Paying taxes is one of those begrudging tasks that we all have to do every year. Taxes go towards paying for public infrastructure and other government-sponsored spending programs, with the hope that it benefits society as a whole — including you as the taxpayer. However, that does not mean that paying taxes is always an easy thing to tackle. In fact, the tax system and completing a tax return can be a complicated process, not helped by the fact that the majority of us only ever complete a tax return once a year. Leaving so much time in between each attempt at completing your taxes means we do not get much practice or chance to improve.
In this article, we look to take out some of the complexity surrounding completing a tax return so you can do your own with confidence. We examine what exactly a tax return is and why checking a tax return is so critically important. We will also answer the query, “How to check my tax return” so you can be assured yours is correct and in compliance.
What is a tax return?
A tax return is a document that all citizens have to file with the tax authorities. In the US, a tax return is filed with the Internal Revenue Service or IRS. A tax return will outline many pieces of information that support how much tax a person owes the government. A person does not have to pay tax on the gross amount of their income. Instead, they pay tax owed on income after all deductible allowances. Therefore, a tax return needs to record information which includes total income amount, but also any tax-deductible expenses.
Why checking a tax return is important
It’s important to check your tax return, either if you complete it yourself or someone else does it for you. But why? Here, we look at the reasons that checking your tax return before you file it with the IRS, or any other tax authority you are beholden to, is imperative as well as good practice.
Tax returns need to be accurate. If everyone filed an incorrect tax return riddled with errors, the whole tax system and what those taxes pay for is at stake. For this reason, checking your tax return is important, as it will help you identify errors that minimize any incorrect payment amounts on your behalf.
When you check your tax return for errors, one of the benefits to you when you identify inaccuracies or confirm it is correct is that you will consequently know what your final tax bill will be. If you do not know what your tax bill is with any certainty, it’s difficult to plan ahead in terms of your finances. Good financial health depends on knowing what your incoming and outgoing revenue is. If you do not know how much you’ll owe in tax and when you will be paying said tax, you’re putting yourself on a budgeting back foot.
Ensuring that you have accurate information on your tax return is also important as it means that you materially diminish the chances of being forced to pay back taxes in the future. If you’re found to have filed your tax return with errors, you are subject to pay the government what is owed. Any missed payments, therefore, become a liability on your behalf. Checking your tax return before you file it means that you’re far less likely to be sent a tax bill you did not plan for.
How to check my tax return
Keeping all of this in mind — how do you check a tax return to ensure that it is correct and accurate?
First, gather all the financial information you have with regards to your pay and expenses you have incurred over the last financial year. That information will also include any tax-deductible payments you have made to schemes, like pensions for example. Check that you have all the information up to date and correct and double-check it against what has been completed in your tax return.
Second, go over your tax return with fresh eyes. Going over your tax return is far easier to do if you walk away from it to then check it a few days later. Another good idea is to review it when you are well-rested; since they are not easy reading. Checking it when you are tired or stressed will make identifying errors far more difficult.
Third, don’t leave your tax return until the last minute. Doing so will make it far more likely that you make mistakes. You will have to rush it to file it and you give yourself very little room for maneuver. You will have minimized the amount of time you have available to check your return for any errors, and as a result, are less likely to have completed a return without any inaccuracies.