Tax Return

Tax return — are documents presenting the income earned by a legal or juridical person within a year that shows the amount of taxes they need to pay. The filing of a tax return is necessary because taxes are the resource for social expenses. They allow the government to develop the city infrastructure and social sector of the economy.

According to this declaration, the government identifies whether an individual evaded a tax or paid too much. In case of overpayment, the government pays back the money as a tax refund. The tax return is a return of funds by the state from the budget and state funds to individuals and legal entities.

Content of Tax Return

The different categories of taxpayers fill the different forms. Sometimes it is hard to understand which one it is necessary to choose. The government indicates which form corresponds to a certain profession. If the income of the individual is lower than the minimum wage, they may not fill the tax return.

Typically, the content of the tax return includes three sections. These sections are to be filled according to the corresponding example of filling in. Such examples of filling in are presented on governmental sites to help the taxpayers. 

Mandatory sections:

Income. Here the taxpayer indicates the sources of income. It can be dividends, rental income, salaries, and emoluments. It assesses gross income that is divided into five parts as per the tax assessments act: salary, capital gains, profession, house ownership, and other sources. 

Tax deductions. Here it is necessary to indicate the grounds to lessen the tax return. It can be a mortgage or educational loan, contributions to pension schemes, charitable deductions, or freelance expenses. Also, there are legislatively prescribed deductions for pensioners and disabled people. 

Tax credits. Here the taxpayers indicate the incentives to lessen the taxes. The amount of tax refund is also identified according to this section.  

If the individual has difficulties with the selection of the necessary form, they may pay a professional for this work. Also, there are many volunteer organizations that help people with disabilities and immigrants to do this.  

Completion of Tax Return 

Preparation of the tax return can be quite challenging because there are many things to consider and remember. That’s why the tax authorities place the recommendations concerning the completion of documents on the site. 

If the taxpayer wants to complete the tax return correctly, they should follow several recommendations:  

1. Ask for documented proof of financial operations. If you work as a freelancer or rent a house, conclude the contract to fix all the money receipts. Otherwise, you will forget them. 
2. Store the necessary papers. To indicate the accurate sum of income from different sources, it is better to have the documents where such a sum is indicated. That’s why it is better to store the pay stub and ask for the supporting documentation for the various services.  
3. Specify which form you need to fill. Different categories of citizens should complete the different types of forms for tax return. There are forms for employees, students, freelancers, and retired persons. You can download the necessary form from the site of the Federal Tax Service. 
4. Learn which dedications and credits you can indicate. If you have the grounds to lessen the amount of tax return, learn more about it. Usually, the dedications and credits for different categories of citizens are indicated in the legislation.  
5. Select the form for submission. There are different ways to submit a tax return. It can be an electronic form on the site, email, or physical paper form. The electronic submission helps to save time and exclude the risk that the delivery of documents will be too long. 
6. Meet the deadline. Remember that the submission of the tax return has a strict deadline. The deadline depends on the country. To meet it, start the filing of documents on the first days of the necessary period and don’t wait till the last minute. Also, consider that if there are holidays during the submission period, the government services don’t work on these days.

Currently, many online services allow the automatic calculation of tax return. They simplify the drawing up of documentation and reduce the term of its submission. The most popular services are H&R Block Free Online, TaxACT Free Edition, IRS Free File, and TaxSlayer SimplyFree Edition, TurboTax Free Edition. However, they have a limited free period where not all forms are presented. That’s why it is better to select the paid version. 

Tax Return and Tax Havens

The penalty for failure to submit the tax return depends on the undisclosed sum. Typically, the individual pays the penalties. But if the undisclosed sum is too big, or there is an obvious willful violation, the person may be accused of tax-dodging and get a criminal sentence. That's why some individuals aim to keep their savings in tax havens.

Tax heaven is an area where taxes are very low. The most well-known tax havens are the British Virgin Islands, Bermuda, Luxembourg, Cayman Islands, Seychelles, Samoa, and Curaçao. Usually, they are small countries on islands.