Soon after you turn the page to a new calendar year, there comes the time to start the process of filing your income tax returns. To add to it, there is the choice of the new vs old income tax regime, and the new income tax slab to consider.
With most processes now being online, there is an ease of function that helps in the execution of the right things at the right time, such as income tax return preparation wailuku, hi. Nevertheless, there are a few things that you need to take care of at your end. A few pieces of income tax filing advice, that are not explicitly revealed otherwise, can help you get through this.
Here is a look at some tax advice and financial planning salt lake city that may help you during the tax filing process.
- Don’t forget about your interest income
You may be earning interest from sources such as recurring deposits, fixed term deposits, infrastructure bonds, and other such sources. It is important to note that this interest earned is taxable, and it is necessary to report it. If not, the IT department may be able to get these details through your Form 26AS. Not revealing your income may result in your being served with a penalty.
- Club your family members’ income when filing
Your spouse and child may not have any direct sources of income, but they may be earning through financial instruments, investments, interests from other sources, and more.
You can choose to file their income tax returns by clubbing their income with yours and reporting it accordingly. Section 64 of the Income Tax Act governs the investments made in the name of your minor children or spouse.
- File your income tax returns
For anyone who draws an income from any source, whether the annual amount is within the old or new income tax slab, it is advisable to file your income tax returns. For citizens below 60 years of age, the exemption limit is Rs. 2.5 lakhs per year. The same is Rs. 3 lakhs for senior citizens between 60 to 80 years of age, and Rs. 5 lakhs for citizens over 80 years of age. These limits apply to your income before any tax breaks or exemptions.
According to Section 271F, you may be penalised up to Rs. 5,000 for failing to file your income tax returns. Even if you don’t have any taxes to pay, or you seek rebates, it is required to file your income tax returns to avail of these. Figure out the types of ITR you will need to file and ensure that you go through the process in the right manner. If you are unsure of the calculations you need to make, you can use an income tax calculator, or consult a tax advisor if necessary.
- Income from previous employment should be reported
If you have switched jobs or employers during the past year, ensure that this change and the salary from your previous employer is reflected when you are reporting your tax. If you don’t report your previous employment history accurately, you may end up paying lesser tax than is due.
While this may seem harmless in the moment, it may not benefit you after the assessment has been done from the other end. In these cases, you will be required to pay the rest of the tax that is due. Additionally, you will also be charged interest on this due tax.
- Don’t conceal your tax-free income
There are some forms of income that are termed tax-free. However, that does not mean that you should not report them or hide them when filing your taxes. Instead, be as precise as possible when reporting your income. It is advisable to use an income tax calculator to help you make more accurate calculations, and thus pave the way for a smoother process.
Income tax is a significant aspect of your overall financial planning. Ensure that you are following all due processes each year and keeping all your records in order. This should also help you plan your investments, expenses, and goals better.
