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Category: Financial Literacy

  • How to File Your Personal Income Tax Returns in Nigeria  

    How to File Your Personal Income Tax Returns in Nigeria  

    The clock is ticking and March 31,2026 is closer than you think. That is the deadline to file your personal income tax returns for 2025. It may feel like something you can push aside for now… but missing it comes with a cost.  You face a fine of ₦100,000 for the first month, and then ₦50,000 for every additional month you delay. 

    That is not small money.  The good news is that you do not need to stand in long queues or visit any office anymore.  You can file your tax right from your phone or laptop, wherever you are. 

    In this guide, I walk you through the process in a simple, stress-free way so you can get it done quickly and move on with peace of mind. 

     

    What Is Personal Income Tax Returns? 

    Every year, the government wants a full picture of your income.  Not just your salary… but everything you earned from salary,  business income, freelancing, side hustle money, rent or even investment income. So you “report” all of this to the government.  That report is called your tax returns.

    Who Should File Personal Income Tax in Nigeria? 

    This is where many people make costly assumptions. Under NIGERIA TAX ACT, 2025, every individual earning income is expected to file. Let us break it down clearly:

    1. If you are a salary earner(employee)
    2. if you are self-employed or run a POS business or any other business
    3. If you have multiple sources of income

    Filing your own income tax returns is good for record purposes and getting a Tax Clearance Certificate (very important for loans, visas, etc.)  

    Where to file your tax returns

    Personal income tax goes through your State Internal Revenue Service, not the Nigeria Revenue Service (NRS, formerly FIRS).

    Lagos residents and workers file tax returns on the LIRS e-Tax website.  You file tax in the state where you live, not your state of origin. Here is a list of all the states  

     How to File Your IncomeTax Return in Nigeria 

    Step 1: Identify Where to File Your Tax

    Before anything else, you need to know where to submit your tax return.

    • If you are employed, you file with the tax authority in the state where you work or live.
    • If you run a business or work for yourself, you file in the state where you reside.

    If you are in Lagos, you will file through the
    Lagos State Internal Revenue Service (LIRS) LIRS e-Tax portal.

    However, members of the armed forces, police, and foreign service officers file through the relevant federal tax authority.

    Step 2: Work Out Your Taxable Income

    Although you file your tax return in 2026, you are actually declaring the money you earned in 2025. To get your taxable income, start by adding all the money you made.  To get an idea of what it looks like based on the new tax reform effective from January 1, 2026:

    • The first ₦800,000 you earn is tax-free
    • If you earn ₦800,000 or less, you do not pay income tax

    Reduce Your Tax with Deductions

    Before calculating your tax, you can subtract certain expenses like:

    • Pension contributions (usually 8% of your income)
    • National Housing Fund (NHF) contributions (2.5% of basic salary)
    • Life insurance (up to ₦100,000)
    • Rent relief (20% of your rent, capped at ₦500,000)

     These deductions reduce how much tax you pay. Just keep records of them

     Step 3: Create an Account on the Tax Portal

    • If you already have a Tax Identification Number (TIN), move to the next step
    • If not, sign up to create one

    You will need:

    • Your Bank Verification Number (BVN) or National Identity Number (NIN)
    • Your date of birth

     

    Step 4: Log Into Your Account

    Once your account is ready:

    • Sign in with your TIN and password
    • Open the menu
    • Click on Returns
    • Select My Tax Returns
    • Then click File Returns Here

    Step 5:  Enter Your Income Details

    Here is what you will provide:

    • Year: Select 2025 (if filing in 2026)
    • Gross salary: Your total earnings before deductions
    • Other income: Side hustles, commissions, or allowances
    • Pension contributions: Usually about 8% of your income
    • Dividends and interest: Earnings from savings or investments
    • Rental income: If you earn from property
    • Foreign income: If applicable

    You will also include:

    • Rent you paid (for relief claims)
    • Any additional income sources not listed
    • Assets like land or property
    • Details of any staff you employ

     Make sure everything is accurate. Tax authorities can verify your information through your BVN, bank records, and employer.

    Step 6: Upload Supporting Documents

    To support your claims, upload clear copies of:

    • Your bank statement
    • Rent receipts or tenancy agreement
    • Pension contribution proof
    • NHF or insurance records
    • Any other document that supports your income or deductions

     Clear documents help avoid delays or questions later.

