An income statement is an official statement of a taxpayer about the income received by a taxpayer. The person who filed the income statement is called the declarant. Based on the income statement and the current tax rates, the tax authority exercises control over the amount of tax payable.
According to the Tax Code, a taxpayer’s income statement must contain information about the objects of taxation, about his income and expenses, sources of income, the tax base, tax benefits and the calculated amount, as well as any other information serving for the calculation and payment of tax. A taxpayer’s lack of income for a specified reporting period, generally speaking, does not exempt him from filing an income statement, unless otherwise provided by law.
The income statement must be filed by persons carrying out entrepreneurial activities without forming a legal entity, including notaries, lawyers, tutors, housekeepers. Entrepreneurs and organisations are required to file returns even with zero income.
Let us figure out which categories of citizens should report their income and in and in what form the income statement should be submitted.. Under the law, the income statement forms the preparation of a multi step income statement for the tax period that comes after the tax period in which they were made public. And before that, the income statement forms of the definitions approved earlier are valid. However, tax authorities recommend submitting an income statement in a new form.
How to prepare an income statement: Sample income statement filling procedure
An income statement consists of 8 sections and three annexes, containing calculations of certain types of income (expenses). Appendices to the income statement are filled out and submitted only if there is income, the calculation of which is contained in them. They are considered an integral part of the income statement and are invalid without it. General requirements that should be followed when drawing up a sample income statement:
- The income statement and its annexes shall contain all the information provided for it, except for cases directly indicated in the income statement and its annexes.
- If any line of the income statement and its additions is not filled in due to the lack of information (operations, amounts), then dashes are put in this line (if the income statement is presented in electronic form, the corresponding lines are left blank).
- Indicators in the sections of the income statement and its annexes are put in dollars with cents.
- The income statement and its annexes are filled out in such a way as to ensure the free reading of the text (numbers) and the preservation of these records for the prescribed retention period of the statements (in print, with blue or black ink or ballpoint pens). Pencil filling is not allowed.
- Income statements and its annexes should not contain erasures, blots, corrections, additions, and strikethroughs. Text or numbers that cannot be read due to damage to the pages, scuffs, ink, or other liquid filling are not allowed.
- The accuracy of the income statement’s data and its annexes is confirmed by the handwritten signature of an individual – a taxpayer or a person authorised to fill out the income statement.
- In the line “General information,” the corresponding type of income statement is indicated. At the first submission of the income statement, we select the type “Reporting,” if errors (inaccuracies) are detected before the deadline for submission – “Reporting new,” and if after the specified period – “Clarifying.”
- The traditional income statement indicates the reporting tax period (calendar year). The quarter is not reported – it is recorded only if an income statement is submitted based on the results of the reporting quarter in which economic activity began, or the transition to the general taxation system.
- During the correction of errors independently identified in the previously submitted income statement, the reporting tax period is indicated, which is specified.
- What items appear on the income statement about the taxpayer:
- The name of the taxpayer;
- Social Security Number or series and number of the passport (for those individuals who, because of their religious beliefs, refuse to accept the registration number and have officially notified the relevant regulatory authority and have a mark in the passport);
- Tax address;
- Postal code and, optionally, contact phone number and email;
- Residential status of a taxpayer (resident, non-resident);
- Payer category (the person engaged in independent professional activity, the person who stopped entrepreneurial activity during the reporting year).
How to prepare an income statement: Where to submit an income statement
The taxpayer submits an income statement for the reporting tax period within the prescribed time frame to the regulatory authority at his tax address. If the taxpayer, following the norms of the current legislation, is obliged to submit an annual income statement, but at that time does not live at the place of registration, then this reporting form is still provided to the supervisory authority.
Found an error after sending the income statement?
In this case, submit a “new statement” income statement and correct the errors. You can send a new report as many times as you like until the last day of filing the reporting. Even if the income is underestimated, there will be no penalty. After the deadline for submitting the reporting has ended, the clarifying income statement must be submitted as a separate document with the status of “clarifying”. Non-critical mistakes made in the income statement for the previous period can be clarified when submitting the next statement. For example, if the income for the third quarter was overestimated or incorrectly calculated, and the taxes were overpaid in the third group, the data can be specified in the income statement for the year. The overpayment can be returned or credited to future payments on the taxes.
Suppose you have understated income and underpaid some taxes. It is better to submit the clarification in a separate document as soon as you find errors – this way, the fine will be less. If you independently find and correct an error in the income statement, the penalty begins to accrue 90 calendar days after the deadline for paying tax for the period in which there was an error. If you filed an income statement in which you incorrectly calculated the single tax, but corrected errors in the reporting for the current period within 90 days, you would only need to pay the amount of underpayment.
An electronic income statement can be sent to the taxpayer’s office through any online reporting service. How to understand that the tax office has received your statement: after submitting, you will receive receipt number 1 – this means that your report has been sent to the tax office. Acceptance of the tax income statement is confirmed by receipt with the status “accepted”. The deadline for sending the report is the last hour of the last day of filing the reports. We do not recommend waiting until the last minute – the tax authorities’ servers may not work, and you will be late submitting reports. You will have to fill out two copies of the income statement at once on paper. You can take it to the tax office in person or send it to an authorised person. The inspector puts a mark “accepted”.
By registered mail with return receipt and a list of attachments. You need to send a letter no later than five calendar days before the last submission date of reports. But much earlier is better. If there are errors in the income statement, the tax authorities will not accept it. The inspector will send a reasoned refusal within five working days from the date of receipt of the statement, and you will need time to correct errors and submit a report.
Reasons for refusing to accept the income statement
Errors in the sole proprietorship data – in the full name and address, group, etc., the income statement may not be accepted even due to an annoying typo, so be careful. The report will not be accepted if the report’s period is not specified or incorrectly specified, or the entrepreneur’s signature is not present. You cannot be denied an income statement with zero values. If you submit electronic reporting and make mistakes, the refusal receipt will indicate the errors to you.
Exemption from income statement
The taxpayer’s obligation to submit an income statement is deemed fulfilled if the taxpayer received income:
- From tax agents who are not included in the total monthly (annual) taxable income;
- Only from tax agents, regardless of the type and amount of accrued (paid, provided) income;
- From transactions of sale (exchange) of property, donation, with notarization of contracts for which the tax was paid;
- In the form of inheritance items that are taxed at “a zero tax rate” or from which tax has been paid.