Tax Return

The tax return is the main way taxpayers tell the government what they earned and what they believe they owe. It usually lists income from all sources, claims any deductions, allowances and credits, shows tax already paid through withholding or advance payments, and calculates the final balance.

If more tax was paid during the year than was owed, the taxpayer receives a refund. If less was paid, they must pay the difference by a deadline. For example, someone who had 7,200 withheld from their wages but whose total tax works out to 6,500 would receive a refund of 700.

Not everyone has to file a return. In some countries, employees with simple finances have the correct tax withheld and do not need to file. Others, such as the self-employed, landlords and people with investment income, usually must.

Filing late, making mistakes or failing to report income can lead to penalties and interest. Many countries now allow or require returns to be filed online, and some pre-fill information already known to the tax authority.