tax year

A tax year is the 12-month period used by governments to track income and calculate taxes owed. In many countries, it aligns with the calendar year (January 1 to December 31), but some regions or businesses may have different fiscal years. During this period, individuals and companies record their earnings, expenses, and deductions to determine how much tax they must pay. After the tax year ends, they file a report called a tax return, which summarizes their financial activity and establishes their tax liability or refund.