Tax Return

Financial Dictionary -> General Finance -> Tax Return

In the United States every working adult is required to pay tax on a percentage of their income. How much they pay is dependent on what income bracket they fall in to. A tax return is a form filled out by a taxed citizen, their employer or accountant that contains financial information that the Internal Revue Service (IRS) can use to calculate how much tax is due.

When filling out the tax return, information such as yearly income, costs and tax deductions (depending on the type of return) is collected. From this the IRS can come to three possible conclusions.

1) The Taxpayer has been charged too much tax and will therefore get a tax refund.
2) The Taxpayer has been charged too little and will be billed for the remainder.
3) They have charged the correct amount.

Not everybody will receive the same tax return, or will have to fill out the same part if they receive a larger booklet. Some people are tax exempt because of small earnings or other circumstances, they will usually only have to declare earnings to double check if they should be taxed. Some people are self employed and thus must fill out that part of the form. Here they may be able to deduct work related expense and other costs associated with self employment. There are all sorts of different deductions that families can make. Because of all the possible deductions and scope of earnings tax returns are often considered overly complicated.

In the United States tax returns are required to be filed once a year by April 15th, documenting earnings from January through until the end of December.

Tax season can be very hectic and stressful, however if you keep regular records of your earnings and deductions in a spreadsheet throughout the year it can be as easy as adding up a few sums. This applies especially to the self employed, who need to document each transaction.