How Did The Income Tax Start?

Income includes just about everything a person earns wages and salaries, interest on
bonds and savings bank accounts, dividends on stock, and rents. It also includes the
payments that are received by doctors, lawyers, authors, inventors, and other
professional tax in this country was first levied by William Pitt the Younger, in 1799 to
pay for the French Wars. Today, income tax is a personal tax on ail annual income from
investments or employment. The amount due is assessed on an annual return of
income, with the rate of tax graded in accordance with the size of income and with a
differential between earned and unearned income. A proportion of income is left free of
tax, according to a scale of allowances for personal or family expenses.

In Britain, rates of tax are fixed by an Annual Finance Act and the people who manage
the income-tax system are called Commissioners of Inland Revenue. Inspectors of
Taxes control local tax districts. General or Special Commissioners hear appeals
against tax assessments or refusals of allowances.

Income tax, when first introduced, was intended to be only a temporary measure

Who must file a tax return?

Do I have to file a tax return?

You must file a federal income-tax return if your income is above a certain level; which
varies depending on your filing status, age and the type of income you receive.

Check the "Individuals" section of the IRS website at irs.gov or consult the instructions
for Form 1040, 1040A, or 1040EZ for specific details that may help you determine if you
need to file a tax return with the IRS this year.

You can also use the "Interactive Tax Assistant" available on the IRS website to
determine if you need to file a tax return. The tool is a tax-law resource that takes you
through a series of questions and provides you with responses to tax-law questions.

There are some instances when you may want to file a tax return even though you are
not required to do so.

Even if you don't have to file, here some reasons why you may want to:
• Federal income tax withheld: You should file to get money back if federal income tax
was withheld from your pay, you made estimated tax payments, or had a prior year
overpayment applied to this year's tax.

• Making Work Pay Credit: You may be able to take this credit if you had earned
income from work. The maximum credit for a married couple filing a joint return is $800
and $400 for other taxpayers.

• Earned Income Tax Credit: You may qualify for EITC if you worked, but did not earn
a lot of money. EITC is a refundable tax credit; which means you could qualify for a tax
refund.

• Additional Child Tax Credit: This refundable credit may be available to you if you
have at least one qualifying child and you did not get the full amount of the child tax
credit.

• American Opportunity Credit: The maximum credit per student is $2,500 and the
first four years of postsecondary education qualify.

• First-Time Homebuyer Credit: The credit is a maximum of $8,000 or $4,000 if your

filing status is married filing separately. To qualify for the credit, taxpayers must have
bought — or entered into a binding contract to buy — a principal residence located in
the United States on or before April 30, 2010.

If you entered into a binding contract by April 30, 2010, you must have closed
on the home on or before Sept. 30, 2010. If you bought a home as your
principle residence in 2010, you may be able to qualify and claim the credit
even if you already owned a home. In this case, the maximum credit for
longtime residents is $6,500, or $3,250 if your Related ads for:

steps that must be followed for income tax return filing

 See the Heads of Income and decide which type of assessee you are
 Select return form according to the type of assessee from the list
 Before filing form pls. read the form carefully
 Use black ball pen or other as instructed in form
 There should not be any overwriting on the form
 Fill name, father's name, date of birth as mentioned in your educational
certificates
 Put signature of authorized person (pls. see the list of authorised signatory) on
the form at right place
 Use your own PAN/TAN/GIR number for filing the income tax return
 Use correct options/code to show your status in the income tax return form
  Assessment year must be mentioned on return form clearly. Assessment year is
the last financial year for which tax has to pay
 Mention your all source of income with income amount clearly and correctly
 Calculate your taxable amount including surcharges and deducting rebate from
your income
 Attached all required documents for getting deduction/ rebate or exemption in tax
 After filling form pls. recheck that all the information given by you is correct and
on proper place
 Don't give any wrong information in the form
 Go to income tax department and submit the form to concerning income tax
assessing officer
 File your income tax return before the last date of return filing. Last date for an
individual having only salary income is 30th June as well as last date for
individual having business income (if auditing not required) is 31st august.

TAX RETURNS - FAILURE TO FILE

This Article is designed to be of general interest. The specific techniques and
information discussed may not apply to you. Before acting on any matter contained
herein, you should consult with your personal legal adviser.

Many people fail to file Individual Income Tax Returns for a variety of reasons. Some
reasons are innocent, although the most common is the understandable desire of
people not to pay tax if they can get away with it.

We have heard many reasons why people fall behind. They may be seriously ill or
unable to pay their tax liability.

Failure to file Income Tax Returns is a criminal offense. However, no one who has
voluntarily filed back returns before being caught has ever been criminally
prosecuted. That is the first key: filing BEFORE they catch you.

If the IRS catches a non-filer, criminal prosecution is likely only if the person is a
high profile publicity bonanza for the IRS.

