What You Should Know about Tax Returns

 

You are allowed to self-assess your income accordingly and pay taxes by income tax authorities. The majority of the individuals tend to believe that their tax return is negligible for the tax authorities and therefore not declaring or understating their income may be worth because it saves them few bucks. Hiding your income from tax authorities so as to reduce your tax liability, commonly results to tax evasion

 

Tax evasion examples include not declaring interest on bank fixed deposits and revenues accepted in cash which is not routed through the official system.

 

The big question is, when does it become essential to file Tax Return? This is very necessary to file your returns when your income the basic exemption limit. Now, what is the impact of the tax evasion? If you are found to have concealed income, you will be charged a penalty and that amount may be three times more than the tax which you could have evaded. For instance, if your tax evasion is $5,000, in case your account is under scrutiny, you may pay a penalty of between the same amount and $150,000 on a case to case basis.

 

There are critical documents that you have to keep in handy when filing your returns so that you can accurately file your returns. First is the Form 16, which contains your salary information as well as tax deducted by your employer. This you have to obtain to get it from your employer. Next, is the Form16A, which is received from the parties which have deducted tax while paying you in the cause of the year. This can include banks or companies to who you could be having fixed deposits, parties to whom you could have given loan among others. Copies of bank statements are the next thing, which gives you all the income earned as well as the expenditure incurred.

 

They see to it that you have not missed out any of the detail which should be included on your income Tax Return. It also acts as a proof for all deductions claimed in the filed returns. You also need documents concerning investment in property. This is where by you has the property in the cause of the year. If the property was bought through a loan, ensure you have all the loan documents together with the certificate of payments are available.

 

Finally, you have to keep track of all your investments in debentures, share and any other revenue instrument as well. Ensure that you have recorded your date of purchase and sale date so as to assess profit/loss for return filing purpose. Read more facts on taxes here: https://en.wikipedia.org/wiki/Tax#Kinds_of_taxes.