Tip Tuesdays: Why You Should File Your Income Tax Returns Every Year?

A colleague recently asked,

I understand why we should pay income tax. But what is the need for filing income tax returns every year?

Short answer: You’re building a history about yourself — that you exist and earn.

This piece of history proves useful in a variety of situations — when you’re applying for a loan with a financial institution, when you’re applying for a visa for traveling to a different country, and such. The earlier you start building this history the better. You should continue to file your income tax returns irrespective of whether you pay income tax or not (say when you take a break for higher education and therefore aren’t earning).

What do you think?

Tip Tuesdays is my initiative to share practical personal finance tips — every Tuesday. I’d be delighted if you could share a tip or two from your own experiences. Drop a comment to submit your tip. And, as always, do spread the word if you find this useful.

Further reading:

1. Tip Tuesdays: File Your Income Tax Returns on Your Own this Year
2. Tip Tuesdays: How to Find the Ward and Circle Number for Filing Your Income Tax Returns?
3. Ask the Readers: How Can I Get a [Duplicate] Copy of My Acknowledged Income Tax Returns?
4. Tip Tuesdays: Before You Submit Your Proofs of Investment or Expense for Income Tax Savings, Make a Photocopy of All Your Receipts
5. Tip Tuesdays: Investing Just to Avoid Paying Income Tax is a Really Bad Idea

Tagged as: income tax, tip tuesdays