What is a Tax Return?
There is a quite funny statement which says that you are guaranteed to experience two things throughout your life – death and taxes. Taxes are those duties that need to be paid by corporations and individuals in a country. It is through these taxes that governments are able to have funds for the different departments that they have. Citizens of each country are imposed tax.
How do institutions and people pay for their taxes? Well they do so by using tax return. This is a form that taxpayers fill out every year and submit. Are you aware on how to obtain the said papers? Well employees typically get this from the companies where they are working. The company where they work can also be the one who does the job of filing them for their employees. Those who are not connected with any company can get it from the bureau of tax. The forms do not come at a price.
Now there are different tax returns for different purposes. To distinguish one from the other a number is placed on the form. For example there is a specific tax return for individuals. On the other hand there is also a specific tax return form for corporations or businesses. Did you know that there is also a tax return specifically for investment?
A tax return would have some things that can be seen there. Well there are basically three things that you can see in such a form. On the top part is the income. This is where you will write all your sources of income. For people who are working for companies the companies take care of these and they have their salary as their main source of income. However if you are not employed, then you need to state your sources of income there.
The next part will be for the deductions. This is the part where all the deductions for your income can be placed. Are you aware of these deductions? An individual taxpayer who is giving alimony can use this as deduction. It could also be your contribution to plan for your retirement. There are more deductions when it comes to businesses. All of the expenses that they incurred in the operation of their business can actually be considered a deductible. An example would be electricity and materials that they used.
The last part of the return is the credits. It is the individuals who fill this out. An example of a credit would be dependent children. How big their credit is depends on the number of children. Fewer children would mean fewer credit. If you have old parents whom you are taking of that can be part of your credits too. Different places may have different jurisdictions for credits. You need to find out about those where you live.
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