What is a Tax Return?
There is a saying that says that in life you are guaranteed two things – taxes and death. Taxes are those duties that need to be paid by corporations and individuals in a country. Through taxes, governments around the world are able to raise funds for the different projects that they have. As long as you are a citizen of a country you pay tax.
How do institutions and people pay for their taxes? Well they do so by using tax return. This is the form or the forms used to file the income tax. Are you aware on how to obtain the said papers? For the employed people they may obtain this from the department handling it in their company. And it is always the company who takes charge of their filing of taxes. 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.
Actually there are a number of tax returns that are available. To make one distinguishable from another, a number is placed. For individual taxpayers there is a specific form of tax return. 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?
Now if you get a form what are the things that you will see there? In a tax return you would find three categories for filling up. The income is the first part. This is where you will write all your sources of income. If you are an employee it is your company that does this work for you. If you are self-employed then you must put there all income-generating sources that you have.
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. Do you know what these deductions can be? One example of deduction is the spousal support which an individual gives. It could also be your contribution to plan for your retirement. There are greater deductions that can be listed down by businesses. All of the expenses that they incurred in the operation of their business can actually be considered a deductible. Examples of such operational expenses are materials and electricity.
The credits is the last area. This one is mostly applicable to individual taxpayers. An example of a credit would be dependent children. How big their credit is depends on the number of children. If you have more children then you have more credit. Now it is not just the children that can be considered dependent, if you are taking care of old parents then you can cite that as credit too. The credits may differ in different places. You have to find out the credits that are available in your area.