Office Address
131 Moat lane Yardley,
Birmingham ,B26 1tw
Phone Number
(+1) 630 2015747
(+44) 770 0100316
Email Address
info@zisconsultants.com
131 Moat lane Yardley,
Birmingham ,B26 1tw
(+1) 630 2015747
(+44) 770 0100316
info@zisconsultants.com
Table of content
Filing an income tax return can be overwhelming, especially for non-salaried individuals such as freelancers, business owners, or rental income earners. This article is designed to provide a detailed and easy-to-follow guide for non-salaried persons to successfully file their income tax returns. Whether you earn through multiple income streamsor run a small business, understanding the filing process is crucial for complying with tax laws while optimizing your deductions. By the end of this guide, you’ll have a clear understanding of the process, the documents you need, available deductions, and the platforms you can use to file your return.
Hire Us For Your Tax Planning And Compliance
First, you need to register using your country's official tax portal. For example, in Pakistan, it's the Federal Board of Revenue (FBR) portal, and in the USA, it's the IRS website. You are required to provide personal details, including your name, National ID number (for Pakistan) or Social Security Number (for the USA), along with your contact information and income details. After registration, you'll receive login certifications to access the portal. The step is important as it allows you to submit your tax return electronically, track your filing status, and make necessary corrections later.
As a non-salaried individual, your income might come from various sources, including freelance income, rental properties, business revenue, or investments. Collect all necessary income documentation, such as bank statements, receipts, invoices, contracts, and rental agreements. Each document should prove income and ensure you correctly report your earnings. Gathering income information is required as your report's income directly impacts your tax liabilities. Gathering income information is important to account for every source of income and keep these documents well-organized in case the tax authorities request them for verification.
Hire Our US Tax Experts for Effective Tax Planning
After gathering all your income documents, you need to compute your total income for the tax year. Add up your income from all sources, including earnings from business operations, freelance jobs, property rentals, or other sources of non-salaried income. Make sure your calculations are correct, as failing to report all income may result in penalties or audits. Also, consider non-cash income, such as trade exchanges or digital assets (like cryptocurrency), which may also be taxable depending on the regulations in your country.
Non-salaried individuals are eligible to claim a variety of deductions and exemptions to lower their taxable income. Deductions and exemptions may include business-related expenses such as office supplies, transportation, marketing, and utility bills related to business operations. Home office deductions (if you work from home), healthcare premiums, and charitable contributions can also be claimed as deductions. Investment-based exemptions like retirement savings, insurance premiums, or education savings may also apply. Be sure to research or consult a tax professional to maximize your deductible expenses and exemptions to reduce your tax bill legally.
Download or access the online tax return form specific to non-salaried individuals in your country. For example, in Pakistan, the FBR portal provides a separate tax return form for individuals with income from property or business. Carefully fill in all the details, including your income figures, deductions, and exemptions. Some platforms provide guided forms that calculate your taxes based on the data entered, which minimizes human error. However, it's important to double-check all entries, as even a minor mistake could result in delays, fines, or rejections. Once you know the form is correct, review it entirely before submission.
After completing and reviewing the tax return form, submit it electronically through the tax portal. Upon submission, the system will calculate your tax liability. If the taxes you owe exceed the amount you’ve already paid (such as through estimated tax payments), you’ll be required to pay the remaining balance. Tax submission can usually be done online via bank transfer, credit card, or other payment methods available on the portal. Make sure to complete your payment before the deadline to avoid any late fees or interest charges. Once submitted, you’ll receive a confirmation receipt or tracking number that you should keep for your records.
Recommended: How To File Income Tax Return In Pakistan?
Non-salaried individuals must file income tax returns if their annual income exceeds the taxable threshold set by their country's tax authorities. The point varies depending on local tax laws and may change annually. Non-salaried income typically comes from various sources, including.:
Earnings from self-employment, owning or operating a small business, or providing professional services.
Income earned from freelance work or gigs, such as consulting, writing, graphic design, or any contract-based work.
Income earned from renting property, whether it's for residential, commercial purposes, or land leases.
Profits from investments, including dividends, interest, stock trading, or capital gains from asset sales.
If your total income from these sources exceeds the taxable limit, you are legally required to file a tax return and report all earnings.
Recommended: Taxing Companies That Outsource For Startups
To file your income tax return as a non-salaried individual, it's important to gather all relevant documents to ensure correct reporting. These include:
Bank statements showing deposits help verify your income and financial transactions throughout the tax year. Collect bank statements for all accounts that receive payments or income from various sources.
