Income Tax Return: Facts and Checklist for Taxpayers

Income tax returns are a much-debated topic. Some people look forward to receiving a refund from the tax office. For others, filing a tax return is nothing but a source of hassle, expense, and stress. It’s safe to say that for most individuals and businesses, complying with financial bureaucracy isn’t exactly a favorite pastime. Nevertheless, many people are “required” to file an income tax return. It is precisely for those people—and for those who file voluntarily—that we aim to offer a little assistance in this article. As tax advisors in Düsseldorf
and Oberhausen
, we are familiar with the most common questions regarding tax returns. Our overview provides answers to frequently asked questions about income tax returns.

There’s no shame in asking for help!

Many people, and especially business owners, sometimes find it difficult to accept professional tax assistance. As tax advisors, we hear statements like, “I can handle this on my own,” or “I can save myself the cost,” all too often. We would therefore like to emphasize once again that there is no shame (and it is actually quite common) in accepting help. Because aside from the pesky costs, professional advice also means less stress and significant time savings. It makes perfect sense to seek professional help from a tax advisor for your tax return. Companies with a high volume of business transactions often cannot maintain the necessary overview without a good tax advisor. Alternatively, especially for employees, a payroll tax assistance association can be an attractive option. The costs there are generally somewhat lower. So before you really dive into the topic, our first tip is to always clarify the tax aspects with an expert. Nevertheless, it’s important that you understand the basics yourself. So keep reading…

What filing deadlines must be observed for income tax returns?

The income tax return is, of course, subject to a specific timeframe. Tax returns can only be filed with the tax office within certain periods. In addition, there are filing deadlines that should not be missed. A distinction must be made between whether you are required to file a tax return or are doing so voluntarily.

Taxpayers who are required
to file

a return
must do so in the following year. Specifically, July
31
is the latest filing deadline. For the 2020 tax year, this means that the income tax return must be submitted by July 31, 2021. This deadline applies to taxpayers who prepare their own returns. In individual cases, an extension may be requested from the tax office. This should be done as early as possible. Tax returns prepared by a tax advisor or payroll tax association are automatically subject to an extended filing deadline. In these cases, the tax return must be received by the tax office by the end of February of the year following next. Failure to meet these deadlines will result in reminders and late filing penalties.

Not everyone is required to file a tax return. Taxpayers who voluntarily choose to file an income tax return are given significantly more time.
The filing deadline for the 2019 tax year
is set for December 31, 2023
. If you decide to file a return, it is still advisable not to wait until the very last minute. When filing a voluntary tax return, there is of course no risk of receiving reminders or similar penalties. You will simply miss out on any potential tax benefits.

Checklist: What goes into an income tax return?

Now that it is clear that you must or wish to file an income tax return, the question arises as to what exactly needs to be included. Those who wish to prepare the tax return themselves should pay particular attention to this question. But even for businesses and individuals who rely on professional assistance, it is important to be familiar with the basics of the tax system. Only with the necessary basic knowledge can relevant information and documents be identified and compiled. This saves you and your tax advisor a lot of time.

Below, we have created a checklist. This overview is intended to help you compile the documents for an upcoming income tax return. The lists and respective items are merely examples. There are regular changes in tax law. Accordingly, it is important that you never rely on a single source alone and also seek professionally verified assistance. As a rough overview, however, the checklist below is absolutely sufficient!

CHECKLIST FOR THE INCOME TAX RETURN

A. GENERAL INFORMATION / PERSONAL INFORMATION:

1. Tax ID number / Identification number / Tax office / Previous year’s tax assessment / Most recent advance payment notice
2. Taxpayer / Husband
3. Wife
4. Children

B. INSURANCE, DONATIONS, MEDICAL EXPENSES, ETC.:

1. Insurance
2. Donations, medical expenses, alimony payments, tax advisory fees, etc.

C. HOUSEHOLD-RELATED EMPLOYMENT/SERVICES:

1. Household-related employment
2. Household-related services

D. COMMERCIAL OR PROFESSIONAL ACTIVITIES:

1. General
2. Income
3. Expenses
4. Equity Interests
5. Shares in Corporations

E. EMPLOYMENT:

1. Income
2. Deductible expenses

F. INVESTMENT INCOME:

1. Tax certificates

G. PENSIONS, PRIVATE SALES, AND OTHER INCOME:

1. Private sales
2. Pension Income
3. Other Income

H. RENTAL AND LEASING:

1. General
2. Income
3. Deductible expenses
4. Notifications regarding income from real estate companies / investment funds

I. FINAL REMARKS:

It is important to note that not every taxpayer is required to include the listed items in their tax return. As an employee, the section for self-employed individuals can, of course, be ignored. Additionally, it should be noted that not all aspects mentioned here necessarily lead to a tax reduction. The specific individual case must always be considered.

How long does it take for the tax office to process a tax return?

After the income tax return has been filed, some taxpayers hope for a refund from the tax office. Perhaps the refund is intended to help finance a purchase or a vacation. Therefore, many wonder how long it takes for the response or payment from the tax authorities to arrive. In principle, tax officials have six months to process the return. If there are irregularities or follow-up questions, the deadline is extended even further. On average, however, the wait time is “only” about eight weeks. During periods when a particularly large number of returns are received, processing can take significantly longer. If you want to receive a response as quickly as possible, it’s worth filing your tax return early. March is a good time to do this. Note: Tax offices often do not process returns before then.

Questions for a tax advisor – Law firm in Düsseldorf and Oberhausen

Tax law is extensive and complex. The income tax return is arguably one of the most time-consuming tasks in tax filing. As soon as income and expenses go beyond a normal non-self-employed activity, things quickly become complicated. It is therefore understandable that taxpayers regularly have questions on this topic. Although online research often yields quick results for many topics, matters concerning one’s own finances require a bit more patience. Much of the information available online is incomplete, incorrect, or outdated.

We hope this article has already answered some of your most pressing questions. For further questions and advice, it makes sense to schedule an appointment with a qualified tax advisor or certified public accountant.

We would be happy to advise you at our offices in Düsseldorf and Oberhausen. Our team of qualified tax advisors and certified public accountants brings a wealth of experience and a genuine passion for their work. We are pleased when our clients leave the consultation feeling confident. Of course, we can also handle your income tax return upon request. Please feel free to contact us to schedule an appointment.