A tax return is a report that taxpayers annually file with revenue authorities, detailing income amounts and calculations of resulting tax liabilities or refunds owed for a given tax year.
Elements of a Tax Return:
- Filing status selection of single, married filing jointly or separately
- Income from various sources including wages, self-employment, investments is reported
- Deductions, exemptions, and credits reduce pre-credit tax amounts
Example:
A couple filed their Form 1040 return electronically, reporting Schedule C business profit offset partially by a residential energy credit.
Takeaways:
Filing complete and accurate returns on time facilitates processing and minimizes risks of underpayment penalties or audits. Record-keeping also supports items claimed if authorities request substantiation. Electronic filing grows, expediting refund issuance.