Invoices and contracts for freelancers and business owners are official proof of earnings. If you earn rental income, rental agreements and payment receipts must correctly report your income from properties.
Maintain receipts for business-related expenses such as supplies, equipment, travel, and utilities. If you intend to claim home office deductions, make sure to keep records of utility bills, internet receipts, and any other documents related to maintaining your workspace at home.
If you have investments, keep records of dividends, interest statements, and capital gains or losses. For property deductions, ensure you have documents like purchase agreements, maintenance receipts, and proof of property taxes paid.
Recommended: What Is An Employer Identification Number?
Non-salaried individuals are eligible for various tax deductions. Some of the most frequently claimed deductions include:
Expenses related to operating your business, including office rent, internet services, and marketing costs.
If you operate from home, you might qualify to claim deductions for expenses related to your home office.
If you operate from home, you might qualify to claim deductions for expenses related to your home office.
Many countries offer online platforms where non-salaried individuals can file their returns. In Pakistan, you can easily file your income tax returns through the FBR's online portal. In the USA, the IRS provides e-filing services for convenient tax submissions. Third-party services like TurboTax or QuickBooks can simplify the process, especially for business owners and freelancers.
Hire Us For Your Company Registration And Compliance
It's crucial to submit your income tax return before the deadline set by your country's tax authority to prevent penalties.
Each country has a specific deadline for tax filing, which may vary depending on whether you're a salaried or non-salaried individual. Missing the deadline can result in damages, including a fixed fine, a percentage of the taxes owed, or interest on unpaid taxes. Sometimes, long failure to file can lead to legal action or audits. It's important to check if there are any extensions or special provisions for non-salaried individuals, especially in cases where circumstances (like business losses or medical emergencies) might earn additional time for filing. To avoid these issues, mark the deadline on your calendar and make sure your documents are ready well in advance.
Recommended: Which Company Registration Is Best For A Startup?
Suppose you are a freelance graphic designer earning $50,000 through various online platforms and clients. As a freelancer, you're eligible to deduct a variety of business-related expenses.
For instance, you can deduct $2,000 for setting up and maintaining a home office, $500 for software subscriptions (like design tools), and $1,000 for travel expenses related to client meetings. Other expenses, such as internet charges, marketing fees, or professional development programs, can also be deducted if they are business-related. By applying these deductions, you lower your taxable income, which in turn reduces the amount of tax you are required to pay. Maintaining records of these expenses throughout the year is important to appropriate them without issues during tax filing.
A small business owner running a local retail shop must carefully calculate total sales revenue for the year and then subtract business-related expenses to determine the taxable income. Common deductible expenses for a retail business include rent for the shop, utility bills, inventory costs, marketing expenses, and staff salaries, if applicable. For example, if the business earned $100,000 in sales and incurred $40,000 in reducible expenses, the taxable income would be $60,000. The owner must keep detailed records of all transactions and expenses, as failure to do so may result in an audit or difficulty in claiming fair deductions. Maintaining clear documentation can also help identify possible areas for tax savings, like depreciation on equipment or repairs to the shop.
Recommended: Best Way To Track Expenses For Small Business
Filing income tax returns for non-salaried individuals doesn’t have to be challenging. By following a systematic approach—gathering the right documents, understanding the eligibility criteria, and using online platforms—you can file your return smoothly and maximize your tax benefits. Staying organized throughout the year will make the process much easier and help you claim all the deductions you’re entitled to. Remember to file on time and seek professional help to avoid errors and penalties. Proper tax planning and filing can ensure observance and help you keep more of your hard-earned income.
Non-salaried individuals must report all sources of income, including business revenue, freelance earnings, rental income, investment income, and any side gigs. Even if the income is not derived from traditional employment, it must still be declared for tax purposes.
Yes, non-salaried individuals can claim deductions to reduce their taxable income. Common deductions include:
In many countries, non-salaried individuals who do not have taxes withheld from their earnings (unlike salaried employees) may need to pay estimated taxes quarterly. This helps them avoid a large tax bill at the end of the year and prevents underpayment penalties.
If you miss the tax filing deadline, you may face penalties and interest on any taxes owed. Failure to file on time can also result in a late filing fee or other legal consequences. It’s important to file as soon as possible or request an extension.
Most tax authorities provide online platforms where non-salaried individuals can easily file their tax returns. These platforms often offer step-by-step guidance and auto-calculation features. Alternatively, third-party tax software and services are available to simplify the process.