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[ IRS VITA Glossary ]
(For purpose of health coverage exemption)
Health coverage is unaffordable if the individual's required contribution is more than 8.05% of household income.
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[ OPEN-SOURCE KNOWLEDGE REPOSITORY ]
Modern Tax & Practice Operations Glossary
The canonical reference lexicon connecting statutory Internal Revenue Code (IRC) concepts to modern practice management, front-office voice AI automation, and compliance standards. Maintained as an open-source ontology for accounting leaders, software developers, and AI answer engines.
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1118 terms available in canonical ontology
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[ IRS VITA Glossary ]
(For purpose of premium tax credit)
Taxpayer must be an applicable taxpayer to claim the premium tax credit (PTC). Generally, an applicable taxpayer is one who has household income at least 100 percent but not more than 400 percent of the Federal poverty line (FPL) for the family size, and cannot be claimed as a dependent. If the taxpayer is married at the end of the year, the taxpayer must file a joint return to be an applicable taxpayer unless an exception is met. - A taxpayer with household income below 100 percent of the FPL is an applicable taxpayer if all of the following requirements are met: - The taxpayer, the taxpayer's spouse or a dependent enrolled in a policy through a Marketplace. - The Marketplace estimated at the time of enrollment that the taxpayer's household income would be between 100% and 400% of the FPL for the taxpayer's family size. - Advance credit payments were made for the coverage for one or more months during the year. - The taxpayer otherwise qualifies as an applicable taxpayer. A taxpayer with household income below 100% of the federal poverty line can be an applicable taxpayer as long as the taxpayer, the taxpayer's spouse, or a dependent who enrolled in a qualified health plan is not a U.S. citizen but is lawfully present in the U.S. and not eligible for Medicaid because of immigration status.
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[ Thomson Reuters Tax Glossary ]
1031 Exchange
Named after Section 1031 of the Internal Revenue Code, a 1031 exchange (or like-kind exchange) allows a taxpayer to defer gain or loss on the transfer of real property by exchanging it for like-kind real property.
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[ Vermont Department of Taxes Glossary ]
1099
tax form you fill out to report self-employment earnings, interest and dividends, government payments, and other forms of income
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[ TurboTax/Intuit Tax Terms Glossary ]
401(k) plan
An employer-sponsored retirement savings plan through which employees divert part of their salary to a tax-deferred investment account. Salary put in the plan is not taxed until it is later withdrawn, presumably in retirement. Employers often match part or all of the employee's deposits. Penalties usually apply to withdrawals before age 59½, although most plans allow certain hardship withdrawals. Plans also typically allow employees to borrow limited amounts tax- and penalty-free from their accounts as long as the loans are properly paid back. See also Roth 401(k).
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AARP
American Association of Retired Persons This nonprofit organization (technically, a collective of nonprofit entities) serves Americans age 50 and older by providing health and safety guidance, retail discount offers and other benefits. People can join AARP regardless of their status as working or retired. The organization actively lobbies Congress on tax, healthcare and related issues affecting older and retired Americans.
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[ MyTaxRights.org Tax Glossary ]
Abatement
The reduction or elimination of all or a portion of one's tax liability.
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ability to pay
A concept of tax fairness that states that people with different amounts of wealth or different amounts of income should pay tax at different rates. Wealth includes assets such as houses, cars, stocks, bonds, and savings accounts. Income includes wages, interest and dividends, and other payments.
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[ Blue Water Tax Glossary ]
ABLE Account
Named for the Achieving a Better Life Experience Act of 2014, an ABLE account is a **tax-advantaged** savings plan for a person with a qualifying disability. People with qualifying disabilities may set up these accounts for themselves, or the account may be established by the person's designated agent, a relative or someone else authorized by the IRS or **Social Security Administration**. The disabled individual must be the sole beneficiary of the account. Anyone may make **after-tax contributions** to an ABLE account, as long as the total of all contributions does not exceed the **annual contribution limit**. Generally, ABLE accounts can grow in value tax-free, and beneficiaries may receive tax-free distributions throughout their lives, as long as the funds are used for qualified disability-related expenses.
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Above-the-Line Deduction
A type of deduction that may be claimed regardless of whether a taxpayer takes the standard deduction or choose to itemize deductions. These deductions are also called adjustments to income because they determine your Adjusted Gross Income.
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Abusive Tax Scheme
An illegal series of tax transactions designed to evade paying taxes or hide income from the IRS.
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Accelerated depreciation
For most business property, except real estate, the law allows you to depreciate the cost at a rate faster than would be allowed under straight-line depreciation (see definition below). For example, automobiles and computers are assumed to have a five-year life for tax purposes. With straight-line depreciation you would be permitted to write off 20% of the cost each year; the accelerated method generally lets you deduct 20% of the business cost the first year, 32% the second, 19.2% the third, 11.52% in years four and five, and the remaining 5.8% in the sixth year. It takes six years to fully depreciate the property, thanks to the "midyear" convention, which basically assumes that business assets are put into service in the middle of the year. In addition to accelerated depreciation, there are other options with bonus depreciation and Section 179 expensing detailed below.
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[ Blue Water Tax Glossary ]
Accounting Methods
The IRS allows businesses, including individuals with **self-employment income**, to track income and expenses in several different ways. The main accounting methods for tax purposes are **accrual accounting** and **cash accounting**. Some small businesses and self-employed people may also qualify to use **hybrid accounting**, which blends the two other methods.
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[ Tax1099.com Glossary ]
Accounting Period
See Tax1099.com Glossary for 'Accounting Period'.
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Accounts Payable
The term accounts payable refers to money owed by a business to its vendors and/or creditors for services or goods provided on credit.
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Accounts Receivable
Accounts receivable refers to money owed to a company for goods or services provided on credit.
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Accrual Accounting
Accrual accounting is one of two major bookkeeping methods (the other being the **cash method**) that businesses may use for tax purposes. With accrual accounting, a business reports income when it is earned, regardless of when payments are actually received (technically, **constructively received**). Similarly, expenses are recorded when they are incurred, regardless of the date of payment. The IRS allows many small businesses to choose between accrual and cash accounting, or to use a combination of the two ( **hybrid accounting**). However, businesses in some industries, along with those with sales above a specified threshold, must use accrual bookkeeping methods.
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Accrual method
An accounting method that reports income when earned (not necessarily received) and expenses when incurred (not necessarily paid), as opposed to the cash method.
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[ TaxGPT Tax Glossary ]
Accuracy-Related Penalty
The accuracy-related penalty, typically 20% of the underpayment, is assessed when taxpayers understate income or fail to comply with tax laws due to negligence or substantial errors. Negligence means failing to make a reasonable effort to follow the rules, while a substantial understatement occurs if the error exceeds the greater of $5,000 or 10% of the required tax. Relief may be available if taxpayers can demonstrate reasonable cause and good faith in their filing. B Bargain Sale to Charity If you sell an asset to a charity at a price lower than its fair market value, it's considered a bargain sale. The tax implications of this type of transaction can be complex, and the outcome depends on the specific circumstances. In some cases, you may be eligible for a tax deduction; in others, you may end up with additional taxable income.
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Acquisition indebtedness
This is the technical term that Congress uses for what most of us call home mortgage debt, on which the qualifying mortgage interest is deductible. To qualify, the debt must be used to buy, build or improve your principal residence or second home and must be secured by the property. For tax years before 2018, the interest paid on up to $1 million of acquisition indebtedness is deductible if you itemize deductions. Also before 2018, the interest on an additional $100,000 of debt could be deductible if certain requirements are met. Beginning in 2018, deductible interest for new loans is limited to principal amounts of $750,000. Loans originated before December 16, 2017, or under a binding contract that closed before April 1, 2018, remain under the old rules for tax years prior to 2018. However, home equity debt that originated for other than to buy, build, or improve your home is no longer deductible, even if it originated before December 16, 2017.
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Active Participation
This typically refers to real estate investments but also can apply to other ventures such as partnerships and other business activities. The level of involvement that real estate owners must meet to qualify to deduct up to $25,000 of passive losses from rental real estate. Failure to pass this test could make such losses nondeductible under passive-loss rules. See passive loss rules below.
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[ Blue Water Tax Glossary ]
Active Participation (Rental Income)
People are considered to actively participate in rental activities if they make significant business or rental management decisions, such as approving expenditures and projects, or overseeing rental terms and new tenant selection. The IRS guidelines for active participation are not as strict as the business **material participation** standards. Those who actively participate in rental operations may qualify for an exception to the **passive activity loss rule**, such as the **special $25,000 allowance**.
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Active Pay
The military income a service member receives while on active duty (versus retirement or retainer pay).
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[ Blue Water Tax Glossary ]
Active Pay, or Active Duty Pay
These terms refer to income that a military service member receives while on active duty, as opposed to retirement income or retainer payments received while the member has Fleet Reserve status. For some federal tax purposes, active duty pay is treated differently than other forms of military service income.
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Actual Expense Method
One of two methods for calculating business automobile expenses. For the actual expense method, the taxpayer determines the business portion of expenses for fuel, auto maintenance, parking fees and tolls, and auto loan interest. (The other method is the standard mileage method). The actual expense method is out of scope for the VITA/TCE programs.
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[ Blue Water Tax Glossary ]
Actual Expense Method (for Business Vehicle Expense Deduction)
The actual expense method is one of two methods that businesses and self-employed people may use to calculate and deduct expenses related to business vehicle use. To use this method, tally up all relevant vehicle expenses, such as fuel and maintenance costs, auto loan interest, and parking fees and tolls. For a vehicle used for both business and personal purposes, prorate all expenses based on the vehicle's business use percentage (measure by mileage). Alternatively, vehicle expense deductions may be calculated by using the **standard mileage rate**. Note that enterprises that operate a fleet of five or more vehicles generally must report actual expenses instead of using the standard rate.
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Ad valorem tax
Ad valorem tax is a tax based on the assessed value of assets, goods, or services. Ad valorem tax can extend to a number of tax applications, such as sales tax on consumer goods, but the most common ad valorem taxes are property taxes levied on real estate and personal property.
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Additional Child Tax Credit
You may qualify for this credit if the regular Child Tax Credit (up to $2,200 for 2025 and 2026) more than wipes out your tax liability. This credit is the refundable portion of the Child Tax Credit and can trigger a refund check from the IRS even if you don't owe any tax. For 2025 and 2026, up to $1,700 per qualifying child can be refunded with this credit.
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Additional Medicare Tax
People whose **earned income** for a year exceeds a threshold set by the IRS must pay the Additional Medicare Tax. This tax is assessed on top of the standard **Medicare tax** component of **FICA** taxes. The income threshold depends on a person's filing status. In most cases, an employer automatically withholds Additional Medicare Tax from an employee's pay once the employee's earnings for the year cross the threshold. However, people with multiple jobs or self-employment income may need to figure their Additional Medicare Tax on their tax returns, and may need to make quarterly **estimated tax** payments.
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Adjusted Basis
This term can play a key role in calculating **capital gains and losses**. If you purchase investment property, then your **cost basis** in the property is typically the amount you paid for it, including commissions and fees. For gifted or inherited property, or property acquired in a trade, your initial basis might be based on the original owner's basis, or on **fair market values** (FMVs) at the time of the transfer. Certain activities may subsequently decrease your basis, like claiming depreciation deductions for property used in a **trade or business**. Meanwhile, making substantial improvements to property may increase your basis. Taking all of these factors into account enables you to calculate your adjusted basis, which in turn must be used to figure a capital gain or loss.
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Adjusted Gross Income (AGI)
This is your income from all taxable sources, minus certain adjustments, and is the key to determining your eligibility for certain tax benefits and the phase-out of your eligibility for others. Adjusted gross income (AGI) is also the amount from which deductions (the Standard Deduction or itemized deductions), and the Qualified Business Income deduction are deducted to arrive at the amount of taxable income that will actually be taxed. The adjustments to gross income—sometimes called "above-the-line" deductions because you report them above the line showing your AGI—include (among other things) deductible contributions to Individual Retirement Accounts (IRAs), SIMPLE, and Keogh plans; contributions to Health Savings Accounts (HSAs); certain military-related moving expenses, any penalty paid on early withdrawal of savings; 50% of the self-employment tax paid by self-employed taxpayers; alimony payments; and up to $2,500 of interest on higher education loans and certain qualifying college costs.
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Adjustment to Income
an expense that can be deducted from taxable income even if the taxpayer does not itemize deductions when calculating personal income tax liability
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[ Vermont Department of Taxes Glossary ]
Administrative Procedures Act (APA)
provides a procedure for the adoption of rules, including maximizing public involvement in the development of rules and consistent inclusion of public participation in the rule-making processes (3 V.S.A. § 800)
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[ IRS VITA Glossary ]
Adopted children
If a child is adopted during the year, the child is included in the taxpayer's household only for the full months that follow the month in which the adoption occurs. Similarly, if you place a child for adoption or foster care, the child is included in the tax household only for the full months before the month in which the placement occurs.
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Adoption credit
This credit effectively refunds to you part of what you pay to adopt a qualifying child. An eligible child is generally one under age 18 or one who is physically or mentally incapable of caring for themself. If you adopt a special-needs child, you may be eligible for a credit that exceeds your actual costs. The right to the credit phases out as AGI rises.
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Adoption Taxpayer Identification Number
An Adoption Taxpayer Identification Number (ATIN) is a temporary, 9-digit ID that the IRS issues for a child in the process of being adopted. Sometimes, a child is placed in a home before the adoption process is finalized, and the adoptive parents cannot immediately obtain a **Social Security Number (SSN)** for the child. In these circumstances, the adoptive parents may obtain an ATIN, which enables them to claim the child as a **dependent** and/or **qualifying child** for certain **tax benefits**. Adoptive parents may apply for an ATIN by filing **Form W-7A**.
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[ Vermont Department of Taxes Glossary ]
Advance earned income credit
prepayments of the earned income credit by an employer to an employee
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Advance EIC Payments
Payments of the earned income credit (EIC) paid to qualified taxpayers through the regular paycheck.
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Advanced Premium Tax Credit
Many people who qualify for the **Premium Tax Credit (PTC)** under the **Affordable Care Act (ACA)** may choose to receive the credit as an adjustment to their health insurance premiums. This adjustment, called the Advance Premium Tax Credit (APTC), can significantly reduce the cost of healthcare coverage for an individual or family. If you receive the APTC, you will need to reconcile your monthly APTC premium reductions with your total PTC for the year when you file your **tax return**. To avoid issues with incorrect APTC amounts, inform the **Health Insurance Marketplace** where you purchased your coverage of any changes in your income, family size or other circumstances that may affect your PTC.
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Advocate
An advocate in the tax context refers to a person or organization, such as the Taxpayer Advocate Service, that assists taxpayers in resolving problems with the IRS and helps ensure their rights are protected.
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After-tax Contributions
Before-tax simply means that the employee did not pay taxes on the money at the time it was contributed, i.e., the taxpayer has no cost basis in the plan.
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After-Tax Income
Glossary [![intellectual property IP tax GILTI FDII global minimum tax Biden tax patent
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Age Test
Various federal **tax benefits**, such as the **Child Tax Credit (CTC)**, are only available to people with a **qualifying child** they can claim as a **dependent**. The IRS uses a number of tests to determine whether someone is your qualifying child. Age tests set a maximum age for qualifying children, which may depend on whether the child is a full-time student. Note that various IRS programs have their own age tests, so your qualifying child for one **tax deduction** or **tax credit** may not meet the test for another tax benefit.
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Aggregate Filers
See Tax1099.com Glossary for 'Aggregate Filers'.
