BTN Business: Paying income tax is a yearly responsibility for millions of Colombians, whether they are individuals or businesses. The process of filing and paying taxes can be overwhelming, especially when you have to figure out how much to save to cover the tax bill. For 2024, the income tax filing period runs from August 12 to October 24, and it covers the financial activities of 2023. To avoid stress and financial strain, experts suggest that you plan and save ahead of time. This article will guide you through practical strategies on how to save money to pay income tax in Colombia 2024, ensuring you stay organized and prepared.
Understanding the Need for Income Tax Planning
The income tax process involves submitting a declaration and, in some cases, paying taxes if you meet specific criteria related to income, expenditures, or financial transactions. More than 6 million Colombians are expected to declare income tax in 2024. The payment amounts change yearly due to factors like inflation, tax reforms, or changes in the value of the Tax Value Units (UVT). Therefore, planning ahead is crucial to ensure you have sufficient funds when the time comes.
Why Saving for Income Tax is Important
When you declare your income, you may discover that the tax withheld during the year isn’t enough to cover your entire tax liability. Andrés Durán, a financial expert from Duran wealth, emphasizes the importance of financial planning and savings. He suggests that taxpayers forecast potential tax deficits early with the help of a tax advisor or accountant. Building a reserve fund specifically for your income tax can prevent last-minute borrowing or relying on credit cards, which often leads to unnecessary debt.
Steps to Save for Your Income Tax Payment in 2024
Here’s how to save money to pay income tax in Colombia 2024 effectively:
- Analyze Past Tax Payments: Review your previous year’s tax declaration and payment to estimate how much you might need to pay in 2024. If you paid 1,200.000 pesos last year, consider setting aside 100.000 pesos monthly for the upcoming year. This steady approach makes the financial burden manageable.
- Create a Dedicated Savings Plan: Based on your tax payment estimate, establish a dedicated savings plan. You can set up automatic transfers to a separate savings account each month. This way, by the time the tax deadline approaches, you will have built up the necessary funds without disrupting your regular cash flow.
- Consult Your Tax Advisor: Working closely with your accountant or financial advisor can help you project your tax obligations accurately. They can guide you on using available tax benefits, such as contributions to AFC accounts or voluntary pension funds, which can reduce your taxable income.
- Take Advantage of Seasonal Income: Many salaried individuals receive additional income such as bonuses or service premiums throughout the year. Consider setting aside a portion of this money toward your tax savings plan. Even if it’s tempting to spend this extra cash, using it for taxes will alleviate the pressure later.
- Review and Adjust Your Plan Regularly: Keep an eye on your savings progress and adjust your plan if needed. If your income or expenses change significantly, reassess how much you need to save. Staying proactive will help you avoid a shortage when tax payments are due.
Key Criteria for Declaring Income Tax in 2024
Not everyone is required to file taxes in Colombia, but certain thresholds determine who must declare income tax in 2024:
- Net Worth: If your total assets exceeded 190,854.000 pesos as of December 31, 2023, you are required to file a tax return.
- Gross Income: You must declare if your total income for 2023 was more than 59,377.000 pesos.
- Credit Card Expenses: Any credit card spending or personal loans exceeding 59,377.000 pesos during 2023 necessitate a declaration, regardless of whether you paid off the debt.
- Purchases and Consumption: If your purchases and consumption amounted to over 59,377.000 pesos in 2023, you must file.
- Financial Transactions: If the total of your bank deposits, investments, or other financial transactions surpassed 59,376.800 pesos in 2023, you are obligated to declare income tax.
Make Income Tax Payment Less Stressful with Proper Planning
Income tax planning isn’t just about fulfilling a legal obligation; it’s a smart financial strategy. By saving systematically, consulting with financial professionals, and taking advantage of tax benefits, you can ensure you have the funds needed to meet your tax responsibilities without financial strain. So, begin saving today to pay your income tax in Colombia 2024 comfortably and avoid last-minute stress.
Final Thoughts
Saving for your income tax payment doesn’t have to be complicated. By following these tips on how to save money to pay income tax in Colombia 2024, you can create a reliable savings plan that meets your needs. Start planning early, use the guidance of your tax advisor, and stay on top of your financial situation. Being proactive today will save you from headaches tomorrow, allowing you to meet your tax obligations with ease.
