Answer to Question #74469 in Accounting for Isabelle

Question

Describe the key features of organisational policy and procedures relating to the preparation of tax documentation for individual taxpayers.

Answer 1

From the taxpayer sense, accounting would involve the tracking of all funds coming in and out of the persons' possession regardless of the purpose, including personal expenses that have no tax implications. Tax accounting focuses solely on items such as income, qualifying deductions, investment gains or losses, and other transactions that affect the individual’s tax burden. This limits the amount of information that is necessary for an individual to manage an annual tax return, and while a tax accountant can be used by an individual, it is not a legal requirement.