Personal Finance Blog

Posts Tagged ‘Return’

April 15 is fast approaching but there’s no way you can get your personal income tax return done by then. What’s a procrastinator to do? File an extension, of course.

But perhaps you are wondering whether this is the best option for you. Read on to find out.

You can automatically extend the April 15 due date to October 15 by filing Form 4868, “Application for Automatic Extension of Time To File U.S. Individual Income Tax Return.” So now you have six more months to file your personal income tax return.

The nice thing about Form 4868 is that simply filing this form grants an automatic, no-questions-asked 6-month extension. You don’t have to have a reason. Just sending this form to the IRS on or before April 15 gets you the extra six months.

But here’s another important point about Form 4868: This 6-month extension is NOT an extension to pay any tax you may owe on the tax return. Form 4868 only grants an extension of time to file the tax return.

So, if you usually get a refund on your personal tax return, you are OK. But, if you think you might have a balance due, or if you are not sure, then you should go ahead and prepare the return to the best of your ability, do the calculations, and see where you stand.

If you are getting a refund, great. If you’re not in a hurry to get the refund, then file the extension form and wait until October 15 to send in the return. But if you have a balance due on the return, then you should send in your balance due with Form 4868. That way you avoid any penalty and interest for late payment of tax.

When October 15 rolls around, you send in the return, showing the Form 4868 payment as a credit. The end result is this: you paid your tax on time (April 15), and you filed your tax return legally late (October 15) because you filed the extension form on time.

Obviously, the key here is whether or not you have a balance due on your return. If you have a balance due, but don’t send in the payment with Form 4868, then you will have penalty and interest charges for paying the tax after April 15.

Bottom line: Do not overlook the fact that Form 4868 does not grant you an extension of time to pay the tax. It only gives you an extension of time to file the return.

* Due date is the date prescribed by the department as the last date of filing return. For Individuals who are not liable to be audited the due date prescribed for filing return is 31st July 2008 unless extended further by a seperate notification.

* The income tax department may any time extend the due date for filing Return of Income by issuing a public notification. In that case such an extended date shall be considered as Due date of filing income tax return.

* Even if the person can not file return of income by due date, he can still file return upto 31st March of the next financial year . In such a case no penalty will be imposed for not filing the return by due date. E.g. if a person whose due date for filing is 31st July 2008, and could not file return by the due date, then he can file the return upto 31st March 2008.

* All losses are allowed to be carried forward to next year only if the return is filed within due date, except when there is loss under the head house property

Development of a nation plays a major role in the progress of a person. The main attribute that is necessary for the development of the country is the finance. No country can grow without money. Government arranges finances from various sources. One of the major sources to get finances is from the payment of taxes from the people. Income Tax is a major liability imparted on the people. It is taken on the basis of annual income of the people and the amount of income tax return depends on the income of a person.

These returns can be classified under two categories i.e. individual and professional. One has to file an individual income tax return personally on the basis of the income he or she gets. On the other hand, in case of professional income tax return, the amount is deducted from the salary of persons.

In order to file return, one has to fill some forms with all the information regarding his or her salary. The amount can be paid by cash, cheque or demand draft. In the past, paying return was supposed to be a tedious task. But now government has made all the procedures easy.

In the present scenario, the return can be filed with ease with the help of the Internet. The website of the income tax department, launched by the government of India, has the facility to file the return online. The e-payment options of the website allow the tax payers to pay the amount through their credit cards. They can pay it with ease while sitting in front of their computers. The online procedure requires filling of online form with all the details. After that, you are required to enter the credit card number and a special code which is written behind the card. Your income tax return will be paid just by going through this procedure. This method is really too easy that anyone who is familiar with the Internet can conduct the procedure of paying the taxes with ease.

