Proper accounting procedures not only make taxation season more manageable for companies, but they can also add value for clients.
According to the Sixteenth Amendment to the Constitution, Congress holds the right to “lay and collect income taxes from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration.”
The Internal Revenue Service has time and again reminded taxpayers of the importance of filing and paying taxes on time. There are even a few options available for those who are unable to pay their taxes.
Regardless, filing income tax returns before the due date allows taxpayers to reap many advantages. These include the following:
Easy Approval For Loans:
If you have planned to apply for a loan for your business in the upcoming months, you should ensure your taxes are filed on time.
This is because most banks ask for IT-returns of the last three consecutive years before they sanction a loan. So furnishing your IT-return will help you appear more favorable in front of the bank.
Claim TDS Refund:
If a person invests in fixed deposits, the interest they gather can attract TDS at a rate of 10% per annum. This remains so whether the person is liable to pay income tax or not.
If the total income amount is less than the legal taxable limit, the individual can then claim a TDS refund. To do this, all you need to do is file for an income tax return.
Carry Losses Forward:
Many businesses around the world faced a slump due to the economic impact of COVID-19. If your business experienced losses this year, you could compensate for this by carrying the loss forward to the upcoming eight years when you file for income tax returns.
Your future income will help compensate for the loss while lessening the amount of tax you’ll pay in future years.
Fast Visa Processing:
If you’re planning to travel abroad, then during visa processing, foreign consulates will ask you to present your income tax return receipts from the last few years.
While some embassies may ask for income tax return receipts from the last three years, others will ask for your most recent tax filing certificate. In either case, a good filing record can create a positive impression in front of embassy officers.
It’s An Important Document For Those Who Are Self-Employed:
For business people, consultants, and partners in companies, an income tax return receipt is an important document.
These people may not receive documents like Form 16, which are usually given to those who receive salaries. As a result, self-employed individuals need to hold on to their income tax return receipts to prove their income and tax payments.
Anyone who is liable to pay taxes and does not file their return before the due date can be subject to a penalty applied on the remaining monthly taxable amount.
If taxpayers file their tax returns more than 60 days late, a penalty of $210 is applicable. It can also be as much as 5% of the unpaid tax for each month, up to a maximum of 25%.
Reap the benefits of timely tax preparations with 3Alpha LLC. Our expert tax advisors ensure your accounts and taxes are organized so you can focus on other aspects of the business. Get in touch to book our services.