    Step 7: Review, Submit, and Pay

    Before you click submit on the portal, remember to double-check all figures and confirm your documents are correct before you hit  ”submit”.

    The tax system will calculate what you owe.

    • If your employer already deducted tax (PAYE), it will be subtracted
    • If there is a balance left, you can pay online or through approved banks

     

    Step 8: Download Your Tax Clearance Certificate

    After submitting and paying:  Download your Tax Clearance Certificate (TCC). Keep it safe. You may need it for:

    • Loan applications
    • Visa processing
    • Government contracts
    • Passport renewal

     

    Bottomline

    Filing your personal Income tax returns is not about being rich. It is about being responsible.  It is about protecting your future. It is about staying on the safe side of the law. Do not wait until the last minute  as late filing can lead to errors, system issues  or even penalties . 

     

     

     

  • What Is An Emergency Fund And Why Having One Is A Priority?

    What Is An Emergency Fund And Why Having One Is A Priority?

    Life often throws unexpected challenges and unforeseen financial bumps our way. This can disrupt our financial stability. However, understanding financial matters can be a key decider between whether you have financial cushion or  you sell your properties or you go begging. 

    In this guide, we’ll explore the importance of having an emergency fund, how much to save, and when to use it when the unexpected happens.

    According to the International Labour Organization, the unemployment rate in Africa increased from 7.3% in 2019 to 8.0% in 2020.  Additionally, a recent survey by Bankrate in the United States found that one in four Americans do not have up to a $1,000 emergency fund.

    Key Takeaways 

    • Emergency funds acts as a cushion when facing job loss, car troubles, home repairs, or medical emergencies.
    • The recommended target for an emergency fund is 3 to 6 months of living expenses.
    • Replenishing the fund after using it for unforeseen expenses is essential for financial stability.
    • Build your emergency funds by saving, budgeting, prioritizing, setting up automatic transfers, and keeping it in a high-interest savings account.
    • Strike a balance between accessibility and the temptation to spend impulsively.

    What Is an Emergency Fund?

    An emergency fund, sometimes referred to as a rainy day fund or emergency savings is like a financial safety net. It’s the money you set aside to cover unexpected emergencies or unplanned financial expenses. Well, think of it as your financial cushion for when life takes an unexpected twist. 

    Why You Need An Emergency Fund

    1. Your emergency fund acts as a financial shock absorber, protecting you when you face:
    2. Job Loss
    3. Car Troubles (Auto Theft or Breakdown)
    4. Sudden Home Repairs
    5. Medical Emergencies

    How Much Is Enough For An Emergency Fund

    Aim to save enough to cover between 3 to 6 months of your living expenses. If your monthly living expenses amount to 150,000 naira, then you should maintain nothing less than 450,000 naira in your emergency funding account. However, the more you save, the better it is for you.

    It’s important to note that you should reserve this money for genuine financial crises, not for impulse buys like new shoes or a fancy dress for your best friend’s wedding.

    Getting Started with Your Emergency Fund

    If you’re considering building one, here’s a step-by-step plan:

    Step 1: Calculate the specific amount you need to have in your rainy day fund.

    Step 2: Open a separate savings account, ideally one with a high-interest rate.

    Step 3: Set a savings goal for daily, weekly, or monthly contributions.

    Step 4: Start small if necessary, but keep the contributions consistent.

    Step 5: Periodically review your how much you have, especially when you experience significant life changes like a raise, bonus, or a new addition to your family.

    Only use your financial cushion for a genuine unforeseen expense, be sure to replenish it as soon as you regain financial stability.

    How To Build Your Emergency Fund 

    • Save windfalls or bonuses directly in your emergency backup.
    • Create a budget and cut down on unnecessary expenses to boost your savings.
    • Make having an emergency savings a financial priority.
    • Set up automatic transfers to your fund until your goal is reached.
    • Keep savings net funds in a high-interest savings account for maximum growth.

    Bottom Line 

    Lastly, remember, your rainy day fund savings should reside in a secure savings account, making it easy to access when needed, but not so accessible that you’ll be tempted to spend it on a whim.”