What exactly is a tax return?

Before you file your taxes, you should clearly know what exactly is a tax return.

Tax returns in the US are reports that are filed with the Internal Revenue Service (IRS). It can also be filed with the state or local tax collection agency as for example California Franchise Tax Board. Generally, tax returns are prepared using forms that are prescribed by the IRS or other taxing authorities.

Returns are classified as either tax returns or information returns under the Internal Revenue Code. However, the term tax return is used in some cases to describe both kinds of returns, but in a broader perspective. If taken in the more narrow sense, the term tax return can be applied to reports of tax liabilities and payments. This might include financial information that have been used to calculate the tax.

If you want to know the difference between tax return and information returns, then read the next section carefully. Information returns are reports that are used to transmit information about your income, the receipts and of course other matters that affect tax liabilities.

For filing either a tax return or an information return, you need to fill up various forms, as for example Form W-2 and Form 1099 are used to report on the amount of income that a taxpayer earns from his or her employer, broker, or from any other sources.

[tags]tax return,IRS[/tags]