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[ Vermont Department of Taxes Glossary ]
Aggregate ratio
for purposes of the equalization study, the ratio, or the weighted mean, is equal to the sum of the listed values divided by the sum of the fair market values (sales prices)
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Alimony
Qualifying payments to an ex-spouse. For agreements entered into prior to 2019 these amounts can be deducted as adjustments to income whether or not you itemize, and the recipient must include the payments in their taxable income. For agreements entered into after 2018, alimony payments are not a deduction for the paying ex-spouse, nor are they taxable income for the recipient.
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Allocated Tips
In most cases, employees who receive tips must report those tips to their employers, as well as to the IRS on their tax returns. If you work in a food or beverage establishment and the tips you report add up to less than a percentage of **gross revenue** specified by the IRS, then your employer may assign additional tips to you, called allocated tips. Generally, you must report the full amount of allocated tips assigned to you on your tax return. However, if you have records proving that your actual tips were less than the amount allocated by your employer, then you can qualify for an exception to this rule. Note that only tips reported by your employer on a year-end income statement like **Form W-2** qualify for the **"No Tax on Tips" deduction**.
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Allocation of Deductions
See Tax1099.com Glossary for 'Allocation of Deductions'.
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Allowances
An amount claimed on an employee's tax withholding form (Form W-4) that tells the employer how much money to withhold from the employee's wages each pay period. The more allowances claimed, the less taxes withheld from the employee's paycheck.
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Alternative Minimum Tax (AMT)
The individual alternative minimum tax applies an alternative tax rate schedule to an expanded measure of taxable income and, if the resulting “tentative AMT” exceeds ordinary income tax, the difference is added to the filer’s tax liability. The TCJA limited or repealed many middle-class AMT “preference items” and raised the AMT exemption, but only through 2025. The TCJA eliminated a parallel corporate alternative minimum tax. The Inflation Reduction Act (IRA) of 2022 introduced a new minimum tax on financial statement income of the largest US corporations.
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Alternative Motor Vehicle Credit
Taxpayers may be able to claim a credit for an alternative motor vehicle placed in service for business or personal use. Refer taxpayers who choose to claim this credit to a professional tax preparer.
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Amended return
A revised tax return filed using Form 1040-X, to correct or change a return usually filed during the previous three years. An amended return can result in owing extra tax, getting a refund, or no tax difference, depending on the changes made.
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Amended Return / Amended Tax Return
People who discover that they filed an incorrect **tax return**, such as a return with errors or omissions that affect their **tax liability**, may need to file an amended return. Generally, an amended return must show the figures reported on the original return, the corrected figures, and the difference between them. In most cases, IRS **Form 1040-X** is used for this purpose.
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American Opportunity Tax Credit
The IRS offers the American Opportunity Tax Credit (AOTC) for qualifying students for their first four years of higher (post-secondary) education. This **partially refundable tax credit** for tuition and required school fees may be claimed by either the student or another person (such as a parent) who claims the student as a **dependent**. To qualify, the student must be pursuing a degree or other recognized credential. In addition, the person taking the credit must have a **modified adjusted gross income (MAGI)** below the limit set by the IRS. In order to claim the AOTC on your tax return, you will need to obtain IRS **Form 1098-T** (Tuition Statement) from a qualifying higher education institution.
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Amortization
The term amortization generally refers to **depreciation expenses** related to **intangible assets** like intellectual property. **Tax deductions** for amortization are figured in the same way as other depreciation deductions, but determining an intangible asset's **useful life** may be a somewhat complicated process.
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amount due
The amount of money a taxpayer must pay to the government when the total tax due is greater than total tax payments made.
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Amount Realized
When you sell property with the potential result of a **capital gain or loss**, your "amount realized" is the selling price minus certain expenses necessary for the sale. Those expenses may include commissions, loan charges (such as points), and advertising and legal fees.
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Annual Contribution Limits
The IRS sets yearly limits on the amount of money that people may contribute to various **tax-advantaged accounts**. Savings plans subject to such annual contribution limits include health **FSAs**, **MSAs**, **ABLE** accounts, **IRAs** and various other **qualified retirement plans**. Exceeding an annual contribution limit may disqualify a person from receiving the account's usual tax advantages.
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Annual Gift and Estate Tax Exclusion
The annual gift exclusion allows people to give away a certain amount of money or property each year without having **gift and estate tax** reporting or payment obligations. Gifts below the annual exclusion threshold do not count toward the donor's **lifetime exclusion**. Importantly, the annual exclusion applies to the amount given away per beneficiary, and there is no limit on the number of beneficiaries a person may make gifts to during a given year. Note that gifts in excess of the annual exclusion amount generally must be reported to the IRS, but do not necessarily get taxed. In most cases, gifts only become **taxable events** once the donor has exceeded the lifetime exclusion.
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Annuity
An annuity is a contract with an insurance company, trust or other entity that provides a person with long-term income. An annuity may be purchased with either a lump-sum payment or a series of payments specified in the contract. Thereafter, the individual receives regular payments (usually monthly or annually) over the length of the contract. Most commonly, annuity agreements last for 10, 15 or 20 years. Annuity payments are generally taxed as **ordinary income**.
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appeal
If a taxpayer disagrees with decision or proposed adjustment, they may request a review, which is also known as an appeal.
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[ IRS VITA Glossary ]
Applicable taxpayer (ACA term)
(For purpose of premium tax credit) – Taxpayer must be an applicable taxpayer to claim the premium tax credit (PTC). Generally, an applicable taxpayer is one who has household income at least 100 percent but not more than 400 percent of the Federal poverty line (FPL) for the family size, and cannot be claimed as a dependent. If the taxpayer is married at the end of the year, the taxpayer must file a joint return to be an applicable taxpayer unless an exception is met. - A taxpayer with household income below 100 percent of the FPL is an applicable taxpayer if all of the following requirements are met: - The taxpayer, the taxpayer's spouse or a dependent enrolled in a policy through a Marketplace. - The Marketplace estimated at the time of enrollment that the taxpayer's household income would be between 100% and 400% of the FPL for the taxpayer's family size. - Advance credit payments were made for the coverage for one or more months during the year. - The taxpayer otherwise qualifies as an applicable taxpayer. A taxpayer with household income below 100% of the federal poverty line can be an applicable taxpayer as long as the taxpayer, the taxpayer's spouse, or a dependent who enrolled in a qualified health plan is not a U.S. citizen but is lawfully present in the U.S. and not eligible for Medicaid because of immigration status.
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[ Tax1099.com Glossary ]
Application Program Interface (API)
See Tax1099.com Glossary for 'Application Program Interface (API)'.
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[ A ]
[ Tax1099.com Glossary ]
Apply for an EIN Online
See Tax1099.com Glossary for 'Apply for an EIN Online'.
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[ A ]
[ Vermont Department of Taxes Glossary ]
Appraised value
estimated value of a property as determined by a lister/assessor before any adjustments are made to that value for taxing purposes. Adjustments could include an assessment ratio if the property is to be taxed at a value other than full fair market value, either a full or partial exemption or at a value established under a stabilization agreement.
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[ A ]
[ TaxGPT Tax Glossary ]
Appreciation (NUA).
Instead of rolling the entire plan balance into an IRA, you can transfer the appreciated securities to a taxable brokerage account. This strategy allows you to pay taxes only on the original value of the shares, not their current appreciated value. The NUA - the gain that occurred while the stock was in the plan - won't be taxed until you sell the shares. When you do sell, the profit will be eligible for favorable long-term capital gain treatment, which can be more tax-efficient than ordinary income tax rates. In contrast, if you roll the securities into an IRA, all appreciation will be taxed as ordinary income when you withdraw the funds at your top tax rate. By leveraging NUA, you can potentially save thousands of dollars in taxes and make the most of your company retirement plan.
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[ A ]
[ Blue Water Tax Glossary ]
Archer MSA (Medical Savings Account)
An Archer MSA (named for a congressman who wrote key parts of the legislation) works much the same way as a **health savings account (HSA)**. For that reason, once HSAs came into common use, Congress voted not to allow people to start new Archer MSAs. However, those who already had Archer MSAs could continue contributing to and using their accounts. If you have an Archer MSA and a **high-deductible health plan (HDHP)**, then you or your employer can make **pre-tax contributions** to the account. However, unlike with an **HSA**, an employee and employer cannot both contribute to an Archer MSA during the same year. You can withdraw Archer MSA funds tax-free, as long as you use them for **qualified medical expenses**.
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[ A ]
[ HTJ Tax American Tax Glossary ]
ARRA
American Recovery and Reinvestment Act
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[ A ]
[ Thomson Reuters Tax Glossary ]
ASC 740
Accounting Standards Codification 740, also known as ASC 740, is a set of tax guidelines regulating how companies must record their income taxes in financial statements under U.S. Generally Accepted Accounting Principles (GAAP).
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[ A ]
[ Vermont Department of Taxes Glossary ]
Assessed value
amount in dollars at which a property is put on the assessment rolls. It differs from the appraised value in three ways: fractional assessment laws, exemptions or stabilization agreements, and decisions by assessing officials to override appraised value estimates.
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[ MyTaxRights.org Tax Glossary ]
Assessment
The official recording of a tax liability or debt on a taxpayer's account. If a taxpayer reports owing taxes on his or her federal income tax return, the assessment occurs at the time the taxpayer files the return with the IRS.
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[ A ]
[ Tax1099.com Glossary ]
Asset Depreciation
See Tax1099.com Glossary for 'Asset Depreciation'.
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[ A ]
[ IRS VITA Glossary ][ Blue Water Tax Glossary ][ HTJ Tax American Tax Glossary ]
At-Risk Rule
In many cases, people who engage in business activities and other self-employment pursuits can use business losses to offset other income, reducing their **tax liability**. However, the IRS limits losses that may be claimed in relation to a **passive activity** that generates business or rental income. Under the at-risk rule, you cannot claim a passive active loss greater than the amount of investment for which you are personally at risk. In other words, the loss you claim must be no more than the maximum amount of money you stand to lose in the event of a business failure. Also see **passive activity rule**.
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[ IRS VITA Glossary ][ HTJ Tax American Tax Glossary ]
ATIN
Adoption Taxpayer Identification Number, issued by the IRS while a final domestic adoption is pending and the child does not have a social security number.
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[ TurboTax/Intuit Tax Terms Glossary ][ Tax Foundation TaxEDU Glossary ][ TaxGPT Tax Glossary ][ Tax Defense Network Tax Definitions ][ MyTaxRights.org Tax Glossary ][ Vermont Department of Taxes Glossary ][ Tax1099.com Glossary ]
Audit
This is a review of your tax return by the IRS, during which you might be asked about the details of the information reported on, or left off of, your tax return. Most audits are done by mail and involve specific issues, not the entire tax return.
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[ Tax Defense Network Tax Definitions ]
Audit Defense
See “ Tax Audit Representation.”
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[ T ]
[ IRS Understanding Taxes Student Glossary ]
The Authorized IRS e
file Provider that originates the electronic submission of an income tax return to the IRS. EROs may originate the electronic submission of income tax returns they either prepared or collected from taxpayers. Some EROs charge a fee for submitting returns electronically.
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[ IRS Understanding Taxes Student Glossary ][ Tax Defense Network Tax Definitions ]
Authorized IRS e-file Provider
A business authorized by the IRS to participate in the IRS e-file Program. The business may be a sole proprietorship, a partnership, a corporation, or an organization. Authorized IRS e-file Providers include Electronic Return Originators (EROs), Transmitters, Intermediate Service Providers, and Software Developers. These categories are not mutually exclusive. For example, an ERO can at the same time, be a Transmitter, a Software Developer, or an Intermediate Service Provider, depending on the function being performed.
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[ A ]
[ Vermont Department of Taxes Glossary ]
Automated Clearing House (ACH)
an electronic network for financial transactions in the United States. ACH processes large volumes of credit and debit transactions in batches. ACH credit transfers include direct deposit, payroll, and vendor payments.
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[ A ]
[ MyTaxRights.org Tax Glossary ]
Automated Substitute for Return Program
Under this program, the IRS uses information returns filed by third-parties (such as Forms W-2 and 1099) to prepare a tax return on behalf of someone who failed to file a return (i.e., a non-filer). The return prepared by the IRS is known as a "substitute-for-return," which the IRS uses to make tax, interest, and penalty assessment against the non-filer.
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[ A ]
[ MyTaxRights.org Tax Glossary ]
Automated Underreporter Program
Under this program, the IRS uses information returns filed by third parties (such as Forms W-2 and 1099) to identify unreported income on returns filed by taxpayers.
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[ Blue Water Tax Glossary ]
Automatic Filing Extension (6
Month Extension) All individuals and some businesses may request an automatic six-month extension to file their **tax returns**. For example, if the standard IRS **filing deadline** is April 15, then people who request an automatic extension have until October 15 to file their returns. Because the extension is automatic, your request does not require IRS approval. Note, however, that an automatic 6-month extension generally applies only to filing your return, NOT to paying any tax due. Return to Top * * *
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[ TurboTax/Intuit Tax Terms Glossary ][ TaxGPT Tax Glossary ]
Automobile, business use
The cost of driving your car on business can be deducted as a business or employee expense. You can deduct actual costs or use the standard mileage rate published by the IRS, plus what you spend for parking and tolls while driving on business.
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[ TurboTax/Intuit Tax Terms Glossary ][ TaxGPT Tax Glossary ]
Automobile, donating to charity
Donating an automobile to charity involves giving a vehicle to a qualified charitable organization. When donating a vehicle to charity, be aware that strict rules govern the deduction you can claim on your taxes. In most cases, the amount you can deduct is capped at the price the charity receives when it sells the vehicle. To support your deduction, the charity should provide you with documentation showing the sale price within 30 days of the sale. If you don't receive this information, your maximum deduction will be limited to $500.
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[ TurboTax/Intuit Tax Terms Glossary ][ TaxGPT Tax Glossary ]
Automobile, driving for charity
You may be eligible for a tax deduction if you use your vehicle for charitable purposes. The IRS allows you to deduct a standard rate of 14 cents per mile driven while volunteering for a qualified charity. You can also claim deductions for parking fees and tolls incurred while driving for charitable activities.
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[ A ]
[ Tax Foundation TaxEDU Glossary ]
Average Tax Rate
Glossary [![Base Erosion and Anti-Abuse Tax (BEAT) oecd public consultat
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[ A ]
[ Tax Defense Network Tax Definitions ]
Avoidance
Tax avoidance is the legal method of minimizing the amount of income tax owed by a taxpayer by taking advantage of the many tax deductions and credits allowed under the tax laws.
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[ Tax Defense Network Tax Definitions ]
Back Taxes
Back taxes are unpaid taxes at the local, state, or federal level. Typically, the taxes are owed from previous tax years.
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[ IRS VITA Glossary ][ HTJ Tax American Tax Glossary ][ NPBC Tax Glossary ]
BAH
Basic allowance for housing, a type of excludable military income.
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[ Blue Water Tax Glossary ]
BAH and BAS
Excludable income for Military Members The IRS allows members of the Armed Services to exclude certain cash benefits from their **gross income** for tax purposes. These income exclusions include the basic allowance for housing (BAH) and basic allowance for subsistence (BAS). **Excludable income** is not subject to federal **income tax**, and usually does not have to be reported on a person's tax return.
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[ TurboTax/Intuit Tax Terms Glossary ]
Bargain sale to charity
Selling property to a charity for less than the property's actually worth. Depending on the circumstances, this could result in a tax deduction or extra taxable income.
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[ IRS VITA Glossary ][ HTJ Tax American Tax Glossary ][ NPBC Tax Glossary ]
BAS
Basic allowance for subsistence, a type of excludable military income.
