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. The taxes are the things that people and businesses owe the government and pay it throughout the year. Through taxes, governments around the world are able to raise funds for the different projects that they have. Citizens of each country are imposed tax.
Do you know how taxes are collected by the government? Those who need to pay tax submit it to the government through the tax return. These are papers that are considered as forms which those paying taxes need to fill out and submit to the tax bureau. Do you know where to get such forms? 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 are available there for free.you don’t have to pay anything for these forms.
There are different tax returns that are actually available. A different number is placed for a different kind of tax return. For example there is a specific tax return for individuals. For corporations or businesses there is also another kind of tax return. You would also find a tax return that you need to file for your investments.
Do you know the things that you will see in a form? Well there are basically three things that you can see in such a form. On the top part is the income. You will write all income sources here. 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.
After the income come the deductions. As its name implies this is the part where you can put all the things that can be deducted from your tax. Are you aware of these deductions? One example of deduction is the spousal support which an individual gives. Another kind would be what you contribute to a retirement savings plan. Businesses have more leeway when it comes to deductions. The expenses that they have in their operation can all be deductible from their income. Examples of such operational expenses are materials and electricity.
The last section is devoted to credits. This one is mostly applicable to individual taxpayers. One credit they have is their dependent children. The number of credit would be dependent on how many children one has. If you have more children then you have more credit. Old dependent parents can also be considered tax credit. Now the kind of credits can vary from place to place. You have to find out the credits that are available in your area.