Tax Return

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DEFINITION of 'Tax Return'

1. The tax form or forms used to file income taxes with the Internal Revenue Service (IRS). Tax returns often are set up in a worksheet format, where the income figures used to calculate the tax liability are written into the documents themselves. Tax returns must be filed every year for an individual or business that received income during the year, whether through regular income (wages), interest, dividends, capital gains, or other profits.

2. A return of excess taxes paid during a given tax year; this is more accurately known as a "tax refund".

BREAKING DOWN 'Tax Return'

Individuals use Form 1040, corporations use Form 1120 and partnerships use Form 1065. Investment income is recorded on Form 1099. Most large corporations and sole proprietors file tax returns quarterly, rather than just once per year. This keeps the tax balance running as close to $0 as possible and avoids oversized tax bills at the end of the year.

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