Tax payers need to pay taxes at the end of every financial year. Most of them battle around at the last minute to file their tax returns, which can cause a lot of hassles. So, it is best to wrap it up in prior and not wait till the last day to mess up with all the details. You need not worry about the tax levied if you have been regularly meeting the requirements of tax laws. Mostly the tax gets deducted from the employee’s monthly salary. But many miss to file in tax returns before the dead line. The following is a mini guide for you to understand your tax procedures better, which will assist you in filing your tax returns easily.
What are tax returns?
Tax returns are the way in which an individual produces all the details of the wages, interests, dividends, capital gain or other profits that she/he has received in the entire year, and reports it to the internal revenue service. Tax returns allows the taxpayer, to remit payment, calculate tax return and liability or request refunds.
Benefits of filing income tax returns
Filling income tax returns is an obligation and not a choice. It is a system made compulsory by the government for those who fall under the prescribed category. Tax payment is a voluntary contribution made by every citizen of a country. By paying income tax, the employee can avail home and personal loans, can become eligible for visa and immigration process, it helps for claiming excess tax paid via refund and also to apply for higher insurance cover. If you have a child who is dependent and incapable of self-care, you may qualify for child or dependent care credit and receive a percentage of the cost for their care. Some tax payers who have contributed to quality retirement account may be eligible to claim for savers credit.
Who needs to file income tax returns?
Most people who earn an income may not file tax returns. Depending on your filing status and amount you have made in a year’s time, you will be required to file a return by law. Even if you don’t fall under the category to file, it is best to submit a tax return. You may need to file a tax return if your gross income is over $10,000 as a single filer, and $20,000 for married couple as jointly. This also applies in situations where you are self-employed or have sold a house during a tax year.