You can read the terms and conditions of the return on the above said website. These terms and condition help you in getting the information about the rules and procedure of paying tax with ease. Moreover, you can also download the form from the website to pay the tax offline. There are some other Internet portals available which provide many facilities related to the tax return. For instance, you can calculate your tax amount easily on these sites. You can calculate all the amount within a minute by entering your income details.

Above analysis shows that filing the income tax return has become an easy task which can be performed while sitting at home. It can be performed by simple Internet surfing. The procedure of paying the return has also become so simple that it is no more a dilemma for the people. In a way, we can say that paying return is a way to contribution in the development of our nation. Hopefully, in the coming time, the procedure will be even more simpler than today and we shall be able to file the return with more ease.

* E-filing is essentially another mode of filing your income tax return, in addition to the popular mode of printing and submitting your return at the income tax counters. It is a two step process:

a. Prepare your return using tax preparation software: Enter your income tax data, such as, PAN, income, deductions, and TDS. Review your data for completeness and accuracy; and, generate your electronic return in XML format.

b. Upload your XML format return on income tax department website. Upon successful uploading, it will generate an acknowledgement form called ITR-V. If you do not use digital signatures, then you have to submit the ITR-V at the income tax counter.

* If you do not wish to e-file, then you can print your ITR1 or ITR2 and deposit it at the nearest income tax office or counter.

* Return filing statistics indicate that more than 33% of the returns are filed in the last two weeks of the return filing date. And, a very large number of returns are filed on the last date of filing returns. You can avoid the queues at income tax counters by filing your returns well before the due date

It is that time of year when individual wants to know how much he or she has earned and how much tax is owed. To define income tax, it can be said that the tax charged on the annual financial income of persons, corporations or other legal entities. In the case of individual income tax, the tax is charged on the total income of the individual (with some deductions which are permitted by law), while corporate income tax is on the annual net income. There are many income tax systems exist in the financial market with different degrees of tax incidence.

Income tax time or financial closing dates are one of the hectic and stressful times of the year as individuals, legal entities or companies have to make sure of all receipts and money matter in a proper order. Well, during this time of the year, one knows about his or her expenses and savings which have been made in the previous financial year. With the help of valuable income tax return tips the individual can reduce the tax that he or she owes at tax time with the proper guidance of tips. Some important income tax return tips are as follows:

Firstly, the usage of tax credits is considered as better option than tax deductions. To define tax credits, it can be said that it is the lower amount that individual owes to the IRS.

Secondly, individual must categorized his or her deductions. For instance, one must include all the expenses such as money contributed in charity under itemized category. The entire process of categorizing is time-consuming, but is worth as it would lessen tax at the end of financial year.

Lastly, individuals can use their status to income tax advantage. If you’re married for instance, then you can choose to file income tax account jointly or separately. But, if individual file his or her status as head of family then he or she is required to get larger standard deduction. Therefore, filing of status determines tax exemptions.

At last, individual must review his or her expenses to find-out the best ways to reduce tax and organize financial documents.

o If more tax has been deducted from your income, then you are entitled to get a refund cheque from the income tax department.

o Time to get such refund is unpredictable, so it is suggested not to overpay and to do your calculations wisely. The interest paid by the income tax department on your refund is very low, so it is better to invest the money in higher return investment than waiting for refund.

o If you e-file your return, then you stand a chance of getting faster refund.

o Refund follow-up is expensive and tedious, so it is advisable to avoid such situation of refund

o Revised return means that you can re-file your income tax return with some modification. If you have already filed your return for financial year 2007-08 but want to make modifications and file a new return, then the new return will be called the revised return.

o For this financial year (Mar 2007 – Apr 2008), you can file a revised return till 31st March 2010.

o However, if the income tax department completes the assessment of your return earlier, then you can not file a revised return.

o If you missed reporting any income or deductions, you can file revised return.

o If you received some information after filing the return, you can file revised return.

o You will need the acknowledgement number and date of filing of original return in order to file a revised return.

o If you have to disclose some income, then do so at the earliest opportunity to avoid interest/penalties from income tax department