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A taxpayer should regularly check the status of his income tax return to ensure that the ITR has been accepted and processed as it is. If some discrepancies are found or some changes are proposed by the CPC, Bengaluru, the taxpayer can timely provide a suitable reply to the Dept. The following are few terms which you need to understand to know the status of the income tax return.
Taxable income is calculated by taking your adjusted gross income and subtracting your total exemptions and itemized deductions. It determines your tax liability before tax credits.
Whether you’re single and ready to mingle or joined in matrimony, your relationship status determines how you file and what, if any, tax breaks you’re entitled to such as the amount of your standard deduction.
The most common filing status options are “Single,” “Married Filing Jointly” and “Head of Household,” and the IRS offers a handy cheat sheet to help you determine the appropriate filing status for you. They also make it easy to choose the correct filing status when you use IRS e-file, which also happens to be one of the fastest ways to get your refund.
Deductions are items or expenses subtracted from your income to reduce the amount of income that is subject to being taxed. Whether or not a tax-deductible expense ultimately reduces the income tax you owe depends on several factors. The biggest differentiator in tax deductions is whether a taxpayer decides to take the standard deduction or to itemize their deductions.
Taxpayers who choose not to itemize deductions on their tax return can take a standard deduction. The amount of the deduction is based on your filing status, age, and whether or not you’re claimed as a dependent on someone else’s tax return.
Tax credits are much like credits you get from a store. After you calculate your tax bill, you can use the credit to reduce the amount that you owe to Uncle Sam. Tax credits are more valuable than tax deductions because they directly cut the amount of tax you owe, rather than reducing the amount of taxed income.
Money paid to an individual for services, as shown in Form 16 by an employer, has to be included in the total income for the year.
If you own property and have rented it out, the income you earn from this property has to be included in your total income for the year. Interest paid on a housing loan is tax deductible to a large extent.
When you sell assets like property, shares, bonds, mutual funds, there is a difference in the purchasing price and the selling price. If the sale price is more than the purchase price we call it Capital gains. This income has to be included in the total income if it is gained in the financial year. If you sell an asset at a loss, you can set this loss off against other gains and income as per income tax laws.
Income earned while running a Business or while rendering professional services come under this head. Profits or Losses while running a business or a service have to be declared under this head.
A capital gain is one type of earning that counts toward your gross income. You earn capital gains when the sale price of an asset is higher than the initial purchase price and as noted above, it’s considered a form of income. Before you go spending all that profit, be aware you’ll have to pay taxes on it.
If the status of income tax return is ‘Outstanding tax demand’, it means tax liability is pending for payment. Here you need to access the intimation issued by the Dept. under Section 143(1) to know the reasons as to why the tax demand has been raised.
The reasons for outstanding tax demand can be various, inter-alia, self-assessment tax was not paid at the time of filing of return, additional deductions claimed in ITR, mismatch in tax credits, so on and so forth.
A return is deemed to be defective return if it hasn’t been filed in accordance with the provisions of the law. If your return is found defective, then you will receive a notice of defective return under section 139(9), asking you to rectify the defect within 15 days from the date of receiving notice. If you don’t respond to defective return, then ITR shall be treated as invalid. A few reasons for defective return are mentioned below:
If you see this status, you need to login to your e-filing portal. Go to e-file > Response to notice u/s 139(9). You need to select whether you agree with this defect or disagree. If you agree with the defect, file the income tax return in response to notice u/s 139(9) correcting such defect. If you don’t agree with the defect, then submit the reasons for such disagreement.
No, this isn’t about your significant other’s emotions. Withholding is the portion of your paycheck that your employer sends directly to the government each pay period as partial payment of your income tax. The withholding amount is determined by the number of allowances you claim on your W-4.
If you claim too many allowances, you may owe money at tax time, and if you significantly underpay your taxes during the year, you may get hit with a penalty when you file your tax return.
Adjusted gross income, or AGI, is all the income you receive over the course of the year, including wages, interest, dividends and capital gains, minus things such as contributions to a qualified IRA, some business expenses, moving costs and alimony payments. AGI is the first step in calculating your final federal income tax bill.
From maggot farmers to chimney sweepers, there are plenty of disgusting jobs out there that we’ll never want to do. Fortunately, that has nothing to do with gross income.
Gross Income is your total income before accounting for deductions and taxes. Sources of gross income include salary, wages, tips, capital gains, interests, and dividends.
‘Refund unpaid/failed’ means that the Income Tax Department has sent the income tax refund, but it could not be credited into your bank account because the details of bank account number provided in ITR was not correct or in case of a paper refund the address provided by you is wrong. In this case, you need to visit the e-filing portal and raise a refund re-issue request.
Login to your e-filing account and then go to My Account > Service Request > New Request > Refund Reissue. You can submit a request for the refund reissue.
An individual / company have to calculate one’s tax liability at the end of the financial year, on the earnings during that year.
The taxpayer self-assesses to find one’s tax liability after accounting for TDS and advance tax. This is called the self-assessment tax.
A charitable contribution is a type of itemized deduction. When it comes to charitable giving, unfortunately acting as your best friend’s wingman isn’t going to save you any money at tax time.
Charitable contributions can earn you an itemized tax deduction when you donate to a qualifying non-profit organization, charity, or private foundation. These gifts are commonly made in the form of cash, but can also include real estate, clothing, appreciated securities or other assets.
If any income tax refund is due to the taxpayer, it can be claimed only by filing of the income tax return. The tax refund is paid only when the return is processed and refund is determined by the Income Tax Dept. If the status of ITR is ‘Refund not determined’, then it would mean that the ITR isn’t yet processed by the CPC.
The income tax return is required to be processed within 1 year from the end of the financial year in which the return is filed. Hence if you have filed ITR on 31-07-2018, processing of ITR will be done by 31-03-2020. However, generally, it is processed within a couple of weeks after its verification.
Tax exemptions are specific amounts that reduce how much of your taxable income is taxable. Generally, you can claim one exemption for yourself and one for your spouse assuming you’re married. You can also claim one exemption for each dependent. Be aware, while you may think differently, your spouse is never considered your dependent.
According to income tax rules, if the tax liability of a taxpayer is more than Rs 10,000 in a financial year and one knows that in advance, one has to pay:
This is to avoid certain charges levied by the department in case of non-payment of these taxes as per the dates above. The penalty /charges would be levied when you make your return after the end of the financial year, if the advance tax is not paid.