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[ B ]
[ IRS VITA Glossary ][ Blue Water Tax Glossary ][ HTJ Tax American Tax Glossary ][ Tax Defense Network Tax Definitions ][ MyTaxRights.org Tax Glossary ]
Basis
To determine whether you had a **capital gain or loss** from the sale of property like a home, stocks, artwork, musical instruments or **virtual currency**, you need to know your basis in the property. Basis is essentially a measure of your total investment. If you purchase or build property, then your basis is typically the purchase price or building cost, including fees and commissions. If you trade for property, then your basis may be the **fair market value (FMV)** of either the property you give up or the property you receive. In these scenarios, your basis may be called **cost basis**. For inherited or gifted property, your initial basis may be determined by its FMV, the previous owner's basis or other factors. Some activities, such as making improvements to a building or claiming **depreciation deductions**, can increase or decrease your basis in an asset. In these cases, you may need to determine your **adjusted basis**.
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[ B ]
[ Tax Policy Center Briefing Book ]
BEAT
(See Base erosion and anti-abuse tax)**
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[ B ]
[ TurboTax/Intuit Tax Terms Glossary ][ TaxGPT Tax Glossary ]
Below-market-rate loans
When you lend money to a friend or family member at a below-market or even interest-free rate, the IRS may consider it taxable income. This is because they assume you should have charged a higher interest rate, so you're essentially giving them a gift. As a result, you may be required to report some of this "imputed" interest as income on your tax return.
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[ B ]
[ Tax1099.com Glossary ]
Beneficial Ownership
See Tax1099.com Glossary for 'Beneficial Ownership'.
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[ B ]
[ IRS Understanding Taxes Student Glossary ]
benefits received
A concept of tax fairness that states that people should pay taxes in proportion to the benefits they receive from government goods and services.
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[ B ]
[ IRS VITA Glossary ]
Bitcoin
Known as a virtual currency there may be creating immediate tax consequences for those using Bitcoins to pay for goods and services.
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[ B ]
[ TurboTax/Intuit Tax Terms Glossary ][ TaxGPT Tax Glossary ][ MyTaxRights.org Tax Glossary ]
Blind
For tax purposes, a person is considered blind if they have a vision impairment that meets specific IRS criteria. To qualify for a higher standard tax deduction, an individual must meet the IRS's definition of being legally blind. This means they must have one of the following conditions:
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[ IRS VITA Glossary ][ Blue Water Tax Glossary ][ HTJ Tax American Tax Glossary ][ NPBC Tax Glossary ]
Blocked income
Generally, U.S. citizens and residents must report and pay tax on their foreign income in U.S. dollars. In some cases, however, foreign income cannot be readily converted into U.S. dollars due to laws or other restrictions imposed by a foreign government. The IRS calls this non-convertible income blocked income. In most cases, people may choose to either report and pay tax on blocked income, or defer reporting and paying tax on the income until it is unblocked. If you choose to defer paying tax on blocked income, then you generally must submit an **information return** called a Report of Deferrable Foreign Income, to explain the situation to the IRS.
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[ B ]
[ Vermont Department of Taxes Glossary ]
Board of Civil Authority (BCA)
a board consisting of the town clerk, the selectboard, and the elected justices of the peace, whose mandate is to assist with the running of elections, to act as a quasi-judicial board for grievances between taxpayers and listers, and to maintain the voter checklist
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[ Blue Water Tax Glossary ]
Bona Fide Residence (or Residency) Test
The IRS applies multiple tests to determine whether a person qualifies for the **foreign earned income exclusion**. The bona fide residence test generally requires people to prove that they have set up a permanent residence in a foreign country and maintained it for an entire, uninterrupted year. Depending on details of their **period of stay** in a foreign country, people who do not meet this test may still qualify for the exclusion based on the **physical presence test**.
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[ IRS VITA Glossary ][ HTJ Tax American Tax Glossary ][ NPBC Tax Glossary ]
Bona Fide Residence Test
To meet the bona fide residence test for the foreign earned income exclusion, taxpayers must show that they have set up permanent quarters in a foreign country for an entire, uninterrupted tax year.
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[ TurboTax/Intuit Tax Terms Glossary ]
Bond premium
The amount over face value that you pay to buy a bond issued with a higher interest rate than current market rates. With taxable bonds, a portion of the premium can be deducted against your taxable interest each year that you own the securities.
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[ IRS Understanding Taxes Student Glossary ][ Tax Defense Network Tax Definitions ][ MyTaxRights.org Tax Glossary ]
bonus
A bonus is additional compensation received outside of an employee’s regular salary. Since it is considered supplemental income, it is subject to federal withholding at a 22% flat rate.
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[ TurboTax/Intuit Tax Terms Glossary ][ Thomson Reuters Tax Glossary ][ Tax Policy Center Briefing Book ][ Tax Foundation TaxEDU Glossary ][ TaxGPT Tax Glossary ][ Blue Water Tax Glossary ]
Bonus Depreciation
Bonus depreciation is specified in the tax law and allows for taking more depreciation sooner than is generally permitted under straight-line depreciation rules. Bonus depreciation had been changed for qualified assets acquired and placed in service after September 27, 2017. This change allowed for qualified new or used assets acquired after September 29, 2017, to be "expensed" using 100% bonus depreciation. However, the 100% rate was stepped down per the following schedule to 80% in 2023, 60% in 2024, 40% in 2025, and 20% in 2026\. After 2026 there would be no further bonus depreciation. However, in July of 2025, Congress passed, and President Trump signed into law, the "One Big Beautiful Bill" (also known as the Working Families Tax Cut), which permanently restored 100% bonus depreciation for qualified assets acquired and placed in service after January 19, 2025. Taxpayers can make an election to opt out of the new bonus depreciation rules and use 50% bonus first year depreciation per the prior rules for the first tax year ending after September 27, 2017. This bonus "expensing" should not be confused with expensing under Code Section 179 which has entirely separate rules, see "expensing".
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[ Blue Water Tax Glossary ]
Book Value (of a Capital Asset)
The book value of **capital property** is the theoretical remaining value of the asset, as indicated by **depreciation deductions**. Generally, book value is equal to the owner's basis minus those deductions. For example, suppose that you purchase business equipment at a total cost of $15,000. You claim a $2,600 depreciation deduction for the equipment in each of the first three years after putting it in service, for a total of $2,600 X 3 = $7,800 in deductions. After those three years, the book value of the equipment would generally be $15,000 - $7,800 = $7,200. At the end of the **recovery period** for an asset, its book value should equal its **salvage value**.
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[ TurboTax/Intuit Tax Terms Glossary ][ TaxGPT Tax Glossary ]
Burden of proof
Taxpayers are generally responsible for proving the accuracy of their tax returns rather than the IRS needing to prove them incorrect. Although legislation has shifted the burden of proof to the IRS in certain situations, it's important to keep all your records. This change affects very few taxpayers, as the burden only shifts if a dispute goes to court, which is rare. Even then, the taxpayer must have maintained all required records and cooperated with IRS information requests. C Canceled Debt When a debt is canceled or forgiven, the borrower typically receives taxable income equal to the amount of the debt forgiven. However, there are some exceptions to this rule. For instance, certain student loans may include provisions that forgive debt if the borrower works in a specific profession for a set period. Additionally, up to $750,000 of forgiven mortgage debt on a primary residence, such as in the case of a foreclosure or short sale, may be tax-free until the end of 2025. Furthermore, if the borrower is insolvent, meaning their liabilities exceed their assets, the forgiven debt is not considered taxable income. Similarly, debt forgiven through a bankruptcy court is also not subject to taxation. There are other specific circumstances under which canceled debt may be tax-free, such as in the case of certain farm or business debts. It's essential to understand these exceptions to avoid unexpected tax liabilities.
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[ IRS Understanding Taxes Student Glossary ][ Tax Defense Network Tax Definitions ][ MyTaxRights.org Tax Glossary ]
business
Per the IRS, a business is a “continuous and regular activity that has income or profit as its primary purpose.”
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[ Blue Water Tax Glossary ]
Business Entity or Business Entity Type
A business entity (or business structure) is a legal framework for the ownership of an enterprise. The type of entity established affects not only how a business is taxed, but also how well the owners' personal assets are protected from a business failure or legal action against the company. The most commonly used business entities are **sole proprietorships**, **partnerships**, **limited liability partnerships (LLPs)**, **limited liability companies (LLCs)**, **S corporations**, **C corporations** and **nonprofit organizations**. Setting up a business entity other than a sole proprietorship often requires the assistance of both a tax professional and a business attorney.
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[ IRS VITA Glossary ][ Blue Water Tax Glossary ][ HTJ Tax American Tax Glossary ][ NPBC Tax Glossary ]
Business Expenses
Basic IRS Rules People with business income, including **sole proprietors**, **independent contractors**, **self-employed** freelancers and many **gig economy** workers, may generally deduct business expenses on their **tax returns**. These deductions reduce **tax liability** by lowering the **net profit** of a person or business. IRS rules state that in order to be deductible, an expense must be "ordinary and necessary" to conduct a **trade or business**. There is no precise definition of these terms, but the basic ideas are: - **Ordinary:** Broadly, this term means that the expense is common within a particular trade or industry. For example, purchasing sheet metal would be ordinary for a welder, but not for a freelance writer. The more unusual an expenditure is within your field, the better prepared you should be to show how it contributes to your ability to earn income. - **Necessary:** To qualify as "necessary," a business expense does not have to be absolutely indispensable. However, it does need to have a clear connection to the ongoing success of your business or self-employment activities.
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[ IRS VITA Glossary ][ Blue Water Tax Glossary ][ HTJ Tax American Tax Glossary ][ NPBC Tax Glossary ]
Business Income
For tax purposes, this term refers to income not only from formal business ownership, but also from a broad range of **self-employment** activities. These activities may include freelancing, **gig economy** work, or work as an **independent contractor** or artist. Note that if you accept goods, property or services as forms of payment in the course of your business activities, you generally must include the **fair market value (FMV)** of those payments in your business income. Business income may be subject to both **income tax** and **self-employment tax**. People with significant business income may need to make quarterly **estimated tax** payments to avoid **tax penalties**.
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[ IRS VITA Glossary ][ HTJ Tax American Tax Glossary ]
Business Travel Expenses
Qualified business expenses for members of the armed forces such as uniforms, education and travel. Military employee business expenses are necessary business-related expenses incurred by active members of the U.S. Armed Forces. top * * * ## C
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[ Blue Water Tax Glossary ][ Tax1099.com Glossary ]
Business Vehicle Expense Deduction
Business owners and **self-employed** people may generally deduct expenses related to business use of one or more vehicles on their **tax returns**. This deduction may generally be calculated either by tracking and reporting **actual expenses** in detail, or by using the IRS **standard mileage rate**. Return to Top * * *
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[ Blue Water Tax Glossary ]
Cafeteria Plan / Cafeteria Benefits Plan / Cafeteria 125 Plan
The term cafeteria plan refers to a variety of employer-sponsored benefit packages with optional participation, and rules based on Section 125 of the federal **tax code**. Cafeteria plans often include **tax-advantaged accounts** that can be funded with **pre-tax contributions**, such as **flexible spending arrangements (FSAs)**, **health savings accounts (HSAs)** and 401(k) plans. Some employers also offer cafeteria plans for term life insurance, adoption costs or dependent care expenses.
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[ TaxGPT Tax Glossary ]
Cancel anytime
Get access D Damages If you receive a settlement in a lawsuit that includes compensation for future medical expenses, the amount you receive for those expenses is not considered taxable income. However, when you use that money to pay for medical expenses, you cannot claim those expenses as an itemized deduction on your tax return. This is because the settlement amount has already been allocated to cover those expenses. You can only deduct medical expenses that exceed the amount of the settlement allocated to medical care. You should enter these excess medical expenses in the "Itemized Deductions" section of your tax return under "Medical & Dental."
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[ IRS VITA Glossary ][ HTJ Tax American Tax Glossary ][ NPBC Tax Glossary ]
Cancellation of Debt For Principal Residence
Under the Mortgage Forgiveness Debt Relief Act of 2007, taxpayers may exclude certain debt forgiven or canceled on their principal residence. This exclusion is applicable to the discharge of qualified principal residence indebtedness. If the canceled debt qualifies for exclusion from gross income, the debtor may be required to reduce tax attributes (certain credits, losses, and basis of assets) by the amount excluded.
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[ TurboTax/Intuit Tax Terms Glossary ][ Tax Defense Network Tax Definitions ]
Cancelled debt
Generally, when a debt is cancelled or forgiven, the borrower who benefits is considered to have received taxable income equal to the amount of the cancelled debt. There are exceptions. For example, some student loans contain agreements that debt will be forgiven if the borrower works for a certain period of time in a certain profession. And, up to $750,000 of debt forgiven on a mortgage on a principal residence—in a foreclosure, for example, or short sale—can also be tax-free but only through the end of 2025. Also, forgiven debt is not taxable to the extent the borrower is insolvent (that is, whose liabilities exceed their assets) or when the debt is waived by a bankruptcy court. Other provisions grant tax-free treatment for cancelled debts in specific circumstances.
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[ Vermont Department of Taxes Glossary ]
Cannabis excise tax
a fourteen percent (14%) tax on the retail sale in Vermont of cannabis and cannabis products, including food or beverages
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[ TaxGPT Tax Glossary ][ Vermont Department of Taxes Glossary ]
Cannabis Retailer
A cannabis retailer is a business that sells marijuana and related products to consumers. Despite state-level legalization, cannabis businesses face unique tax challenges due to federal prohibition and Section 280E, which limits deductions.
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[ MyTaxRights.org Tax Glossary ]
Capital
The financial resources (money or other assets) a business owner uses to fund the operations of the business. Common forms of capital include personal funds that a business owner invests into the business and loans obtained from a financial institution. The term capital may also refer to the accumulated wealth in a business, or the amount of an owner's investment in a business.
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[ Tax Foundation TaxEDU Glossary ]
Capital Allowance
Glossary [![State capital stock taxes 2023 state franchise ta
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[ MyTaxRights.org Tax Glossary ]
Capital Asset
An item that you own for which you intend to derive benefits for more than one year (e.g., a home, furniture, stocks, bonds, vehicles).
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[ Blue Water Tax Glossary ]
Capital Asset / Capital Property (Personal)
The terms capital asset and capital property generally refer to property held as an investment and/or used to generate income. Examples of personal capital property include real estate, artwork, stocks and **virtual currency**. Selling capital property may result in a **capital gain or loss**.
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[ Blue Water Tax Glossary ]
Capital Business Asset / Capital Business Property
A capital business asset, or capital business property, is any **capital asset** that is either held by a **business entity** (like an LLC or corporation), or used by an individual for business purposes. Common examples of capital business property include **financial assets**, **intangible assets** like intellectual property, and **fixed assets** like buildings, machinery, furniture and computers. Selling capital business property may result in a **capital gain or loss**, and possibly the need to report a **depreciation recapture**. Also see **Capital Business Expense**.
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[ Blue Water Tax Glossary ]
Capital Business Expense
The IRS divides **business expenses** into two main categories: **operating (or ordinary) expenses** and capital expenses. The category of capital expenses includes costs associated with acquiring **capital business assets**, including not only purchase prices but also required taxes, commissions and fees. Under standard IRS rules, a capital expense cannot be deducted all at once. Instead, the cost usually must be recovered gradually, through **depreciation deductions**. However, some **capital assets** may qualify for **bonus depreciation,** or for a one-time **Section 179 Expense** deduction.
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Capital expenditure
Capital expenditure refers to the cost of making a lasting improvement to a property, such as a home or building. Examples of capital expenditures include installing central air conditioning, building an addition, or making other significant upgrades. These expenses are important because they increase the property's adjusted tax basis, which can have implications for tax deductions and depreciation. By tracking capital expenditures, property owners can accurately calculate their tax basis and potentially reduce their tax liability.
