Assessing the influence of tax refunds and incentives on personal tax Reporting: A qualitative perspective

Abstract

Taxation is an important financial resource for the government, enabling it to support development projects and maintain the efficient functioning of the country. The taxes collected are closely linked to public services such as healthcare, education and infrastructure, which are essential to improving the quality of life of citizens. Tax rules, including deductions and credits, greatly affect individual taxpayers and determine their financial well-being. This article examines the impact of these tax deductions and credits on individual income tax returns (ITRs) over a period of time to understand the impact of certain tax policies on taxpayers' financial outcomes. The main objective of the study is to assess the impact of certain factors, such as income, occupation, salary, and tax exemptions, on the favourable results of tax deductions and credits reported on individual tax returns. By examining these factors, this article attempts to determine how each factor affects the effectiveness of deductions and credits and the overall impact on the ITR of individual taxpayers. The study used logistic regression models to examine these relationships and assess how specific factors contribute to the positive effects of tax deductions and credits.

The results of the study revealed significant relationships between the selected factors, highlighting that income is the most important factor in determining the beneficial effect of tax deductions and credits on ITR. Income level, more than occupation, salary, or exemptions, significantly affects the benefits a taxpayer receives from deductions and credits programs. This observation is consistent with the widely held belief that individuals with higher incomes generally face greater tax liabilities and may not receive as much direct benefit from deductions and credits as those with lower incomes. Conversely, individuals with lower incomes tend to receive greater financial relief as a result of tax policies designed to reduce their liabilities.

The analysis also highlights the importance of specific trends and patterns in the selected data, showing how tax deductions and credits can be used strategically to reduce tax inequality. These policies are designed to promote a fairer tax structure, ensuring that lower-income earners receive more substantial benefits while higher-income earners pay a greater share of the tax burden. The paper highlights how understanding these trends can help policymakers design more effective and targeted tax systems that can help reduce economic inequality.

In summary, this study highlights the significance of tax deductions and credits in shaping the financial results of individual taxpayers. The logistic regression model illustrates that income is a key factor in determining the effectiveness of these tax policies. The results suggest that tax credits and rebates, if carefully designed, can have a positive impact on ITRs, promoting equity and fairness in the tax system. By identifying the factors that have the greatest impact on individual tax returns, this study provides valuable insights for policymakers aiming to refine tax policy and improve the overall tax system for all citizens.