA on your behalf.
Your income tax is the tax on your business’s profits or your personal income. You pay the income tax.
Mixing these two up creates a mess in your iTax filing. You might underpay your own tax or misreport what you withheld for others.
How to Avoid This Mistake
a. Separate Your Mindset
Think of them as two separate buckets. The “Withholding Tax” bucket is for money you hold for others. The “Income Tax” bucket is for money you owe on your own earnings.
b. Use the Right Tax Head
When making a payment on iTax, be very careful. Select the correct tax head from the dropdown menu. Is it “Income Tax” or “Withholding Tax”?
c. Ask for Help
If you are still confused, do not guess. The cost of being wrong is a KRA penalty and tax interest. Consult a qualified tax agent. A small fee for their service can save you much money and a massive headache.
5. Incomplete iTax Registration
Many people are in a hurry, and they leave many activities halfway complete. For example, you just needed a PIN for a one-time thing. So, you rushed through the iTax registration. You do not select all your tax obligations. Maybe you left the “Business Income” box un-ticked. Or you did not register for VAT.
This incomplete profile will come back to haunt you. When you try to file a return for that income type, the system will block you. You will be stuck, unable to comply with the law.
How to Avoid This Mistake
a. Be Thorough from Day One
During the registration process, fill in every single field truthfully. If you have a side hustle, declare it. It is better to be over-prepared than unprepared.
b. Review Your Profile
Log in to iTax today. Go to your profile page. Look at your listed “Tax Obligations.” Are they correct? If you started a new business, you may need to add an obligation for that.
c. Understand VAT Threshold
If your business’s taxable turnover has exceeded kshs 5 million in a year, you must register for VAT. Do not ignore this. Update your registration immediately to stay compliant and avoid fines, penalties, tax interest, and prosecution.
Ready to Take Control of Your Tax Journey?
Filing your returns can be a smooth, even satisfying, process. It is all about knowing the common pitfalls. Now you have the knowledge to avoid them. Save your money. Save your time. Save yourself from the stress.
We want to hear from you. Which of these mistakes have you made? Do you have another iTax challenge? Share your experience in the comments below. Let us learn from each other.
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