Some Guidelines On Tax Return Preparation

2007-05-02 10:04:19

( Computers )



Tax returns must be filed annually on any income that has been earned. Tax return filing is compulsory whether taxes were withheld on your income, or not. Failure to file your income tax on time can lead to the payment of a fine and imprisonment for a certain period.

Independent tax return preparation requires you to accomplish specific forms depending on the income you have earned. Any deductions that you are entitled must be itemized in these forms. Income tax forms are available from your local tax office, or any public library.

Tax return preparation is necessary in order to determine how much tax needs to be paid to the government.

For income tax to be calculated, you will need to add up all of the income that you received during the year. This includes your wages including any self employment income, annuities, pensions and any income received from commissions.

Next, you will need to subtract any adjustments from the total of your income above. Adjustments include alimony, taxes on self employment, interest penalties on bank transactions, interest paid on educational loans and retirement plans. The result of this calculation gives you the total adjusted gross income you have earned for the year.

From the total adjusted gross income, you will further need to either subtract certain expenses. These include medical and dental expense, real estate and personal property taxes, charitable donations and state/local taxes paid.

Lastly, depending on your marital status and the number of children that you have, you are given a personal exemption. This exemption is deducted from the total of the above amounts.

The total figures from the above calculations will you provide you with the total taxable income for the year. The amount of tax that you will need to pay depends on a marginal tax rate system provided by the government.

Tax return preparation is accomplished in several ways: by accomplishing the tax forms yourself, hiring a tax professional, or purchasing tax preparation software. Once forms are completed, these forms are sent through mail or online.


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