A tax return is a form or document filed with a tax authority (such as the IRS in the United States or HM Revenue and Customs in the UK) that reports a taxpayer's income, expenses, and other relevant financial information. It is used to calculate the taxpayer's tax liability, which determines how much tax they owe or if they are due a refund for overpayment
. Key points about tax returns include:
- They summarize income from various sources, deductions, and tax credits to determine the final tax amount owed or refundable
- Taxpayers use tax returns to report earnings, claim deductions and credits, and calculate their tax obligations annually
- Filing requirements vary by country and individual circumstances, but generally, tax returns must be submitted yearly
- A tax return is not always the final determination of tax liability; the tax authority may review and accept or adjust the return
- Keeping copies of tax returns is recommended for several years for record-keeping and possible audits
In essence, a tax return is the official document that enables tax authorities to assess and collect the correct amount of tax from individuals and organizations based on their financial activity during a specific period