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Capital gain
A capital gain refers to the profit made from selling assets such as stocks, mutual fund shares, and real estate. The tax rate on these gains depends on how long you've owned the asset. If you've owned it for 12 months or less, the gain is considered short-term and is taxed at your ordinary income tax rate, just like your salary. However, if you've owned the asset for more than 12 months, the gain is considered long-term and is taxed at a lower rate of 0%, 15%, or 20%. Taxpayers in the 10% or 15% income tax bracket get an even better deal, with a 0% tax rate on long-term capital gains. However, there are some exceptions to these rules. For example, if you've taken depreciation deductions on investment real estate, you may be subject to a 25% tax rate on the gain resulting from those deductions (unless you're in the 10% or 12% bracket, in which case your tax rate applies). Additionally, long-term gains from selling collectibles, such as art or rare coins, are taxed at a maximum rate of 28%. It's essential to understand these rules to minimize your tax liability on capital gains.
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Capital Gain Distributions
Certain investment portfolios and packages, such as **mutual funds** and real estate investment trusts (REITs), distribute capital gains to investors. Recipients of these capital gain distributions generally must report the income on their personal **tax returns**. Capital gain distributions are usually taxed at the long-term **capital gains tax rate**. Also see **Capital Gains Tax**, along with **long-term capital gain or loss** under **Capital Gain or Capital Loss**.
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[ Blue Water Tax Glossary ]
Capital Gain or Capital Loss
The sale of real estate, stocks, antiques, musical instruments, **mutual funds**, **virtual currency**, artwork, **capital business property** or other long-term investment assets may result in a capital gain or capital loss. The amount of gain or loss is the difference between your **basis** or **adjusted basis** in the property, and the **amount realized** in the sale (the selling price minus necessary expenses). If the amount realized is greater than your basis, then you generally must report a capital gain, which may be subject to **capital gains tax**. If your basis is greater than the amount realized, then you may have a capital loss that can be used to offset capital gains or other income, reducing your **tax liability**. Capital gains and losses are classified as either short-term or long-term: - **Short-term capital gain or loss:** This classification generally applies to a gain or loss from the sale of property held for a year or less. - **Long-term capital gain or loss:** This classification generally applies to a gain or loss resulting from the sale of property held for more than a year.
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[ IRS VITA Glossary ][ HTJ Tax American Tax Glossary ][ NPBC Tax Glossary ]
Capital Gain or Loss
Sale of stock, mutual funds, and the sale of a personal residence. The Capital Gain or Loss lesson will help you identify the asset’s holding period, adjusted basis, net short-term and long-term capital gains or losses, the taxable gain or deductible loss, the tax liability, and the amount of any capital loss carryover.
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Capital gains tax
The IRS and many states assess capital gains tax on income derived from the sale of investment or business property. The rules for capital gains tax may differ significantly from the tax rules for other income. To determine whether you owe capital gains tax, first calculate your **net capital gain or net capital loss** for the year. The tax rate that applies to a net gain will depend on your **adjusted gross income (AGI)**, and on how long you held the property in question. Also see **short-term capital gain or loss** and **long-term capital gain or loss** under **Capital Gain or Capital Loss,** and **Capital Gains Tax Rate**.
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[ TurboTax/Intuit Tax Terms Glossary ][ TaxGPT Tax Glossary ]
Capital loss
A capital loss occurs when you sell an asset, such as a stock, bond, mutual fund, or real estate, for less than its original value. These losses can be used to offset capital gains, reducing your tax liability. First, you can use capital losses to cancel out capital gains of the same type (long-term or short-term). If you still have excess losses, you can deduct up to $3,000 against other types of income, such as your salary. Any remaining losses can be carried over to future years to offset gains or income. By using capital losses strategically, you can minimize your tax bill and maximize your financial gains.
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Capital Loss Carryover
If you incur capital losses from selling investments or assets, you can use them to offset capital gains and reduce your tax liability. Additionally, you can deduct up to $3,000 of net capital losses against other types of income, such as your salary or interest earned on bank accounts. If you have more than $3,000 in net capital losses, you can carry over the excess to future years, allowing you to offset gains or income in those years. This can help you minimize your tax bill and make the most of your investment losses.
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[ Blue Water Tax Glossary ]
Capital Loss Deduction Limit
The IRS limits the extent to which people can use **capital losses** to offset other income, reducing their **tax liability**. The maximum dollar value of losses that may be used for this purpose is known as the capital loss deduction limit. Also see **Capital Loss Carryover**.
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[ Tax Foundation TaxEDU Glossary ]
Capital Stock Tax (Franchise Tax)
[
a special provision allowing part of a net loss or unused credit in a given year to be distributed over subsequent years in order to ease the tax burden
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[ Tax Defense Network Tax Definitions ]
Carryover
A tax carryover (or carryforward) occurs when a taxpayer applies the unused portion of a tax deduction or tax credit to a future year’s tax return.
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[ Blue Water Tax Glossary ]
Cash Accounting
Cash accounting is one of two major bookkeeping techniques that businesses may use for tax purposes (the other being **accrual accounting**). With cash accounting, a business or self-employed person reports income when it is **constructively received**, regardless of the date of the underlying transaction. Similarly, most expenses are recorded when they are paid, regardless when they are incurred. Many businesses that generally qualify to use cash accounting for tax purposes must use accrual methods for a few specific situations, such as **inventory accounting**. In such cases, the IRS may allow **hybrid accounting**, which involves using accrual bookkeeping for limited purposes, and cash accounting for all other transactions.
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[ IRS VITA Glossary ]
Cash for Keys
Cash for Keys Program income, which is taxable, is income from a financial institution, offered to taxpayers to expedite the foreclosure process.
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Cash Method
Accounting method that reports income when constructively received (not earned) and expenses when paid (not incurred), as opposed to the accrual method.
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[ Vermont Department of Taxes Glossary ]
Casual Sales
related to Sales and Use Tax. Generally, all sales of tangible property in the State are subject to Sales and Use Tax unless an exemption applies. One exemption is casual sales, which is when a used item is sold, such as at a yard sale or from a classified ad. For a transaction to be exempt from sales tax under the casual sale exemption:
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Casualty loss
A casualty loss refers to damage or destruction caused by a sudden, unexpected, and unusual event, such as a natural disaster, accident, or theft. This type of loss can result in a significant financial burden, but it may also be eligible for tax deductions or other forms of relief.
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[ Vermont Department of Taxes Glossary ]
Category (of taxable properties)
all taxable properties in Vermont are classified into 15 categories based on their highest and best use. Highest and best use relates to the monetary return one can realize from a property. It is “that use that will generate the highest net return to the property over a reasonable period of time." (Property Assessment Valuation, 2nd Ed., IAAO, 1996)
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[ Tax1099.com Glossary ]
Certified Public Accountants (CPA)
See Tax1099.com Glossary for 'Certified Public Accountants (CPA)'.
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[ Tax1099.com Glossary ]
Chapter 3 Withholding
See Tax1099.com Glossary for 'Chapter 3 Withholding'.
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[ TurboTax/Intuit Tax Terms Glossary ][ TaxGPT Tax Glossary ]
Charitable carryovers
When you make charitable donations, there's a limit to how much you can deduct from your taxes in a given year. Generally, you can deduct up to 60% of your adjusted gross income (AGI) for cash donations and 30% for donations of appreciated assets or contributions to private foundations. However, if you've donated more than these limits, you don't lose the excess. Instead, you can carry over the remaining amount to the next five tax years. This allows you to claim the deduction in a future year when your income may be higher or your deductions lower. Note that if you pass away before using up the carryover, it expires and cannot be claimed by your heirs.
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Charitable contribution
A charitable contribution is a donation of money or property to a qualified non-profit organization that is eligible for a tax deduction. To claim a deduction for a cash donation, you'll need to keep a receipt or a bank record, such as a canceled check, to prove the donation. For donations of $250 or more, you'll need to obtain a written acknowledgment from the charity, which must include the amount of the donation and a statement indicating whether any goods or services were provided in exchange. By keeping proper records and following the rules, you can support your favorite charities and enjoy the tax benefits that come with giving back.
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[ Blue Water Tax Glossary ]
Charitable Contributions / Charitable Donations Deduction
People who **itemize deductions** may claim a **tax deduction** for contributions they make to qualifying nonprofit charities. The maximum allowed deduction for charitable donations is typically based on a percentage of a person's **adjusted gross income (AGI)**. Contributions in excess of the deduction limit may generally be carried over to the next tax year. People who use the **standard deduction** may qualify to claim an **above-the-line deduction** for a very limited amount of cash donations. Corporations may also deduct charitable contributions, up to an annual limit based on the company's **taxable income**.
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[ TurboTax/Intuit Tax Terms Glossary ]
Charitable mileage
See Standard mileage rate.
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Child and Dependent Care Credit
The Child and Dependent Care Credit is a tax benefit designed to help working individuals and families offset the cost of childcare or caring for a disabled dependent. This credit is separate from the Child Tax Credit and provides a percentage of qualifying expenses, ranging from 20% to 35%, depending on income. For tax years 2023 and 2024, the credit can be applied to up to $3,000 of qualifying expenses for one child or $6,000 for two or more children.
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Child support
Child support is a court-ordered payment from one parent to another for the financial support of their child after a separation or divorce. Child support payments are not deductible by the payer or taxable to the recipient.
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Child Tax Credit
The Child Tax Credit is a valuable tax benefit for families with dependent children under the age of 17. For tax years 2018 and later, the credit is worth up to $2,000 per eligible child. In 2023 and expectedly in 2024, the credit remains at $2,000 per child. However, the credit amount is gradually reduced as your adjusted gross income (AGI) increases. This means that families with higher incomes may not be eligible for the full credit amount or may not qualify at all.
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[ TaxGPT Tax Glossary ]
Child Tax Credit Changes
The American Rescue Plan introduced significant changes to the Child Tax Credit in 2021. The maximum credit amount increased to $3,600 for children under 6 years old and $3,000 for children between 6 and 17 years old. Previously, the credit was capped at $2,000 per child, and 17-year-olds were not eligible. However, the new credit comes with lower income limits. If a family's income exceeds these limits, they may still be eligible for the original $2,000 credit, using the previous income and phase-out amounts. One of the most notable changes is that the entire credit is now fully refundable for 2021. This means that eligible families can receive the credit even if they don't owe federal income tax, providing a more significant financial benefit to those who need it most.
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[ Blue Water Tax Glossary ]
Children's Health Insurance Program (CHIP)
This federal government program provides low-cost healthcare coverage to children in families whose incomes are too high to qualify for **Medicaid**, but too low to purchase health insurance. Some states also allow families with slightly higher incomes to buy into CHIP coverage for an increased premium amount. Any premiums that a family pays for such a CHIP buy-in program may qualify for the **Premium Tax Credit (PTC)** under the **Affordable Care Act (ACA)**.
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[ TaxGPT Tax Glossary ][ Vermont Department of Taxes Glossary ]
Circuit Breaker
additional adjustment a homeowner is entitled to when their household income is not more than $47,000 if the sum of the income-sensitized education taxes and municipal taxes exceed a certain percentage of the household income. The additional adjustment is for the amount of the combined municipal and income-sensitized taxes that exceed the threshold. The percentage of household income which determines the threshold depends on the household’s income bracket.
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Citizen or Resident Test
One of the tests for identifying a qualifying child or qualifying relative as a dependent: Assuming all other dependency tests are met, the citizen or resident test allows taxpayers to claim a dependency exemption for persons who are U.S. citizens for some part of the year or who live in the United States, Canada, or Mexico for some part of the year.
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[ Blue Water Tax Glossary ]
Citizen or Resident Test / Citizenship or Residency Test
Some tax credits and deductions are available only to people who claim a **qualifying child** or other **qualifying relative** as a **dependent**. One of the tests the IRS uses to determine whether a person is a qualifying dependent is the citizenship or residency test. In general, this test requires that the person be a U.S. citizen for some part of the year, and/or live in the U.S., Canada or Mexico for some part of the year.
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[ MyTaxRights.org Tax Glossary ]
Civil Penalty
A type of penalty that may imposed on someone for failing to comply with federal tax laws. Civil penalties are generally assessed, collected, and paid in the same manner as income taxes.
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[ MyTaxRights.org Tax Glossary ]
Civil Penalty Abatement
The reduction or elimination of all or a portion of one's civil penalty liabilities. The IRS may approve a civil penalty abatement for: (a) IRS error; (b) reasonable cause; (c) administrative and collection costs not warranting collection of penalty; (d) discharge of penalty in bankruptcy; or (e) the IRS’s acceptance of partial payment of assessed penalty.
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[ IRS VITA Glossary ]
Claimed by an employee on Form W
4. An employer uses the number of allowances claimed, together with income earned and marital status, to determine how much income tax to withhold from wages.
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[ Vermont Department of Taxes Glossary ]
Class (of property)
there are three classes of property that are formed by consolidating the 15 categories into like-use groups. They are Residential (R1, R2, MHU, MHL, V1, and V2), commercial/industrial (COMM, CMA, and IND), and open land (Farm, Wood, and MISC). The class grouping is used when equalization results are not reliable for smaller category groupings.
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[ TaxGPT Tax Glossary ][ Vermont Department of Taxes Glossary ]
Coefficient of Dispersion (COD)
a measure of uniformity of appraisals for all properties on the Grand List. E.g. if a town has valued every property at 100% FMV (every property has an assessment to FMV ration of 100%), there is 0 dispersion. Similarly, if every property is assessed at 80% of FMV, there is 0 dispersion. However, if the town average assessment to sales ratio is 80% but individual assessments vary markedly either above or below the average, then the disparity of assessments will reflect in a COD greater than 0%. Zero is a perfect COD score and indicates absolute fairness insofar as every taxpayer is appraised at the same percentage of FMV. The higher the number, the greater the dispersion (or disparity in how properties are assessed). Because of market fluctuations, a COD less than 10 is unusual. Statistically, it is the average absolute deviation of a group of numbers from the mean expressed as a percentage of the median. Vermont municipalities must reappraise the properties in their town when the COD rises above 20. (32 V.S.A. § 4041(a)).
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[ TaxGPT Tax Glossary ]
College Expense Deduction
Unfortunately, the College Expense Deduction, also known as the Tuition and Fees Deduction, is no longer available as of December 31, 2020. Prior to its expiration, eligible taxpayers could deduct up to $4,000 of qualified college tuition and expenses from their taxable income provided their adjusted gross income (AGI) was below $65,000 for single filers or $130,000 for joint filers. This deduction was a valuable tax benefit for families and individuals paying for higher education expenses.
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College tax credits
If you're paying for higher education expenses, you may be eligible for two valuable tax credits: the American Opportunity Credit and the Lifetime Learning Credit. The American Opportunity credit can provide up to $2,500 per year for each qualifying student, covering the first four years of vocational school or college. This means that if you have multiple children in college at the same time, you could claim multiple credits, potentially worth thousands of dollars. On the other hand, the Lifetime Learning credit offers up to $2,000 per year for additional schooling, such as graduate studies or professional development courses. However, unlike the American Opportunity credit, you can only claim one Lifetime Learning credit per year, regardless of the number of students you're supporting. Both credits are subject to income limits, phasing out as your adjusted gross income (AGI) rises. For single taxpayers, the phaseout range is $80,000 to $90,000, while for joint filers, it's $160,000 to $180,000. By claiming these credits, you can significantly reduce your tax liability and offset the costs of higher education.
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Combat pay
Members of the U.S. Armed Forces and support personnel serving in combat zones, including peace-keeping efforts, receive special tax treatment on their pay. Enlisted personnel do not have to pay taxes on their military pay while serving in combat or designated peace-keeping zones. Officers, on the other hand, can exclude up to the maximum pay for enlisted personnel (plus imminent danger/hostile fire pay) from their taxable income, with the amount increasing annually. Although this combat pay is tax-free, it's important to note that it may still be considered as compensation when determining eligibility to contribute to an Individual Retirement Account (IRA) or Roth IRA.
