Let’s get something straight, some people are just clueless when they hear the word taxes. They just know taxes are meant to be paid and if this does not happen, then, they may be faced with prison time. But honestly, I think a way to avoid prison time or tax related penalties, is by truly understanding everything there is to know about taxes right? In this article, I want to focus a bit more on what tax returns are and I want to show you everything you need to know about them in a simple, easy and fun way!
Let’s begin by simply defining what tax returns are
In case you did not know, when you are declaring taxes, you are simply filling out a bunch of forms so; this is what is being done with tax returns. This is a form that a natural person or a business entity must fill out in order to give out information on what their incomes where for a certain period of time and by doing so, it is determined what percentage has to be paid in the form of taxes.
Now, who am I supposed to give these forms and my tax payment to?
These forms are not just filled out for you to keep them. You are supposed to hand them out to the Internal revenue service or as they are actually known, IRS.
What else do I need to know about this form?
There is some information that you must separately specify in these forms. For example, you must give information on what your actual incomes were. These incomes could come from the salary you received by working for a company, or in some cases, dividends or royalties which are also classified as income according to this form.
Since the IRS knows, not everything is all about incomes; you also need to specify what deductions apply to you. These may vary for some people in different jurisdictions but, when it comes to large businesses their deductions would be classified as anything that requires the company to spend money to keep it going.
Another thing a tax payer might be entitled to would be credits. These also are prone to changing in different jurisdictions but these are mostly related to children that are still dependent on their parents, elderly people, etc.