If you are familiar with income taxes but you haven’t gotten a clear understanding of it, this blog is just for you. Basically it is a tax levied on the people as well as the businesses which operate within our society by the government of the country. The funds which are thus received are used for various purposes which are ultimately for the upliftment of the country.
Income Tax Forms Decoded
There are seven ITR forms available to the people, one of which has to be filled before the due date assigned by the government. You can determine which form you have to fill by looking at various factors such as your annual income, your sources of income as well as your category, i.e whether you are an individual taxpayer or a business.
Deductions, Credits and Exemptions
According to the Income Tax Act, you can deduct your various investments in charitable institutions as well as certain other payments from your taxable income. Other than charity investments, healthcare investments and 401(k)s are also exempt from your taxable income.
Note: The fiscal year begins on April 1. Every year various changes are brought about in the tax regime which one must be aware of in order to avoid making mistakes while filing tax returns.
What shouldn’t you do while filing for returns?
You must always be cautious while choosing the form for filing your returns. Choosing the wrong form can lead to delay in submitting the returns which can cause you to pay a penalty. Filing of tax returns after the due date has passed can also result in the same.
Last minute hassles must be avoided at all costs. Neglecting to e-verify your documents or failing to mention all sources of income may also lead to penalties or even worse, bring you under the radar and scrutiny of the Income Tax Department.
The Many Aspects of Tax Planning
Tax Planning is the process of organising your fiscal affairs in a way that not only increases your tax efficiency but also decreases your liability. There are certain aspects of tax planning that can be helpful to keep in mind:
- use of tax advantaged accounts
- timing your income and deductions correctly
- making use of available tax credits
- taking advantage of deductions for charitable contributions
- Health Saving Accounts (HSAs) and Flexible Spending Accounts (FSAs) will allow you to set aside money without having to pay tax for it.
Things to Note about Income Tax
There are a few things you need to keep in mind about your duties regarding income taxes:
- List your sources of income- whether earned (work) or unearned (investments), you must explicitly declare your source(s) when completing tax forms.
- Clearly state your taxable income- Subtract permitted deductions from your yearly income to get your taxable income.
- Returns must be filed during the taxable period.
- Follow your country’s set tax rate.
- Your filing status (single, married filing jointly, married filing separately, head of household) might have an impact on your tax burden.
- You must submit income tax returns detailing your income, deductions, and credits. The form number changes from one nation to the next.
- The Tax Authorities (Income Tax Department in India) is in charge of all tax collection and enforcement, as well as federal income tax.
Why choose WebLedger?
If you have any doubts about income tax returns or how to file them, WebLedger is one of the best programs for all your concerns regarding all things income tax. It is a great software for those users who seek simplicity besides ready assistance. The complications of tax filing have been eliminated by the easy filing method. The several ITR filing alternatives are designed to be a perfect fit for each individual’s financial circumstances.
WebLedger assists you in calculations regarding tax regulations with easy-to-follow guidelines on the website about the tax filing process. WebLedger also offers solutions at very affordable costs without any downgrades in the quality of the products.
There are some exclusive benefits of WebLedger mentioned below:
- Integration of intelligent bookkeeping
- Unrivalled precision and compliance
- A smooth filing process
- Services for ITR
Finally, income tax returns are a very important component of the government-people interaction. Tax returns are often viewed as a financial hardship, although they enhance the financial status of the states while also permitting advantages for its inhabitants.
Tax returns sometimes may seem overwhelming because of all the formalities one has to go through to get it done. This is when people can rely on WebLedger, which is one of the few resources you could use to solve all worries regarding income tax, at very affordable prices.