Basic Information about Tax Returns
Sometimes we wonder who started getting taxes from people anyway, and a simple explanation to citizens would be that their money are used by their government to take care of public needs that are beneficial to everybody. Old governing bodies before would collect taxes in various forms like labor, produce or gold. Today, taxes are collected in money form. Taxes therefore are our compulsory payables to our government.
Taxes in the past were used to fund wars or public projects. In our modern government, taxes are used to help build our country’s infrastructure, provide education funding, maintain law and order, fund economic structures and administration, for defence, etc.
With then president Woodrow Wilson in 1913, the Federal Income Tax was set and the system deducted from a person’s income about 1% to 7% of his or her earnings. Since then, with the additional taxes set in, and after World War I, taxes have become four times bigger.
Taxes – Getting Started & Next Steps
In America for example, there is a certain level of income that citizens are expected to file their tax returns. If a person’s salary or pension is under a Pay As You Earn condition, he or she is not expected to file tax returns.
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Tax return forms are given by the IRS or Internal Revenue Service in which all details of income and expenses incurred for the period are to be given or written on the form. The amount of taxes to be paid are computed based on these information, and you can calculate this or have the IRS do it for you.
The tax return form is composed of one page which everybody has to fill in, and with nine supplementary forms for those people with specific types of income that they have to file.
If you are self-employed, you are still expected to file returns, or if you have some other forms of income like rental of your property, interest of your money in a national savings account, etc.
It is always recommended that you file your correct tax returns once you know that you have not paid correctly based on your income. If you fail to do so and wait for the IRS to inform you, you could be paying a fine or penalty or go to prison.
To avoid an automatic penalty, it is recommended that you deliver your tax returns back to your local tax office by January 31st after the end of the tax year.