Calculating tax is evident. As the year draws to the close what most of us care about is the filing of our taxes successfully. However, it is the same thing most of us fret about. This is because of the insane amount of calculation and the exorbitant consultation fees that we often think we need to pay. This was certainly a nightmare earlier when there wasn’t any scope for availing the online tax calculators or digital tax calculators that we use today.
What is tax?
We all need to file our taxes but do you know what is tax? Tax can be defined as the amount of money that we are bound to pay to the government against the income or the total money we are making within the same jurisdiction. This money serves as a significant part of the total fund of the government. This is further used in an array of welfare and developmental works that we see around us by the government.
Calculation of taxes
Calculation of taxes might seem to be a hard nut to crack but it is great to know in brief how it is done before we proceed to the next part of the article. Calculating the income tax is generally based on the income tax slab that they fall under.
Firstly they need to consider the whole income or the gross income that they earn and from the total sum, they need to subtract the investments made under the tax law of the particular country you reside in. Now they need to calculate taxes based on the tax rate (slab rate) that they fall under.
This process of manually calculating the income taxes was the only way feasible to calculate the income tax earlier. However, with the changing time, the methods of filing taxes also changed. Calculating has now become a completely digitized process where you don’t have to go through all the calculations rather the computer will do it for you and all of this you can enjoy relaxing back at the comfort of your home. Though you still need to keep a track of your total monthly income, you can simply forget all the worries about the calculation phase. Relying on the online tax calculators and the tax calculating software has made our life a lot easier than what it was.
Besides, using a tax calculator also helps in suggesting to us a couple of investment products for tax saving that one can buy online. Therefore, it is important to note here that these calculators help in investment planning as well. However, if you need to clarify some of the other technical jargon and questions related to tax and its calculation then follow the rest of the article diligently.
How to use the income tax calculator?
If you are looking forward to using the modern income tax calculators for the first time, then don’t worry because it is really easy to use one of these online applications or software that you can find today.
Now, right at first, you need to know some basic details of your income and along with it, you will need your details to be filed up duly. To use your calculator you need to enter your age, income, and investments in tax saving instruments and more. Then, you need to follow all the instructions that will be prompted to you by the software or app at the end of which you need to pay the required amount. On many occasions, people are also eligible for tax refunds.
What is a Tax Refund?
Yes, if you are a first-timer and don’t know what a tax refund is. Then, you should know that whenever a taxpayer pays extra money in the form of tax, then they are eligible for a tax refund after 21 business days or 42 business days depending on the mode of filing your taxes. On the other hand, in case you have underpaid your taxes, you need to pay the remaining bill right as it is produced after the calculation of your taxes.
Though many of us might often think that a tax refund is a bonus it is not really what it seems. A tax refund is the money received which is our own. Furthermore, it can also be considered as an interest-free loan that a taxpayer makes to the government.