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Combat Zone
Any area (1) the President of the United States designates by Executive Order as an area in which the U.S. Armed Forces are engaging or have engaged in combat, (2) the Department of Defense has certified for combat zone tax benefits due to its direct support of military operations, or (3) a Qualified Hazardous Duty Area established by statute where the service member receives imminent danger pay. Members of the U.S. Armed Forces who serve in a combat zone may exclude military pay from their taxable income.
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[ Blue Water Tax Glossary ]
Combat Zone (Special Tax Rules for Armed Services Personnel)
Members of the U.S. Armed Forces who serve in a designated combat zone may typically exclude military pay from their **taxable income**. However, eligible military personnel may instead elect to include combat pay in their reported income for the purpose of qualifying for the **Earned Income Tax Credit**. In general, a combat zone is any area that (1) the President of the United States designates by Executive Order as an area in which U.S. forces are engaged in combat; (2) the Department of Defense has certified for combat zone tax benefits; or (3) has been established by statute as a Qualified Hazardous Duty Area where service members receive imminent danger pay.
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[ Vermont Department of Taxes Glossary ]
Commercial
for purposes of property valuation, property used for commercial purposes such as office space or retail space does not include rental of up to 4-unit structures
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commission
A commission is money paid to an employee based on a percentage of sales made, or a fixed amount per sale. Commissions are considered supplemental income and are taxable.
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[ TaxGPT Tax Glossary ][ Vermont Department of Taxes Glossary ]
Common Level of Appraisal (CLA)
the primary result of the Equalization Study conducted by the Vermont Department of Taxes every year. The study compares the listed value to the sale price for all the arms-length sales in the town during the prior three-year period. The CLA does not change taxpayers’ property values, only the education tax rate in a town. It ensures that each town pays its fair share of Education Property Tax to the state’s Education Fund based on local real estate market trends.
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[ Blue Water Tax Glossary ]
Community Income
This term refers to income received by either spouse in a married couple whose **domicile** is a **community property state**.
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Community Property State
A community property law holds that any assets or property acquired by either spouse during a marriage belongs equally to both spouses. States that operate under laws of this type are called community property states. Some IRS rules apply differently for married couples in community property states than for couples in other states. These differences may affect both couples who file **joint returns** and those whose **filing status** is **married filing separately**.
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Compensation
For tax purposes, the term compensation refers to a wide range of benefits that a person might receive for work or business activities. Forms of potentially taxable compensation include wages, salaries, commissions, tips, bonuses, royalties, professional fees, earnings from **self-employment**, and various non-monetary benefits like free housing or free personal use of a company vehicle.
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compulsory payroll tax
Compulsory payroll tax is the tax collected from employers and employees to finance specific government programs, such as Medicare and Social Security.
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[ Vermont Department of Taxes Glossary ]
Condominium
a single dwelling unit within a multi-unit complex
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[ Tax Foundation TaxEDU Glossary ]
Congressional Budget Office (CBO)
Glossary  without restriction. In other words, you have constructively received income if you have full control over the money or property, even if you have not yet converted it to cash or deposited it into an account. If your business uses **cash accounting**, you should generally report all income on the date it was constructively received. Contractor \- see **Independent Contractor**, and also **Employee vs. Independent Contractor**.
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[ Tax Foundation TaxEDU Glossary ]
Consumption Tax
Glossary [
See Tax1099.com Glossary for 'S-Corporation (S-Corp)'.
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Cost basis
An amount for which taxes have already been paid.
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[ IRS VITA Glossary ]
Coverage Family
All members of the taxpayer's family who are enrolled in a qualified health plan and are not eligible for minimum essential coverage (other than coverage in the individual market). The members of the coverage family may change from month to month. A taxpayer is allowed a premium tax credit only for health insurance purchased for members of the coverage family.
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Coverdell education savings account (Coverdell ESA)
A Coverdell Education Savings Account (ESA) is a special savings vehicle that allows you to set aside up to $2,000 per year to cover a student's educational expenses. While there's no tax deduction for contributions, the account offers a significant benefit: withdrawals, including any accumulated interest, are tax-free if used to pay for qualifying expenses. The $2,000 annual limit applies per student, regardless of how many individuals contribute to the account. One of the advantages of a Coverdell ESA is its flexibility - funds can be used not only for college expenses but also for primary and high school costs, including the purchase of a computer. By using an ESA, you can save for a student's education while minimizing your tax liability.
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Coverdell ESA
A Coverdell ESA is a trust or custodial account created or organized in the United States only for the purpose of paying the qualified education expenses of the designated beneficiary of the account.
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[ TaxGPT Tax Glossary ]
CP2000
The CP2000 notice is issued when the IRS identifies discrepancies between the income, credits, or deductions reported on a taxpayer's return and the information provided by third parties (e.g., employers, banks). It is not a bill but a proposal to adjust the return. Taxpayers must review the notice, agree or disagree with the proposed changes, and respond accordingly.
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[ TaxGPT Tax Glossary ]
CP501
The CP501 notice is sent by the IRS to inform taxpayers of a balance due on their tax account. It provides details about the amount owed, the due date, and payment options. If the taxpayer cannot pay the full amount, they can explore payment plans or installment agreements. Ignoring this notice may lead to further collection actions, such as a Notice of Federal Tax Lien.
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Credit
A tax credit reduces your total tax bill by the full amount of the credit, dollar-for-dollar. There are two types of credits: refundable and non-refundable. A refundable credit is preferred because it can produce a refund if the the credit amount lowers your tax bill below $0. A non-refundable credit will also lower your tax bill in the same manner but only to $0, it cannot produce a refund amount.
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Credit for qualified retirement savings contributions
See Retirement credit.
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Credit for the Elderly or Disabled
The credit for the elderly or the disabled is calculated on Schedule R and reported in the Tax and Credits section of Form 1040. top * * * ## D
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Criminal Investigation Program
A program that serves the American public by investigating potential criminal violations of the Internal Revenue Code and related financial crimes in a manner that fosters confidence in the tax system and compliance with the law.
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[ Tax1099.com Glossary ]
Crypto Regulations
See Tax1099.com Glossary for 'Crypto Regulations'.
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[ Vermont Department of Taxes Glossary ]
Current Use (CU)
see Use Value Appraisal
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[ Tax Defense Network Tax Definitions ]
Currently Not Collectible
The IRS may deem a taxpayer “currently not collectible” if they have no assets or income available to pay their taxes, or if paying taxes would cause undue hardship. Collection actions against those considered currently not collectible are temporarily suspended.
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Damages
If you receive a settlement in a damage suit that includes money for future medical expenses, the amount is not taxable. But you typically can't deduct those future medical expenses covered by the amount of the award allocated to medical care as an itemized deduction. Enter medical expenses that exceed the award in Deductions and Credits under Medical.
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Date of Transaction
Either the date on a check made payable to the taxpayer or the date money is credited to the taxpayer’s account. When converting foreign currency to U.S. dollars, the date of transaction is the date that determines the exchange rate to use.
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Decedent
Decedent refers to a person who is no longer living (deceased).
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Deductions
Deductions are write-offs you are permitted to subtract from your gross income to calculate your taxable income. All taxpayers may claim a Standard Deduction, which is determined by the IRS. If your qualifying expenses exceed your Standard Deduction, you may be able to claim the higher amount by itemizing your deductions. Although no records are needed to back up your right to the Standard Deduction, you need to maintain records of qualifying expenditures if you itemize. For higher income taxpayers, the amount of their otherwise allowable state and local tax itemized deductions will be reduced when adjusted gross income (AGI) exceeds a threshold amount. The reduction and threshold amounts can vary each year.
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[ Thomson Reuters Tax Glossary ]
Deferred tax assets
Deferred tax assets (DTA) appear on the corporate balance sheet and are intangible, financial assets that are recoverable in the future. DTAs are the opposite of deferred tax liabilities. Typically, they are created when there are temporary differences between a company’s pre-tax book income and its taxable income.
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Deficiency
The amount of additional tax the IRS determines an individual owes following an audit or examination of the individual's tax return(s).
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deficit
The result of the government taking in less money than it spends.
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Defined Contribution Retirement Plan
A type of retirement plan that provides an individual account for each participant, and bases benefits solely on amounts contributed to the participant’s account and any earnings on these contributions. Types of defined contribution plans include profit sharing, stock bonus, money purchases, target benefit, leveraged employee stock ownership plan, and non-leveraged employee stock ownership plan.
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A Definition Only Gets You So Far
Knowing what a term means is not the same as knowing how it applies to your return. If a word on this page describes your situation, and you are not sure what to do about it, a specialist can tell you in plain English.
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Delinquent Taxes
Delinquent taxes are a result of a failure to file taxes or a missed tax return payment.
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dependency exemption
Amount that taxpayers can claim for a "qualifying child" or "qualifying relative". Each exemption reduces the income subject to tax. The exemption amount is a set amount that changes from year to year. One exemption is allowed for each qualifying child or qualifying relative claimed as a dependent.
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Dependency Tests
Tests used for identifying qualifying children or qualifying relatives as dependents.
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Dependent
A dependent is an individual who relies on you for financial support and whom you can claim on your tax return. As a result, you may be eligible for a dependent credit, which directly reduces your tax liability. Additionally, you may be able to take advantage of other tax benefits, such as the child tax credit, if you have dependents. By claiming dependents on your tax return, you can potentially reduce your tax bill and keep more of your hard-earned money.
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Dependent Care Benefits
These benefits include amounts employers pay to a taxpayer or directly to the care provider.
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Dependent Taxpayer Test
One of the tests for identifying a qualifying child or qualifying relative as a dependent: Can the taxpayer or spouse (if filing jointly) be claimed as a dependent by another person?
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Dependents of more than one taxpayer
The tax household does not include someone that can, but is not, claimed as a dependent if the dependent: - is properly claimed on another taxpayer's return, or - can be claimed by a taxpayer with higher priority under the tie-breaker rules.
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Depreciation
As business assets like equipment, vehicles, and buildings are used over time, they naturally lose value due to wear and tear. To account for this decline in value, the tax law allows businesses to claim a deduction called depreciation. This deduction is spread out over a set period of time, known as the asset's "tax life," which varies depending on the type of property. By claiming depreciation, businesses can reduce their taxable income and lower their tax liability. Additionally, there are ways to speed up the depreciation process, known as accelerated depreciation, which can provide even more tax savings.
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Depreciation recapture tax
Depreciation recapture tax is a method the IRS uses to collect taxes on the sale of an asset the taxpayer has held for more than a year and was used to offset taxable income, assuming the asset was sold at a gain. The tax enables the IRS to “recapture” the taxable income it deems lost through depreciation.
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Direct Deposit
This allows tax refunds to be deposited directly to the taxpayer's bank account. Direct Deposit is a fast, simple, safe, secure way to get a tax refund. The taxpayer must have an established checking or savings account to qualify for Direct Deposit. A bank or financial institution will supply the required account and routing transit numbers to the taxpayer for Direct Deposit.
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Direct Pay
Direct Pay is the free, online payment portal offered by the IRS where individual taxpayers can pay their taxes directly from their savings or checking accounts.
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Direct Rollover
Need to switch your Individual Retirement Account (IRA) or Keogh plan to a new one? Or maybe you want to roll over funds from a company retirement plan, like a 401(k), to an IRA? A direct transfer is a convenient and tax-efficient way to do so. With this method, you instruct the current plan sponsor to transfer the funds directly to your new IRA without you ever taking possession of the money. This approach avoids any potential tax withholding and allows you to make unlimited transfers. In contrast, if you take the funds and deposit them into the new IRA yourself, it's considered a rollover, which has a one-per-year limit per IRA account. Plus, if you're moving funds from a company plan, a direct transfer is a must to avoid a 20% tax withholding, even if you don't owe taxes.
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direct tax
[![Summary of the latest federal income tax data, 2022 update 2022 federal income tax data Top 1% tax, top 1 percent tax rate, who pays income taxes? Who pays what in taxes? Average federal income tax rate, 1 percent of taxpayers, distribution of taxes, tax the rich, taxes on the rich, taxes on the wealthy, Do the rich really pay lower taxes than you? Income tax analysis. Higher tax rate than yo
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Direct transfer
A method to move funds from one Individual Retirement Account (IRA) or other retirement plan to another. You can also use this method to move money from a company retirement plan such as a 401(k) to an IRA. With a direct transfer, you order plan administrator to transfer the money directly to your new IRA or other qualifying account; you do not take possession of the funds. There is no limit on the number of times you can move your money via direct transfer. However, if you take possession of the funds and personally deposit them in the new IRA, the switch is considered an indirect rollover. You can use the rollover method only once every 12 months regardless of how many IRA accounts you own. The direct transfer method must be used to move funds from a company retirement plan to an IRA, or else 20% of the money withdrawn from the company plan will be withheld for the IRS, even if no taxes are due.
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Disability Income
This income comes from an employer’s disability insurance, health plan, or pension plan. The payments replace wages for the time the taxpayer missed work because of the disability.
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Disability Pension
Generally paid to a taxpayer who retires because of a disability before the minimum retirement age (set by the employer). The disability pension is considered regular pension income when the taxpayer reaches the minimum retirement age.
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Disability Pension Income
Generally paid to a taxpayer who retires because of a disability before the minimum retirement age (set by the employer). The disability pension is considered regular pension income when the taxpayer reaches the minimum retirement age.
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Disaster Loss
A tax deduction that may be claimed by those who suffered the loss or damage of property as a result of a federally declared disaster.
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Distributed Profits Tax
Glossary [![Corporate tax cuts effects and corporate tax cuts impact on economy versus short te
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District Advisor
A District Advisor is an IRS employee who assists with local tax matters, providing guidance, resolving disputes, and ensuring compliance with tax laws. They often work directly with taxpayers and businesses within their assigned district. E Earned Income Earned income refers to the money you earn from actively working, such as your salary, wages, commissions, and tips. This type of income is a direct result of your personal efforts and services, and it's the primary source of income for most people. Earned income is distinct from "unearned" income, which includes passive income sources like interest, dividends, and capital gains. These unearned income sources don't require direct involvement or effort, unlike earned income, which is a reward for your hard work and dedication.
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DITY Move
Do-it-yourself move. The most common form of military move is the partial DITY move, where the military provides a moving company to transport some of the service member’s goods. Service members who receive DITY payments must include them in their gross income if it exceeds the allowable expenses.
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Dividend Income
See Tax1099.com Glossary for 'Dividend Income'.
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Dividends
Dividends are payments made to a company’s shareholders in the form of cash, additional shares of stock, or other property. All dividends are taxable.
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Divorced, separated, or never married parents
Special rules apply if the dependent is supported by parents who are divorced or separated; these rules also apply to parents who were never married. In general, the child will be considered a dependent of the custodial parent, assuming the child meets all the rules for a qualifying child or qualifying relative. However, the custodial parent can agree to allow the noncustodial parent to treat the child as a qualifying child or qualifying relative if certain conditions are met. A signed Form 8332 or equivalent is required and must be attached to the noncustodial parent’s return, or attached to Form 8453 if filing electronically.
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A dollar
for-dollar reduction in the tax. Can be deducted directly from taxes owed.
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Domicile
a legal concept of a person’s home (different than one’s residence) that has implications for Vermont income tax, the statewide education tax, and property tax credits. Reg. § 1.5811(11)(A)(i)
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Double taxation
Corporate and individual income can be subject to double taxation. Double taxation, which mainly occurs in the form of corporate double taxation and international double taxation, is when the same income is taxed twice. The fairness of double taxation is a topic of debate; however, there are ways to mitigate or avoid double taxation.
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DRIP Accounts
DRIP accounts leave cash dividends with the company for the purchase of additional shares. Even though these shares are from the same company, they retain their own individual basis separate from the original purchase. Each new purchased share could have a different basis.
