Best ways to Calculate the Liability of Tax

Introduction:

If you have a taxable income, it is your responsibility to pay taxes. And if you don’t pay your taxes at the right time, there are several penalties that can be levied on you. If you are filing your returns after the due date, then it will be considered as an “extended return”, which might attract penalty charges.

Best ways to Calculate the Liability of Tax

Introduction:

Declare Your Income.

The Income Tax Act of 1961 provides for different kinds of income that can be considered taxable. These include:

Salary from employment or self-employment
Interest from bank deposits and bonds, debentures, shares, etc.
Dividends received from mutual funds
Capital gains made by selling stocks and shares in your portfolio (or even your own company)

Check Your Total Tax Liability.

The best way to calculate tax rebate liability is to check for exemptions and deductions. This can be done by going through all the forms you have filed in the past or by checking the official website of the Income Tax department.

The first thing that you need to do is check if the income tax deduction has been made on your behalf. If it has not been made on your behalf, then it would be better if you did this yourself by filing a form called TDS-1 every year. The second step involves calculating whether or not any exemptions are applicable in terms of property tax paid or other payments made towards charity, etcetera. The third step involves calculating whether there are any deductions available for investments made under Section 80C (which includes investments such as life insurance policies)and Section 80D(which includes investments such as medical expenses). Once all these three steps have been taken care of, then one can easily calculate what their overall tax liability will be

Check for Exemptions and Deductions.

If you are unsure of how to calculate your tax liability, don’t worry. The IRS offers a long list of exemptions and deductions that can reduce your taxable income.

The exemptions and deductions available to you depend on your filing status, age, and whether or not you’re blind or disabled. Certain types of income are also exempt from taxation if they fall under special categories. For example:

Child support payments are not considered taxable income for either party receiving them unless the payer is deducting them from his/her gross income for some other reason (such as taxes). In this case, the amount deducted should be included in both parties’ taxable incomes for the year it was received.
* Alimony payments made by one spouse to another are tax-deductible only to the payer; however, alimony payments received to count toward total household income when calculating Federal Insurance Contributions Act (FICA) taxes.
* Disability benefits from Social Security do not count toward gross income when determining unemployment benefits; however, they do count toward earned income credit calculations.
Retirement plan distributions under certain circumstances may be considered nontaxable withdrawals instead of ordinary withdrawals subject to ordinary tax rates up until age 59½ years old.

TDS Deduction.

TDS is deducted at source. This means that the government does not wait for you to pay your income taxes before calculating how much tax is due. Instead, it deducts TDS from your salary and pension payments. Other forms of income include rent, interest payments and dividends from equity shares, mutual funds or bonds.

TDS deduction is calculated at 10% on all payments made by an individual exceeding Rs 2 lakh every financial year (FY). The exemption limit depends on whether an individual’s gross total income has crossed the Rs 2 lakh threshold or not during an FY; if it hasn’t crossed this limit, then there is no need to pay any taxes whatsoever!

If your total gross income exceeds Rs 2 lakh per FY, then both federal and state governments can claim to rake off their respective portions of taxes under various heads such as income tax (both direct and indirect), surcharge, etcetera…

File Your ITR at the Earliest.

If you are an individual taxpayer and do not file your tax return for the previous financial year by July 31, then the Income Tax Department will charge a penalty. The amount of this penalty depends on how late you file your tax return. In addition, even if you are unable to pay the entire amount due on time, it’s still mandatory for all citizens in India to submit their income tax returns (ITR) every year by August 15 and make payments online via challan or net banking facility of any bank or post office before September 30.

If you do not have much of the money to pay all taxes due, then there are two ways out: either pay them off in instalments over the next few months or wait until after filing returns next year and then settle up with full payment within 45 days from the end date of the first quarter (April 15). If a person is unable to make payments towards taxes at all during the financial year, then they also needn’t worry because under section 245DDAAB of the Income Tax Act 1961, there is no need for him/her to make a payment right away after submitting ITR form along with challan number; instead, those who can afford will be allowed time until March 1 next year via Challan-19A only provided he/she files returns within the due period prescribed by law, i.e., August 15 2017.”

File Your Taxes Before July 31.

The tax filing deadline is July 31. If you file your taxes before that date, you will get the benefit of tax deductions. If you wait until after July 31 to file, however, those deductions won’t be available to you anymore.

The best way to calculate your liability is by using TurboTax or H&R Block’s online tools that help users determine their exact amount owed in taxes while giving them instant access to information regarding their various tax deductions and credits.

The Income Tax Act of 1961 provides for different kinds of income that can be considered taxable. These include:

Salary from employment or self-employment
Interest from bank deposits and bonds, debentures, shares, etc.
Dividends received from mutual funds
Capital gains made by selling stocks and shares in your portfolio (or even your own company)

Check Your Total Tax Liability.

The best way to calculate tax rebate liability is to check for exemptions and deductions. This can be done by going through all the forms you have filed in the past or by checking the official website of the Income Tax department.

Check for Exemptions and Deductions.

If you are unsure of how to calculate your tax liability, don’t worry. The IRS offers a long list of exemptions and deductions that can reduce your taxable income.

Child support payments are not considered taxable income for either party receiving them unless the payer is deducting them from his/her gross income for some other reason (such as taxes). In this case, the amount deducted should be included in both parties’ taxable incomes for the year it was received.
* Alimony payments made by one spouse to another are tax-deductible only to the payer; however, alimony payments received to count toward total household income when calculating Federal Insurance Contributions Act (FICA) taxes.
* Disability benefits from Social Security do not count toward gross income when determining unemployment benefits; however, they do count toward earned income credit calculations.
Retirement plan distributions under certain circumstances may be considered nontaxable withdrawals instead of ordinary withdrawals subject to ordinary tax rates up until age 59½ years old.

TDS Deduction

File Your ITR at the Earliest.

If you are an individual taxpayer do not file your tax return for the previous financial year by July 31, then the Income Tax Department will charge a penalty. The amount of this penalty depends on how late you file your tax return. In addition, even if you are unable to pay the entire amount due on time, it’s still mandatory for all citizens in India to submit their income tax returns (ITR) every year by August 15 and make payments online via challan or net banking facility of any bank or post office before September 30.