On frequent occasions, receipts do provide legal proofs of transactions that have taken place. They are always given to the buyer for goods or services bought. Similarly, the seller also keeps a copy of the same transaction to be used as a reference. In the same way, Tax Receipts provides proof of tax deductions made at the end of a tax period. At the same time, they provide solid evidence and acknowledgment of transactions that took place during the taxation period.
Tax Receipts are essential, especially when you are preparing your annual taxes. Generally, taxes are essential to the growth of our economy. Therefore, if we comply with them, we improve our chances of leaving a better life.
Other than taxes, you will also need the Tax Receipts when giving out donations and charities. This is because they will provide proof of donation hence exempting you from specific taxation. Now that you’ve known what Tax Receipt is and its purpose let’s take a look at some of its components.
Components of a Tax Receipt
Basically, Tax Receipt contains more or less similar components. Remember that the receipts are used for common agenda- filling out income taxes. Therefore, some of the most common components you are likely to find in the Tax Receipts includes the following:
- The amount of transaction
- The date of the transaction
- The transaction details
- The date in which the receipt is being issued
- The contact details of both parties involved in the transaction
- The identical receipt number
- Space for signatures
What’s the difference between Tax Receipt and Tax Invoice?
Ideally, it’s very easy to confuse the tax receipt and tax invoice. After all, they all contain more or less similar information. At the same time, they are all legal documents. However, the two do have a slight difference. A tax invoice, also known as tax statement is a document that contains all transaction details of a given taxation period. The invoice allows all transactions, such as payments, charges, or refunds, to be made at a given period of time.
On the flip side, a tax receipt is a document that indicates an already made payment. In other words, it serves as a proof of tax already paid.
In a nutshell, the difference between a tax invoice and a tax receipt lies in the timeline. While the prior comes before tax payments, the latter often come after payments have been made.
Types of Tax Receipt
According to experts, there are various kinds of Tax Receipt. These include charitable tax receipts, tax-deductible donation receipts, current tax receipts, child care tax receipts, among others.
Charitable Tax Receipt
A Charitable Tax Receipt is used when giving out charitable donations. When writing this specific type of receipt, you need to pay close attention to essential information such as the date of donation, the amount donated in cash, description of goods donated, receiver’s name and address, and signature. Depending on the state, these receipts can exempt you from paying taxes.
Current Tax Receipt
This refers to a receipt that is received by the government from all sources of personal earnings. It includes the sum of personal taxes, as well as taxation imposed on imports, corporate income, and production. Usually, these receipts contain pertinent details such as the purpose of collection, property details, and amount of collection, name, date, and official signatures.
Child Care Tax Receipt
The Child care Tax Receipt refers to receipts that account for all child care expenses that were provided for a child within the taxation period. This tax receipt often contains the caregivers’ resident location, Social Security Number, among other details. It’s important to know that these receipts are often incurred when you or your spouse or common-law partner pays a third party to take care of your child while you engage in other businesses such as work, school, etc.