Updated on July 18, 2023
Tax compliance refers to the obligation and responsibility of taxpayers to comply with the laws and regulations set forth by the government regarding the payment and reporting of income taxes. Tax compliance means fulfilling your duties as a taxpayer by accurately and honestly reporting your income, deductions, and other relevant financial information to the tax authorities. It involves keeping proper records of your financial transactions, maintaining supporting documents, and submitting your tax returns within the specified deadlines.
What are the steps in tax compliance?
Some of the key steps in tax compliance are highlighted below.
Understand your tax obligations.
Keep accurate and organized records of your financial transactions.
Determine your taxable income by calculating your earnings and deducting eligible expenses.
Report your income and deductions accurately.
Calculate the amount of tax you owe based on applicable rates and taxable income.
Pay your taxes through advance payments or when filing your tax return.
File your tax return by submitting the completed forms and supporting documents.
Review your tax return for accuracy and file revised returns in case of any errors or omissions.
Retain copies of your tax returns and related documents for future reference.
Cooperate with the tax authorities if requested for additional information or audit.