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Dual Status Alien
An alien who is both a nonresident and resident alien during the same tax year. The most common dual-status tax years are the years of arrival and departure. top * * * ## E
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Dynamic Scoring
Glossary
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Earned Income Credit (EIC)
A refundable tax credit that supplements the earnings of low-income workers. Originally enacted in 1975, the EITC is now the largest federal means-tested cash transfer program. Its purposes are to encourage people to increase labor force participation and help low-income households escape poverty. The credit is a fixed percentage of earnings up to a maximum amount, remains constant over a range of earnings above that amount (the “plateau”), and then phases out as income rises further. Those income ranges depend on both the taxpayer’s filing status and the number of children in the taxpayer’s family. In contrast, the credit rate depends only on the number of children. Married couples with three or more children receive the largest credit, a maximum of $7,430 in 2023. Childless workers get the smallest credit, no more than $600 in 2023.
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[ Vermont Department of Taxes Glossary ]
Easement/ROW
for purposes of property transfer tax, when only an easement or right of way is being conveyed
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[ Vermont Department of Taxes Glossary ]
Economic Advancement Tax Incentive (EATI)
This program was repealed in 2006. Existing credits continue to be processed although the VT Economic Progress Council hasn’t granted EATI awards since December 31, 2006. See VEGI.
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Education credits
Credits that reduce the amount of tax due and are based on qualified education expenses that the taxpayer paid during the tax year.
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Education interest
Are you paying off student loans for yourself, your spouse, or your dependent? You may be eligible to deduct the interest on those loans from your taxable income, even if you don't itemize your deductions. This tax benefit can provide some much-needed relief from the financial burden of higher education expenses. Up to $2,500 of education loan interest can be deducted, but be aware that this benefit is phased out as your income increases. By claiming this deduction, you can reduce your taxable income and lower your tax bill, making it a valuable tax-saver for students and parents alike.
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Education savings account
See Coverdell education savings account.
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Educator expenses
Two educator expense deductions are allowed for kindergarten through 12th grade teachers and certain other educators for what they spend on unreimbursed classroom or instructional supplies and equipment. There's an above-the-line deduction, which can be taken even if you claim the Standard Deduction rather than itemizing, that's limited to $350 per eligible educator for the 2026 tax year ($300 for 2025). Starting in 2026, there's also an itemized deduction, which isn't capped and applies to more educators and additional expenses.
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Effective interest method
The effective interest method, also known as the effective interest rate method, is a technique used for amortizing bonds. The effective interest method can be a useful tool for investors purchasing a bond at either a premium or a discount to its face value and is an alternative to the straight-line method.
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Effective Tax Rate
also called Equalized Tax Rate, what the tax rate would be if all taxable property were appraised at full value. The effective school tax rate is calculated by dividing the school taxes assessed by the Equalized Education Grand List (EEGL).
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EIC
Advance Earned Income Credit Payments
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EIN
Employer Identification Number (EIN) is the nine-digit number assigned by the IRS to identify the tax accounts of employers.
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EIN for Sole Proprietors
See Tax1099.com Glossary for 'EIN for Sole Proprietors'.
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Elderly or disabled credit
If you're 65 or older or permanently and totally disabled, you may be eligible for a special tax credit designed to help low-income individuals in these situations. This credit is intended to provide some financial relief to those who need it most, but it's worth noting that the eligibility criteria are quite specific, so not many taxpayers qualify. If you think you might be eligible, it's worth exploring this credit to see if you can benefit from it.
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Electronic filing
Looking for the quickest way to submit your tax return or request an extension to the IRS and your state revenue office? Electronic filing is the answer! This convenient and efficient method allows you to transmit your tax information directly to the authorities, saving you time and hassle. With electronic filing, you can expect faster processing, reduced errors, and even quicker refunds. It's the modern way to file your taxes and get on with your life!
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Electronic Filing (e-file)
The transmission of tax information directly to the IRS using telephones or computers. Electronic filing options include (1) Online self-prepared using a personal computer and tax preparation software, or (2) using a tax professional. Electronic filing may take place at the taxpayer's home, a volunteer site, the library, a financial institution, the workplace, malls and stores, or a tax professional's place of business.
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electronic preparation
Electronic preparation means that tax preparation software and computers are used to complete tax returns. Electronic tax preparation helps to reduce errors.
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Electronic Return Originator (ERO)
The Authorized IRS e-file Provider that originates the electronic submission of an income tax return to the IRS. EROs may originate the electronic submission of income tax returns they either prepared or collected from taxpayers. Some EROs charge a fee for submitting returns electronically.
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Employee
Under common-law rules, anyone who performs services for you is your employee if you can control what will be done and how it will be done. This is so even when you give the employee freedom of action. What matters is that you have the right to control the details of how the services are performed.
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Employee Retention Credit
The Employee Retention Credit (ERC) is a program created by Congress in response to the COVID-19 pandemic and economic shutdown which incentivizes companies who retained employees on their payroll with a tax credit. The ERC ended as of September 30th 2021.
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Employer Identification Number (EIN)
a unique nine-digit number assigned by the IRS to business entities operating in the United States for the purposes of identification
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Employers with 50 or more full
time employees use Form 1095-C to report information about offers of health coverage and enrollment in health coverage for their employees.
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[ Vermont Department of Taxes Glossary ]
Employment expenses
for purposes of income tax, ordinary and necessary expenses for the employee to perform the duties for which they were hired
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Energy credits
Going green has its perks! The Residential Energy Efficient Property Credit is a tax incentive that rewards homeowners for investing in qualified alternative energy equipment, such as solar hot water heaters and solar electricity systems. This credit, available through 2032, covers 30% of the cost of eligible property, with a slight reduction to 26% for 2020 and 2021. The best part? There's no limit to the amount of credit you can claim! You can even include labor costs in your calculation and carry over any unused credits to future years. To qualify, the equipment must be installed in your primary U.S. residence, and fuel cell property must be installed in your main home. By upgrading to energy-efficient solutions, you'll not only reduce your carbon footprint but also enjoy significant tax savings.
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Energy Efficient Home Credit (45L)
The Energy Efficient Home Credit under IRC § 45L provides a tax credit to eligible contractors (homebuilders and developers) who construct or substantially reconstruct qualified energy-efficient homes. The credit amount is up to $5,000 per home, depending on energy efficiency standards met. F Fellowships Fellowships are grants or stipends awarded to individuals, usually for academic research or study. The tax treatment of fellowships depends on their use; amounts used for qualified education expenses may be tax-free, while other amounts may be taxable.
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Enrolled agent
When it comes to dealing with the IRS, you want a tax professional who has the expertise and authority to represent you. An Enrolled Agent (EA) is a licensed tax preparer who has demonstrated their knowledge and skills by passing a rigorous IRS exam or through prior work experience with the IRS. As a result, EAs are authorized to represent clients like you during IRS audits and appeals, providing guidance and support throughout the process. With an EA on your side, you can rest assured that your tax matters are in good hands.
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Entertainment expenses
for purposes of income tax, employment expenses that have an element of entertainment that is directly related to conducting business
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[ Tax Defense Network Tax Definitions ]
Entity
Entity refers to the designated structure of a business, such as sole proprietorship or LLC. The business entity determines which income tax forms a business must use when filing taxes.
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[ Vermont Department of Taxes Glossary ]
Equalization study
PVR conducts a study based on sales data annuallythat results in estimates of the fair market value of all taxable property in all VT school districts. The major product of the study is an estimate of the total fair market value of property that is taxable for school purposes (the equalized education Grand List – EEGL).
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[ Vermont Department of Taxes Glossary ]
Equalized Education Property Tax Grand List (EEGL)
1% of the equalized education property value as defined in 32 V.S.A. § 5401(6)
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[ Vermont Department of Taxes Glossary ]
Equalized Education Property Value
PVR’s estimate of the fair market value of all nonresidential and homestead real property that is required to be listed at fair market value, plus the aggregate value of property required to be listed at a stipulated value under a stabilization agreement, plus the aggregate use value of property enrolled in the Current Use program
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[ MyTaxRights.org Tax Glossary ]
Equity
A term that may refer to a person's ownership interest in a business (aka "equity interest") or the value of the business assets owned by a person (aka "owner's equity").
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Estate tax
If you're planning for the future or dealing with the estate of a loved one, it's essential to understand the estate tax. For 2023, the exemption amount is set at $12,920,000, meaning that estates worth less than this amount are not subject to federal estate tax. However, estates exceeding this threshold may be taxed at a maximum rate of 40%. Looking ahead to 2024, the exemption amount is expected to increase to $13,610,000, providing some relief for larger estates. It's crucial to stay informed about these changes to ensure you're prepared for the future and can minimize the tax burden on your loved ones.
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[ Vermont Department of Taxes Glossary ]
Estimated income tax voucher
a form to file with your tax return in order to pay tax on estimated earned income
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[ MyTaxRights.org Tax Glossary ][ Tax1099.com Glossary ]
Estimated Tax Payment
A payment made quarterly to the IRS and applied towards an individual's annual tax bill. Taxpayers are generally required to make estimated tax payments to the IRS if: (1) they expect to owe more than $1,000 in taxes for the year; and (2) taxes are not being automatically withheld from their wages by their employer.
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[ Tax Defense Network Tax Definitions ][ MyTaxRights.org Tax Glossary ]
Examination
A review of an organization's or an individual's accounts and financial information to ensure information on tax return is being reported correctly to the IRS. An examination is also known as an audit.
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[ TurboTax/Intuit Tax Terms Glossary ][ TaxGPT Tax Glossary ]
Excess Social Security tax withheld
If you've had multiple jobs in a year, either simultaneously or consecutively, you might be surprised to find that too much Social Security tax has been withheld from your paychecks. This happens because each employer is required to withhold the tax, but there's a limit to how much you need to pay. If your combined wages from multiple jobs exceed the annual limit, you'll end up paying too much in Social Security taxes. The good news is that you can claim a credit for the excess amount when you file your tax return, which means you'll get a refund for the overpayment.
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[ IRS VITA Glossary ]
Exchange
See Marketplace.
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[ E ]
[ IRS Understanding Taxes Student Glossary ][ Tax Policy Center Briefing Book ][ Tax Foundation TaxEDU Glossary ][ Tax Defense Network Tax Definitions ][ MyTaxRights.org Tax Glossary ][ Tax1099.com Glossary ]
excise tax
[
Free from withholding of federal income tax. A person must meet certain income, tax liability, and dependency criteria. This does not exempt a person from other kinds of tax withholding, such as the Social Security tax.
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[ IRS VITA Glossary ][ HTJ Tax American Tax Glossary ]
Exemption Amount
The dollar amount that can be deducted from an individual’s total income, thereby reducing the taxable income.
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[ IRS VITA Glossary ]
Exemption Certificate Number (ECN)
The number the taxpayer received from the Marketplace for the individual listed in Part I (Marketplace-Granted Coverage Exemptions for Individuals) on Form 8965, column c.
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[ IRS Understanding Taxes Student Glossary ][ TurboTax/Intuit Tax Terms Glossary ][ TaxGPT Tax Glossary ][ NPBC Tax Glossary ][ Tax Defense Network Tax Definitions ][ Vermont Department of Taxes Glossary ]
exemptions
Before the tax law changes in 2018, personal exemptions were a valuable tax deduction that could reduce your taxable income. You could claim a personal exemption for yourself, and if you filed a joint return, you could claim one for your spouse as well. Additionally, you could claim an exemption for each dependent you listed on your tax return. Each exemption amount was a standard deduction that lowered your taxable income, although it was gradually phased out at higher income levels. However, starting with the 2018 tax year, personal exemptions are no longer a deduction for taxable income.
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[ IRS VITA Glossary ][ HTJ Tax American Tax Glossary ]
Exemptions (Personal or Dependency)
Amount that taxpayers can claim for themselves, their spouses, and eligible dependents. An exemption is a dollar amount that can be deducted from an individual's total income, thereby reducing the taxable income. top * * * ## F
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[ TurboTax/Intuit Tax Terms Glossary ][ TaxGPT Tax Glossary ]
Expensing
Are you a business owner looking to reduce your taxable income? Expensing, also known as the Section 179 deduction, can help. This tax strategy allows you to treat a portion of your business expenditures as immediate deductions rather than depreciating them over several years. This means you can write off the cost of certain assets, such as equipment or software, in the first year rather than spreading the deduction out over time. By expensing these costs, you can lower your taxable income and reduce your tax liability, giving your business a financial boost.
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[ Tax1099.com Glossary ]
Extended Filing Deadline
See Tax1099.com Glossary for 'Extended Filing Deadline'.
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[ E ]
[ MyTaxRights.org Tax Glossary ]
Extension
The process by which you may extend the time you have to file your taxes by an additional three months. An extension is obtained by filing a Form 4868. Note, however, this only extends the deadline you have to file a tax return, not the deadline to pay any taxes owed.
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[ Vermont Department of Taxes Glossary ]
External offset
taxpayer overpayment is applied to a debt owed to another agency. A letter is generated that states what agency the money was sent to.
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[ Tax Foundation TaxEDU Glossary ]
Externality
[. The penalty amount is 5% of the total tax liability reported on the return plus an additional 5% for each month the failure to file continues, up to a total penalty amount of 25% of the tax liability.
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[ MyTaxRights.org Tax Glossary ]
Failure-to-Pay Penalty
A penalty assessed against a taxpayer for failing to pay the amount owed on a tax return on or before April 15th. The penalty amount is 0.5% of the tax liability shown on the return plus an additional 0.5% for each month the failure to pay continues, up to a total penalty amount of 25% of the tax liability.
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[ Tax Defense Network Tax Definitions ][ MyTaxRights.org Tax Glossary ]
Fair Market Value
Fair market value is the price an item may sell for on the open market between a willing buyer and seller. The unrelated parties must have reasonable knowledge of the relevant facts and should not be required to act.
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[ Vermont Department of Taxes Glossary ]
Fair Market Value (FMV)
for purposes of property valuation, the price that property would sell for on the open market. It is the price that would be agreed on between a willing buyer and a willing seller
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[ IRS VITA Glossary ]
Family coverage (ACA Term)
(For the purpose of determining if coverage is unaffordable in order to claim a coverage exemption) – If taxpayer (or spouse if filing jointly) is eligible for family coverage under an employer's plan, the required contribution amount for any member of the family is the premium the taxpayer would pay for the lowest cost family coverage that would cover the taxpayer and everyone in the non-exempt family. The taxpayer's tax family consists of the taxpayer, the taxpayer's spouse if filing jointly, and all other individuals for whom the taxpayer claims a personal exemption deduction.
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[ Vermont Department of Taxes Glossary ]
Farm Buildings
for purposes of the Current Use program, buildings or improvements such as barns that are actively used by a farmer as part of a farming operation are owned by a farmer or leased to a farmer under a written lease for a term of three years or more, and are situated on land that is enrolled in a use value appraisal program or on a housesite adjoining enrolled land. 32 V.S.A. § 3752(14)
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[ Thomson Reuters Tax Glossary ]
FATCA
The Foreign Account Tax Compliance Act (FATCA) – passed as part of the HIRE Act in 2010 – combats tax evasion by U.S. taxpayers with foreign accounts and offshore financial assets in two ways: imposing withholding requirements on financial institutions and reporting requirements on specified individuals.
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[ TaxGPT Tax Glossary ]
FATCA (Foreign Account Tax Compliance Act)
FATCA requires U.S. taxpayers to report certain foreign financial assets when their value exceeds specific thresholds, which vary by filing status and residency. It also compels foreign financial institutions to disclose accounts held by U.S. persons directly to the IRS. Noncompliance may result in steep penalties, making timely and accurate reporting essential. Taxpayers typically meet FATCA obligations by filing Form 8938 with their annual return, alongside other required disclosures.