If the non-filer is a car mechanic, putting him in jail accomplishes little for society. It has
no publicity value; it costs money to prosecute and jail him; his family goes on welfare.

However, if the non-filer is a doctor, lawyer, politician, sports figure, or entertainer,

criminal prosecution is a publicity bonanza for the IRS to scare other people.

How can people get away with not filing?

It is difficult for most people. Taxes are withheld from employees and W-2s are issued;
interest, dividends, stock sales, and real estate sales are reported to IRS on magnetic
computer tape.

IRS computers track these items and compare what is reported on individuals' tax
returns. The computers audit you automatically if any discrepancy appears.

There are two main categories of non-filers:

Many people are paid "under the table," have no interest or dividends, and do not own
a house. They can get away without filing, for a while.

Self-employed independent contractors, such as skilled tradesmen and salespeople

(such as real estate agents) pay two kinds of tax: regular income tax, PLUS self-
employment tax (an extra 15% for Social Security). This extra tax makes many
independent contractors reluctant to file.

However, non-filing has its price. When you are caught, interest and penalties may
easily double the debt. The later you file, the more difficult it is to accurately report
income and deductions. And, it is likely the IRS will not believe deductions which would
not have been audited if you had filed on time.

Times are tough. The government needs money. New programs to catch non-filers are
being tested and implemented. Most people are wholly in favor of making non-filers pay.

investmentyogi.com lists some solid reasons for acquiring a PAN

card (if you don't have one) and filing your ITR within the due date,
which is 31st July every year.

We have heard many a times that every individual whose total income exceeds the
maximum exemption limit is obligated to furnish his/her Income Tax Return or ITR.

But what is the benefit of filing ITR -- especially for those below 30 years of age or those
not in the higher tax bracket? Why should any person voluntarily go and submit his
income details to the tax authority? Isn't it more logical not to disclose income details
and avoid paying tax altogetherStandard Income Proof: ITR is considered a customary
income proof not only in India but also globally. If you are looking for higher education or
employment abroad, ITR is the largely accepted income proof.

Speeds your loan application process: Apart from a good credit history (or past
repayment track), the fact that you are filing your ITR regularly gives you speedier
access to credit and at better terms -- although not necessarily a larger line of credit, but
surely a better rate.
It also provides the impression to the financier that you are a law abiding citizen and will
repay the loan within time.

Power of PAN: Permanent Account Number or PAN issued by the IT authority is not
only a prerequisite for filing ITR but is also now mandatory for all financial transactions
-- from opening a bank account, or purchasing mutual funds to real estate for
investment. So it makes sense to get yourself one even if you don't have much income
to boast of.

Claim your tax refund: Filing ITR is not always about paying tax. It can be used as a
means to reduce your tax liability! Yes, you heard us right. Take for instance, salaried
employees for whom TDS has been cut during the financial year can claim refund if the
tax outgo has been more than the actual tax payable.

Important note:

Every person with taxable income (over and above the tax exemption limit) should file
an income return, even if her/his tax liabilities have been taken care of by the employer
through tax deducted at source (TDS); persons whose salaries have been subjected to
TDS are also required to file return because they may have earned from sources other
than salary (house property income, capital gains, etc.).

The entire tax payable on your income has to be paid before filing the return of income
either by way of tax-deducted at source (TDS), advance tax or self-assessment tax.
Ensure that it is done before the ITR is filed.

Not only for refund, you also need to file your income return if you are claiming carry
forward of loss (say, from long term capital asset or from any other source of income).
In such cases, filing returns within the due date is a must.

E-governance : India Income Tax return filing

If you earn in India through salary, or your business or services in india, which are
taxable, you can pay taxes, file income tax returns, everything online through
below links.

Prerequisites are:
1. You should have a PAN number. or you can e-apply for one through
http://incometaxindia.gov.in

2. You should have a digital signature to submit all filled up forms(if any) online. you can
obtain a digital signature through www.tcs-ca.tcs.co.in You can use the digital signature
for all egovernance initiatives like registering a company, also use it on any website that
accepts digital signatures today or in the future.. so your investment in acquiring a
digital signature is valuable for long term.

Income tax returns e-filing: http://incometaxindiaefiling.gov.in/portal

Pay taxes online: https://tin.tin.nsdl.com/etax

HOW WE CAN GET THE INFORMATION FOR DUE DATE OF PAYING…..all most
services are free, it costs zero bucks to file your returns, except a few like PAN
applications are costed but low cost (below 250 rupees).. And you only spend for paying
taxes, and acquiring a secure digital signature.

And if you are not the computer friendly, or an accounts friendly person, you can ask for
a 'Tax Return Processor' an agent authorized by the government to drop-in at your
office/home and help you with filing returns for free or for a fixed maximum cost of 250
rupees only. These TRP agents are paid some commissions on the taxes you pay, so
only a few of their services cost within 250.. and the rest is free.