As the title suggests, I wonder what happens if someone does some mistakes (let’s say “accidental” and not “intentional”) while submitting tax returns. Are there (huge) penalties? Possibility to face a long bureaucratic process?
I have read the thread like this but don’t know if anyone has faced significant penalties for making such mistakes or if explaining the genuine mistake is “accepted” with “corrections” (without any financial penalty).
Of course I understand this would be “depend” on the gravity of mistakes/errors. To make things simple, let’s assume an average family income/situation (i.e. without a complicated/large financial portfolio, regular employment income, typical deductions, etc).
The reason I am asking this question is that after filing taxes for two years via CA, I am trying to file taxes myself this year. Thanks to the detailed tutorials from this blog and various discussions on this forum, I am getting familiar with and preparing tax returns. But as mentioned in other posts(here, here), a first-timer could have various questions and make some mistakes or interpret some numbers differently.
So, one might wonder “Should I pay 300-400 CHF to CA and not think about all this?” or “What the hell could go wrong if I forget or incorrectly report a few hundred/thousands“? (as a first timer)
Curious what are your experiences! This will help me to be brave and file taxes myself! (Or, turn back to CA again )
Depends on the mistake you make:
- If you declare something incorrectly or make deductions that you are not allowed to make, there is usually no penalty. The tax office will just correct it and you have to pay the corrected amount when you get the final bill.
- If you forget to declare something (income or assets) completely, this is considered tax evasion (“Steuerhinterziehung”). In the worst case, a fine of up to 100% of the tax difference may be imposed (plus you obviously have to pay the tax difference itself).
- If you fake documents (such as your wage statement or statements of assets), this is considered tax fraud (“Steuerbetrug”) and may result in imprisonment.
As long as you are honest, I would not worry about this. The tax office is usually very cooperative and it is pretty normal that they have to correct / change a few things in a declaration.
I failed to report my owned vehicles last (tax) year, as it was not required at the previous canton where I moved from.
I did add them in this year’s report (depreciated 40% p.a. as instructed - both below 10k market value), with a comment that I made an honest mistake last year around.
When I find out if any repercussions arise, I’ll report here.
thank you @0xLambda and @dbu!
The tax office is usually very cooperative and it is pretty normal that they have to correct / change a few things in a declaration.
that’s very good to hear!
First of all: If you declared something wrong and the tax declaration isn’t finalized yet you can correct it by submitting again (paper) or filling it out again online. If they send you the final bill you have 30 days to contest.
For already finalized tax declarations: From what I remember, at least in ZH your first mistake goes unpunished as long as you come forward and are willing to admit fault and pay the taxes owed (“Selbstanzeige”).
That is only for tax fraud/evasion where you admit that you filled out the tax form wrong to gain an advantage and not having to pay the fully owed taxes.
That’s not the same as adding too many deductions which gets corrected for “free” and without punishment.
this is good to know, thank you for sharing experiences/advice!
I am bit in similar situation as @dbu: last year I filed taxes first time (via external CA) and provided all relevant documents to him: salary in CH, property in home country in my name, rent for the property, etc.
BUT, I didn’t think about saving bank accounts back in my home country (non-eu). There, I have two saving accounts with ~20K CHF balance. This was not from extra income but something I transferred from CH bank accounts in the past. IIUC, this should have been declared and become taxable as part of total fortune.
So for this year I will add those bank accounts from my home country with balance (and interest) in returns.
Do you think I also need to mention/explain that these accounts/balance were not reported last year? (or 20k CHF in foreign saving account is not something huge and I just add it without any explanation?)
A naive question as a first timer who doesn’t know the system here: for explaining, in the account statement we are going to attach, we just write a small note with pen and that’s enough? Or you write this in official way with some cover letter or something where you explain these things?
Same here, last year I forgot to report 1 bank account and 1 Life insurance oversees.
This year, I declared them both with a note and attached all statements proving I was owning those accounts prior my relocation to Geneva.
If you do not prove it was anterior savings, the tax officer will assume it was undeclared revenue and tax them at the revenu tax rate.
I hope that in September/October, I will receive a reclamation to pay the fortune tax avoided the previous year.
It could be up to 500-600 depending on the situation.
I used to do it in that way because I had some “complex” parts to address, but then I realized that I could do better and more precise after spending time to figure out how to do some calculations (that of course you argue that is not for free).
And anyway I had to double check with them everything…and they charged me for that time as well.
For simple cases, you can re-file the tax return or make a voluntary correction/declaration.
Typically you will have to pay the taxes and late interest but penalties for a first time offense is unlikely unless you did something egregious.