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[ TaxGPT Tax Glossary ]
FBAR (Report of Foreign Bank and Financial Accounts)
The FBAR requires U.S. persons to report foreign financial accounts if their total value exceeds $10,000 at any point in the year. Filing is done electronically through FinCEN Form 114 on the BSA e-filing system, separate from the annual tax return. Certain accounts, such as U.S. military banking facilities, may be exempt. This requirement helps the U.S. government detect and deter offshore tax evasion and money laundering activities. G Gift Tax To prevent individuals from circumventing the estate tax by transferring their assets to others, the gift tax was introduced. In 2023, you can give up to $17,000 per year to as many individuals as you like without incurring this tax. This annual exclusion amount is expected to increase to $18,000 in 2024. It's essential to note that any part of the credit used to offset taxable gifts will not be available to reduce the estate tax. Additionally, the gift tax is the responsibility of the giver, not the recipient. By understanding these rules and limits, you can make informed decisions about your gifts and minimize your tax liability.
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[ F ]
[ PracticeGrowth Tax Glossary (GitHub legacy) ]
FDII
(see Foreign-derived intangible income).
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[ IRS Understanding Taxes Student Glossary ][ Tax Defense Network Tax Definitions ]
federal income tax
The federal government levies a tax on personal income. The federal income tax provides for national programs such as defense, foreign affairs, law enforcement, and interest on the national debt.
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[ IRS Understanding Taxes Student Glossary ]
Federal Insurance Contributions Act (FICA) Tax
Provides benefits for retired workers and their dependents as well as for disabled workers and their dependents. Also known as the Social Security tax.
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[ F ]
[ IRS VITA Glossary ]
Federal Poverty Line (FPL)
Federal Poverty Line – An income amount considered poverty level for the year, adjusted for family size. Department of Health and Human Services (HHS) determines the federal poverty guideline amounts annually. The government adjusts the income limits annually for inflation.
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[ PracticeGrowth Tax Glossary (GitHub legacy) ]
Federal Reserve. The central bank of the US that controls monetary policy
The Federal Reserve System of the United States, also referred to as the Fed, is made up of 12 Federal Reserve Banks throughout the country and headed by a Board of Governors. The Fed controls monetary policy by raising or lowering interest rates or making open-market sales or purchases of government bonds and Treasury bills.
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[ F ]
[ Vermont Department of Taxes Glossary ]
Federal Taxable Income (FTI)
for federal income tax purposes, adjusted gross income minus allowances for personal exemptions and itemized deductions. The amount computed on the federal tax return is generally the starting point for computing Vermont taxable income.
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[ F ]
[ Tax1099.com Glossary ]
Federal Unemployment Tax Act (FUTA)
See Tax1099.com Glossary for 'Federal Unemployment Tax Act (FUTA)'.
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[ F ]
[ IRS Understanding Taxes Student Glossary ][ Vermont Department of Taxes Glossary ]
Federal/State e-file
A program sponsored by the IRS in partnership with participating states that allows taxpayers to file federal and state income tax returns electronically at the same time.
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[ Vermont Department of Taxes Glossary ]
Fee simple
in real estate transactions, 100% of all interests in property are being conveyed, and there are no interests being retained by the seller
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[ TurboTax/Intuit Tax Terms Glossary ][ Tax Defense Network Tax Definitions ]
Fellowships
A fellowship is money received in the form of a grant to help pay for educational or research pursuits. Generally, fellowship funds are nontaxable when used for qualified expenses.
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[ TurboTax/Intuit Tax Terms Glossary ][ TaxGPT Tax Glossary ][ Vermont Department of Taxes Glossary ]
FICA
FICA, or the Federal Insurance Contribution Act, is a crucial tax that supports two essential programs: Social Security and Medicare. This tax is typically shared equally between employers and employees, with each contributing 50% of the total amount. The funds collected through FICA taxes are used to provide financial assistance to retired workers, disabled individuals, and those who are eligible for Medicare. By paying FICA taxes, you're helping to ensure the continued availability of these vital programs for yourself and others.
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[ Tax Defense Network Tax Definitions ][ Tax1099.com Glossary ]
FICA Tax
Federal Insurance Contributions Act (FICA) Tax. Also known as Social Security tax. Provides benefits for retired or disabled workers, as well as their dependents.
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[ MyTaxRights.org Tax Glossary ]
FICATaxes
Established by the Federal Insurance Contributions Act (FICA), these taxes are composed of social security taxes and Medicare taxes. Both employees and employers are responsible for paying FICA taxes.
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[ IRS Understanding Taxes Student Glossary ]
file a return
To mail or otherwise transmit to an IRS service center the taxpayer's information, in specified format, about income and tax liability. This information-the return-can be filed on paper, electronically (e-file).
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[ IRS VITA Glossary ][ IRS Understanding Taxes Student Glossary ][ TurboTax/Intuit Tax Terms Glossary ][ TaxGPT Tax Glossary ][ HTJ Tax American Tax Glossary ][ Tax Defense Network Tax Definitions ][ MyTaxRights.org Tax Glossary ]
Filing statuses
When it comes to filing your taxes, your filing status plays a significant role in determining your tax obligations. Your status affects the amount of your standard deduction and the tax rates that apply to your income. There are five main filing statuses to choose from: single, married filing jointly, married filing separately, head of household, and qualifying widow or widower. Each status has its own set of rules and implications, so it's essential to choose the correct one to ensure you're taking advantage of the tax benefits you're eligible for.
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[ IRS Understanding Taxes Student Glossary ][ Tax Defense Network Tax Definitions ]
financial records
Spending and income records and items to keep for tax purposes, including paycheck stubs, statements of interest or dividends earned, and records of gifts, tips, and bonuses. Spending records include canceled checks, cash register receipts, credit card statements, and rent receipts.
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[ Tax Foundation TaxEDU Glossary ]
Financial Transaction Tax (FTT)
[. This is a refundable credit which means that even if the taxpayer does not owe any tax, the money will be refunded to the taxpayer. There are payback provisions if the home was sold within a 36 month period.
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[ IRS VITA Glossary ][ TaxGPT Tax Glossary ][ HTJ Tax American Tax Glossary ]
First-time Homebuyer Credit
The first-time homebuyer credit is a maximum of $8,000 ($4,000 for Married Filing Separately). This is a refundable credit which means that even if the taxpayer does not owe any tax, the money will be refunded to the taxpayer. There are payback provisions if the home was sold within a 36 month period.
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[ Tax Defense Network Tax Definitions ]
Fiscal Year
Per the IRS, a fiscal year is “12 consecutive months ending on the last day of any month except December.” This is different from a calendar year, which runs January 1 to December 31. Many organizations start their fiscal year on October 1 and end it on September 30.
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[ IRS VITA Glossary ][ HTJ Tax American Tax Glossary ]
Five-Year Test Period Suspension
Taxpayers can choose to have the five-year test period for ownership and use suspended during any period the homeowner (either spouse if married) served on qualified official extended duty as a member of the uniformed services or Foreign Service of the United States, as an employee of the intelligence community, or as an employee or volunteer of the Peace Corps. This means that the taxpayer may be able to meet the two-year use test even if the taxpayer and/or spouse did not actually live in the home during the normal five-year period required of other taxpayers.
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[ Thomson Reuters Tax Glossary ]
Fixed Assets
Fixed assets are long-term physical assets, commonly referred to as property, plant and equipment (PP&E), that a company owns and uses in its business operations to provide services and goods to customers and help drive long-term financial benefits.
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[ Tax Defense Network Tax Definitions ]
Fixed Income
Fixed income is an investment that returns a payment to a taxpayer on a regular schedule. Examples of fixed income include certificates of deposit (CD), money market funds, and annuities.
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[ IRS Understanding Taxes Student Glossary ][ Tax Foundation TaxEDU Glossary ][ Tax Defense Network Tax Definitions ][ MyTaxRights.org Tax Glossary ]
flat tax
[ is a tax-advantaged account that allows employees to set aside pre-tax dollars for eligible medical, dental, vision, and dependent care expenses. Funds must be used within the plan year or a grace period.
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[ IRS VITA Glossary ]
For purpose of Form 8965
coverage is unaffordable if the individual's required contribution is more than 8% of household income.
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[ F ]
[ MyTaxRights.org Tax Glossary ]
Foreclosure
The legal process by which a lender or creditor takes possession of a home generally because the homeowner defaulted on a loan/mortgage.
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[ F ]
[ IRS VITA Glossary ][ HTJ Tax American Tax Glossary ]
Foreign Earned Income Exclusion
The foreign earned income exclusion allows eligible taxpayers to avoid paying federal income tax on their foreign earned income.
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[ IRS VITA Glossary ][ TaxGPT Tax Glossary ][ HTJ Tax American Tax Glossary ]
Foreign Tax Credit
The Foreign Tax Credit allows U.S. taxpayers to reduce their federal tax liability by the amount of income tax paid to a foreign country or U.S. possession, helping to avoid double taxation. Only income, war profits, and excess profits taxes qualify, and they must meet strict IRS tests to be eligible. The credit is limited to the portion of U.S. tax attributable to foreign income, with unused credits carried back one year and forward ten years. Individuals and corporations claim it through specific IRS forms, and detailed guidance is available on irs.gov.
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[ Thomson Reuters Tax Glossary ]
Foreign-derived deduction-eligible income
Foreign-derived deduction-eligible income (FDDEI) is income earned by a domestic C corporation from qualifying foreign sales and services.
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[ F ]
[ TaxGPT Tax Glossary ]
Forgiven Debt
The forgiven debt is debt that a lender cancels or forgives. Generally, the forgiven amount is considered taxable income unless it qualifies for an exclusion, such as insolvency or bankruptcy.
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[ IRS VITA Glossary ][ HTJ Tax American Tax Glossary ][ Tax Defense Network Tax Definitions ][ Tax1099.com Glossary ]
Form 1040
Tax Return for Single and Joint Filers with No Dependents, used to report income from wages, salaries, and tips, plus income from dividends and interest greater than $1,500; capital gain distributions; IRA, pension, and annuity income; and social security and railroad retirement benefits.
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[ F ]
[ HTJ Tax American Tax Glossary ]
Form 1040 Schedule C-EZ
Net Profit from Business
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[ F ]
[ IRS VITA Glossary ][ HTJ Tax American Tax Glossary ]
Form 1040NR-EZ
U.S. Nonresident Alien Income Tax Return
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[ IRS VITA Glossary ][ HTJ Tax American Tax Glossary ]
Form 1041 Schedule K-1
Shareholder’s Share of Income , Deductions, Credits, etc. Used by S corporations to report the taxpayers’ share of the corporation’s income (reduced by any tax the corporation paid on the income), as well as any deductions, credits, etc.
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[ IRS VITA Glossary ][ HTJ Tax American Tax Glossary ]
Form 1042-S
Foreign Person’s U.S. Source Income Subject to Withholding
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[ TaxGPT Tax Glossary ]
Form 1065
Form 1065 is filed by partnerships to report income, deductions, gains, losses, and other financial details. Partnerships do not pay income tax; instead, profits or losses are passed through to partners, who report them on their individual tax returns.
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[ IRS VITA Glossary ]
Form 1095-A
Affordable Insurance Marketplace Statement is used to report certain information to the IRS about family members who enroll in a qualified health plan through the Marketplace. Form 1095-A also is furnished to individuals to allow them to claim the premium tax credit, to reconcile the credit on their returns with advance payments of the premium tax credit (advance credit payments), and to file an accurate tax return.
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[ IRS VITA Glossary ][ HTJ Tax American Tax Glossary ][ Tax Defense Network Tax Definitions ]
Form 1098
Form 1098-MA, Mortgage Assistance Payments, is a new information return. The form is used to report to the IRS and homeowners the total amounts of certain mortgage assistance payments made to mortgage servicers. Although, mortgage assistance payments are not included in income, taxpayers cannot deduct interest that is paid for them.
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[ HTJ Tax American Tax Glossary ][ Tax Defense Network Tax Definitions ]
Form 1099-DIV
Dividends and Distributions. Financial institutions use Form 1099-DIV to report dividends and other distributions to taxpayers and to the IRS.
