What is the purpose of an Income Tax Return?

The purpose of an Income Tax Return is fundamentally to report the total income an individual or entity has earned over the tax year. This document serves as a crucial means for taxpayers to disclose all sources of income to the tax authorities, which is necessary for determining the appropriate amount of tax owed. By providing a complete picture of income, the return ensures that the taxpayer meets their legal obligations and allows the government to assess revenue needs.

The Income Tax Return also typically includes information about any tax deductions, credits, or exemptions that apply, but its primary function is the comprehensive reporting of income rather than just securing deductions or seeking refunds, which are secondary outcomes based on the information provided within the return. Thus, reporting total income is the core aspect of the Income Tax Return's purpose, aligning with the requirement to accurately declare financial status for tax assessment.