The tax year, also referred to as the tax period, is a 12-month period designated by a government wherein individuals and businesses compute and file their taxes. In many countries, this period aligns with the calendar year (January 1st to December 31st), while other nations may dictate alternative start and end dates. For instance, the United Kingdom uses April 6th of one year to April 5th of the next year as its tax year. Tax liabilities, deductions, and payments for a taxpayer must be calculated based on their income and expenses occurring within the designated tax year. For instance, if John receives a salary of $50,000 during the 2023 calendar year, he will report this income for the 2023 tax year when filing taxes. Similarly, a company operating its financial year from July 1, 2022, to June 30, 2023, would file taxes for the 2023 tax year based on this timeframe. Understanding the tax year relevant to your jurisdiction ensures accurate financial planning and adherence to regulatory obligations. Missing deadlines linked to the tax year could lead to penalties and interest charges. Proper tracking and documentation of transactions during the tax year simplify the process of compiling and submitting tax returns.