It is an official document that a person or company submits to the tax authority, reporting their income, expenses, deductions, withholdings, and any other relevant information to calculate the taxes they must pay or the credit balance they may receive.
It is the formal report through which a taxpayer fulfills their tax obligation to report their tax situation within a given period (monthly, quarterly, or annually, depending on the law).
Key elements of a tax return:
- Income: what the person or company earned (salaries, sales, services, etc.).
- Expenses or deductions: Expenses permitted by law that reduce the tax base.
- Withheld taxes or advances: Previous payments already made.
- Final calculation: Determines whether the taxpayer must pay more or whether they have a credit balance.