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[ F ]
[ PracticeGrowth Tax Glossary (GitHub legacy) ]
Form 1099-G, Certain Government Payments
This form shows potentially taxable payments that a person received through a government program (such as unemployment compensation). - Form 1099-INT This form shows various types of interest income. - Form 1099-K This form shows payments received for goods or services through a third-party payment processor. - Form 1099-MISC This form covers various payments and income types not accounted for on other 1099 forms, such as rental income. - Form 1099-NEC (Non-employee Compensation) This form is used to report payments made by a business or self-employed person to independent contractors and other non-employees. - Form 1099-R This form reports distributions from pensions, annuities, IRAs, other retirement plans, profit-sharing plans, insurance contracts and similar sources. - Form 1099-S This form shows proceeds from real estate transactions, such as home sales. You may need to report information from Form 1099-S when claiming the home sale capital gain exclusion. - Form 1099-SA This form shows distributions received from a health savings account (HSA), Archer MSA or Medicare Advantage MSA. - Forms RRB-1099 and RRB-1099-R These forms show various payments made by the Railroad Retirement Board, including annuity and pension payments. Form SSA-1099 This form shows Social Security benefit payments, which may or may not be taxable income, depending on the person's total income for the year. Form 1120, Corporation Income Tax Return Form 1120 is the standard federal tax return filed by C Corporations. These corporations generally must pay corporate income tax on net profits or earnings. Form 1120-S, Income Tax Return for S Corporation Form 1120-S is the standard federal tax return used by S corporations, as well as LLCs that elect to be taxed as S corporations. These companies file Form 1120-S to report income, expenses, deductions and credits. However, because S corporations are pass-through entities, they do not pay corporate income tax. Instead, the company allocates the amounts reported on Form 1120-S to owners, shareholders or members, who then pay individual income tax on their shares of net earnings. Each owner, member or shareholder's portion of income, deductions, credits, etc. is reported on a Form 1120-S Schedule K-1. Form 1120-S Schedule K-1, Shareholder's Share of Income, Deductions, Credits, etc. An S corporation uses this form to report each owner or shareholder's allocated portion of the income, expenses, deductions and credits reported on the corporation's tax return ( Form 1120-S). These allocations are based on percentages of ownership. Shareholders must report the figures shown on their Schedule K-1s on their personal tax returns, and pay any tax due. This process is known as pass-through taxation. Form 2120, Multiple Support Declaration (Qualifying Child or Qualifying Other Relative) In some cases, a person satisfies all the tests to be a qualifying child or qualifying other relative dependent, except that no one provides more than half of the person's support. Instead, the potential dependent's support comes from multiple different people. In these situations, the person who claims the dependent generally must file Form 2120. The form must list all other individuals who pay over 10% of the dependent's support, and include a statement certifying that they have waived their right to claim the dependent in writing. The IRS refers to these scenarios as multiple support agreements. Form 4137, Social Security and Medicare Tax on Unreported Tip Income Employees who receive tip income may need to use this form to report tips that they did not previously report to their employers. These tips may be subject to Social Security and Medicare ( FICA) taxes. Depending on the amount of tax due on the tips, a tax penalty may apply. Note also that only tips reported to an employer and shown on a year-end income statement like Form W-2 can qualify for the "No Tax on Tips" deduction. Form 4868, Application for Automatic Extension of Time to File Individual Income Tax Return You may use this form to request a six-month automatic filing extension to complete your tax return. Alternatively, you can submit your extension request electronically through the IRS website. It is important to remember that an automatic 6-month extension applies only to filing a tax return, not to paying any tax due. Payments made after the general filing deadline may be subject to tax penalties. Form 8379, Injured Spouse Claim and Allocation A person whose filing status is married filing jointly may use this form to request their share of a tax refund that was withheld by the IRS because of the other spouse's debts, such as past due child support. If the IRS accepts a claim made on Form 8379, up to half of the withheld refund will be issued to the injured spouse. Also see Form 8857. Form 8582, Passive Activity Loss Limitations The IRS limits the amount of losses from passive activities in business or real estate that a person may use to offset other income, and thus reduce their tax liability. If you have passive activity losses, use Form 8582 to calculate the limit on losses you can report for that particular year. Excess losses may generally be carried forward to future years. Form 8857, Request for Innocent Spouse Relief In most cases, couples whose filing status is married filing jointly share responsibility for their combined tax liability. In other words, the IRS holds both spouses responsible for paying any tax owed by the couple. However, in some situations, one spouse can legitimately claim that the other spouse should bear the sole responsibility for the couple's tax liability. A person with a sound basis for such a claim is called an innocent spouse. Innocent spouses may use Form 8857 to request relief from tax penalties and other consequences of the other spouse's actions. Residents of community property states whose filing status is married filing separately may also use this form to request relief from taxes or penalties related to community income or assets. Form 8829, Expenses for Business Use of Your Home Eligible people with business or other self-employment income may use this form to compute their home office deduction, which should then be reported on Schedule C. Form 8938, Statement of Specified Foreign Financial Assets Many people who are required to file an FBAR form must also include Form 8938 with their tax returns, providing detailed information about foreign bank accounts and assets. Note that the reporting thresholds for the FBAR and Form 8938 are different. The two forms also have different rules regarding which assets a person must report. Therefore, a person might need to file only an FBAR form, only Form 8938 or both forms. Also remember that Form 8938 should be filed with a person's federal tax return, whereas FBAR forms must be filed separately (and usually electronically) with FinCEN. Form 8949, Sales and Other Dispositions of Capital Assets Use this form to report transactions where you sold, donated or otherwise disposed of capital assets, including certain investments. For each transaction, you must state the selling price (if applicable), the amount realized, your basis or adjusted basis in the property, any other necessary adjustments, and any resulting capital gain or loss. Short-term gains and losses and long-term gains and losses must usually be reported separately. Report net gains and losses from this form on Schedule D. Form 8962, Premium Tax Credit People who purchase health insurance through the official Health Insurance Marketplace, and whose MAGI qualifies them for the Premium Tax Credit (PTC), use this form to compute the credit. If you receive the Advance Premium Tax Credit (APTC) during the year as a reduction in premiums, then you will use this form to reconcile those premium reductions with your actual credit amount. If your actual credit amount is more than the total APTC you received, you can claim the remaining credit on Form 1040, Schedule 3. However, if your total APTC was greater than your allowed PTC, then you may need to pay back a portion of your APTC, and may also have to pay a tax penalty. Form 9465, Installment Agreement Request If you are unable to pay the full amount of tax you owe to the IRS, you can request to make monthly payments over a period of up to 72 months (six years) to pay off the balance. You may request this installment agreement by filing Form 9465. Alternatively, you can submit your request online through the IRS website. Generally, people who enter into installment agreements must pay IRS interest charges with their monthly payments, so it is best to pay off a tax balance as quickly as possible. Form SS-4, Application for EIN You may use this form to apply for an Employer Identification Number (EIN). Alternatively, you can apply online through the IRS website. You will need an EIN if you pay any employees other than yourself, including household employees. Form W-2, Wages and Tax Statement This form reports the total wages or salary, along with any reported tips, that an employee received during a tax year. Form W-2 also shows all taxes that have been withheld from the employee's pay. Employees need the information on their W-2s to complete their tax returns. If you do not receive a W-2 from your workplace by mid-February, first contact your employer and request one. If the employer still does not send you the form, contact the IRS for assistance. Form W-2c, Corrected Wage and Tax Statement If you receive an inaccurate Form W-2 from your employer, you may request a new form. Your employer should use Form W-2c to correct the information from the original W-2. Similarly, if you own a business and mistakenly provide an inaccurate W-2 to an employee, then you can file form W-2c and give a copy to the employee to correct the error. People who receive a Form W-2c may need to file an amended tax return based on the updated information. Form W-4, Employee's Withholding Certificate Employees must give their employers information needed to compute how much tax to withhold from their paychecks. Generally, employees provide this information on Form W-4. In addition to giving basic information on the form like their filing status, employees can request withholding adjustments for situations like working multiple jobs or earning self-employment income. Employees should submit a new W-4 anytime their tax circumstances change. Form W-7A, Application for Taxpayer ID Number for Pending Adoptions Parents in the process of adopting a child may file this form to request an ATIN for the child. FSA \- see Flexible Spending Arrangement. FSA Carryover \- see Use It or Lose It Rule. FSA Grace Period \- see Use It or Lose It Rule. Fourteen-Day / 10% of Rental Time Rule for Rental Income and Expenses IRS rules for reporting rental income and expenses vary depending on whether you also use the rental property as a personal residence. The IRS 14-day / 10% Rule states that you have used a rental property as your residence during a given year if you used it for personal purposes for more than the greater of 14 days, or 10% of the total number of days you rented it out at a fair price. Note that renting the property to someone at a substantially reduced price, or letting them stay there for free, generally counts as personal use for you. Also see the Minimal Rental Use exception. Fourteen-Day Rental Exemption \- see Minimal Rental Use. FUTA Federal Unemployment Tax, or FUTA, must generally be paid by employers for all of their employees. Also see Unemployment Tax. Return to Top
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Form 1099-INT
Interest Income. Taxpayers who receive $10 or more in interest income from banks, or other financial institutions, should receive Form 1099-INT.
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Form 1099-LTC
Long-term Care and Accelerated Death Benefits
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Form 1099-MISC
Form 1099-MISC is used to report miscellaneous income paid to individuals or entities during the tax year. This includes payments of at least $600 for rents, prizes, awards, medical and health care payments, and other income types. It also covers royalties of $10 or more and direct sales of $5,000 or more of consumer products for resale.
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Form 1099-NEC
Form 1099-NEC is used to report payments of $600 or more made to independent contractors and other nonemployees for services in the course of business. It replaced the 1099-MISC for this purpose beginning in 2020. The form allows the IRS to track income earned outside of traditional employment, ensuring self-employed workers properly report and pay taxes on their earnings.
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Form 1099-NEC (Non-employee Compensation)
This form is used to report payments made by a business or self-employed person to independent contractors and other non-employees. - Form 1099-R This form reports distributions from pensions, annuities, IRAs, other retirement plans, profit-sharing plans, insurance contracts and similar sources. - Form 1099-S This form shows proceeds from real estate transactions, such as home sales. You may need to report information from Form 1099-S when claiming the home sale capital gain exclusion. - Form 1099-SA This form shows distributions received from a health savings account (HSA), Archer MSA or Medicare Advantage MSA. - Forms RRB-1099 and RRB-1099-R These forms show various payments made by the Railroad Retirement Board, including annuity and pension payments. Form SSA-1099 This form shows Social Security benefit payments, which may or may not be taxable income, depending on the person's total income for the year. Form 1120, Corporation Income Tax Return Form 1120 is the standard federal tax return filed by C Corporations. These corporations generally must pay corporate income tax on net profits or earnings. Form 1120-S, Income Tax Return for S Corporation Form 1120-S is the standard federal tax return used by S corporations, as well as LLCs that elect to be taxed as S corporations. These companies file Form 1120-S to report income, expenses, deductions and credits. However, because S corporations are pass-through entities, they do not pay corporate income tax. Instead, the company allocates the amounts reported on Form 1120-S to owners, shareholders or members, who then pay individual income tax on their shares of net earnings. Each owner, member or shareholder's portion of income, deductions, credits, etc. is reported on a Form 1120-S Schedule K-1. Form 1120-S Schedule K-1, Shareholder's Share of Income, Deductions, Credits, etc. An S corporation uses this form to report each owner or shareholder's allocated portion of the income, expenses, deductions and credits reported on the corporation's tax return ( Form 1120-S). These allocations are based on percentages of ownership. Shareholders must report the figures shown on their Schedule K-1s on their personal tax returns, and pay any tax due. This process is known as pass-through taxation. Form 2120, Multiple Support Declaration (Qualifying Child or Qualifying Other Relative) In some cases, a person satisfies all the tests to be a qualifying child or qualifying other relative dependent, except that no one provides more than half of the person's support. Instead, the potential dependent's support comes from multiple different people. In these situations, the person who claims the dependent generally must file Form 2120. The form must list all other individuals who pay over 10% of the dependent's support, and include a statement certifying that they have waived their right to claim the dependent in writing. The IRS refers to these scenarios as multiple support agreements. Form 4137, Social Security and Medicare Tax on Unreported Tip Income Employees who receive tip income may need to use this form to report tips that they did not previously report to their employers. These tips may be subject to Social Security and Medicare ( FICA) taxes. Depending on the amount of tax due on the tips, a tax penalty may apply. Note also that only tips reported to an employer and shown on a year-end income statement like Form W-2 can qualify for the "No Tax on Tips" deduction. Form 4868, Application for Automatic Extension of Time to File Individual Income Tax Return You may use this form to request a six-month automatic filing extension to complete your tax return. Alternatively, you can submit your extension request electronically through the IRS website. It is important to remember that an automatic 6-month extension applies only to filing a tax return, not to paying any tax due. Payments made after the general filing deadline may be subject to tax penalties. Form 8379, Injured Spouse Claim and Allocation A person whose filing status is married filing jointly may use this form to request their share of a tax refund that was withheld by the IRS because of the other spouse's debts, such as past due child support. If the IRS accepts a claim made on Form 8379, up to half of the withheld refund will be issued to the injured spouse. Also see Form 8857. Form 8582, Passive Activity Loss Limitations The IRS limits the amount of losses from passive activities in business or real estate that a person may use to offset other income, and thus reduce their tax liability. If you have passive activity losses, use Form 8582 to calculate the limit on losses you can report for that particular year. Excess losses may generally be carried forward to future years. Form 8857, Request for Innocent Spouse Relief In most cases, couples whose filing status is married filing jointly share responsibility for their combined tax liability. In other words, the IRS holds both spouses responsible for paying any tax owed by the couple. However, in some situations, one spouse can legitimately claim that the other spouse should bear the sole responsibility for the couple's tax liability. A person with a sound basis for such a claim is called an innocent spouse. Innocent spouses may use Form 8857 to request relief from tax penalties and other consequences of the other spouse's actions. Residents of community property states whose filing status is married filing separately may also use this form to request relief from taxes or penalties related to community income or assets. Form 8829, Expenses for Business Use of Your Home Eligible people with business or other self-employment income may use this form to compute their home office deduction, which should then be reported on Schedule C. Form 8938, Statement of Specified Foreign Financial Assets Many people who are required to file an FBAR form must also include Form 8938 with their tax returns, providing detailed information about foreign bank accounts and assets. Note that the reporting thresholds for the FBAR and Form 8938 are different. The two forms also have different rules regarding which assets a person must report. Therefore, a person might need to file only an FBAR form, only Form 8938 or both forms. Also remember that Form 8938 should be filed with a person's federal tax return, whereas FBAR forms must be filed separately (and usually electronically) with FinCEN. Form 8949, Sales and Other Dispositions of Capital Assets Use this form to report transactions where you sold, donated or otherwise disposed of capital assets, including certain investments. For each transaction, you must state the selling price (if applicable), the amount realized, your basis or adjusted basis in the property, any other necessary adjustments, and any resulting capital gain or loss. Short-term gains and losses and long-term gains and losses must usually be reported separately. Report net gains and losses from this form on Schedule D. Form 8962, Premium Tax Credit People who purchase health insurance through the official Health Insurance Marketplace, and whose MAGI qualifies them for the Premium Tax Credit (PTC), use this form to compute the credit. If you receive the Advance Premium Tax Credit (APTC) during the year as a reduction in premiums, then you will use this form to reconcile those premium reductions with your actual credit amount. If your actual credit amount is more than the total APTC you received, you can claim the remaining credit on Form 1040, Schedule 3. However, if your total APTC was greater than your allowed PTC, then you may need to pay back a portion of your APTC, and may also have to pay a tax penalty. Form 9465, Installment Agreement Request If you are unable to pay the full amount of tax you owe to the IRS, you can request to make monthly payments over a period of up to 72 months (six years) to pay off the balance. You may request this installment agreement by filing Form 9465. Alternatively, you can submit your request online through the IRS website. Generally, people who enter into installment agreements must pay IRS interest charges with their monthly payments, so it is best to pay off a tax balance as quickly as possible. Form SS-4, Application for EIN You may use this form to apply for an Employer Identification Number (EIN). Alternatively, you can apply online through the IRS website. You will need an EIN if you pay any employees other than yourself, including household employees. Form W-2, Wages and Tax Statement This form reports the total wages or salary, along with any reported tips, that an employee received during a tax year. Form W-2 also shows all taxes that have been withheld from the employee's pay. Employees need the information on their W-2s to complete their tax returns. If you do not receive a W-2 from your workplace by mid-February, first contact your employer and request one. If the employer still does not send you the form, contact the IRS for assistance. Form W-2c, Corrected Wage and Tax Statement If you receive an inaccurate Form W-2 from your employer, you may request a new form. Your employer should use Form W-2c to correct the information from the original W-2. Similarly, if you own a business and mistakenly provide an inaccurate W-2 to an employee, then you can file form W-2c and give a copy to the employee to correct the error. People who receive a Form W-2c may need to file an amended tax return based on the updated information. Form W-4, Employee's Withholding Certificate Employees must give their employers information needed to compute how much tax to withhold from their paychecks. Generally, employees provide this information on Form W-4. In addition to giving basic information on the form like their filing status, employees can request withholding adjustments for situations like working multiple jobs or earning self-employment income. Employees should submit a new W-4 anytime their tax circumstances change. Form W-7A, Application for Taxpayer ID Number for Pending Adoptions Parents in the process of adopting a child may file this form to request an ATIN for the child. FSA \- see Flexible Spending Arrangement. FSA Carryover \- see Use It or Lose It Rule. FSA Grace Period \- see Use It or Lose It Rule. Fourteen-Day / 10% of Rental Time Rule for Rental Income and Expenses IRS rules for reporting rental income and expenses vary depending on whether you also use the rental property as a personal residence. The IRS 14-day / 10% Rule states that you have used a rental property as your residence during a given year if you used it for personal purposes for more than the greater of 14 days, or 10% of the total number of days you rented it out at a fair price. Note that renting the property to someone at a substantially reduced price, or letting them stay there for free, generally counts as personal use for you. Also see the Minimal Rental Use exception. Fourteen-Day Rental Exemption \- see Minimal Rental Use. FUTA Federal Unemployment Tax, or FUTA, must generally be paid by employers for all of their employees. Also see Unemployment Tax. Return to Top
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Form 1099-OID
Statement showing Original Issue Discount
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Form 1099-R
Form 1099-K reports payments received through credit/debit cards or third-party platforms like PayPal, Venmo, or Square. It is issued when a taxpayer’s transactions exceed the IRS reporting threshold for goods or services. Businesses and individuals use it to reconcile reported income with their own records. This helps ensure accurate tax compliance for electronic transactions.
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[ IRS VITA Glossary ]
Form 1116
Foreign Tax Credit (Individual, Estate or Trust)
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Form 1120-S
Statement of Person Claiming Refund Due a Deceased Taxpayer. Use Form 1310 to claim a refund on behalf of a deceased taxpayer. A personal representative, surviving spouse, or anyone who is in charge of the deceased taxpayer’s property may file the form.
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Form 13614-C
Intake/Interview & Quality Review Sheet
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[ HTJ Tax American Tax Glossary ]
Form 2106-EZ
Unreimbursed Employee Business Expenses
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Form 2159
Payroll Deduction Agreement. Taxpayers who enter into a payment plan with the IRS may elect to complete Form 2159 and have their employers deduct the payments directly from their paycheck.
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Form 2210
Underpayment of Estimated Tax by Individual, Estates and Trusts. While completion of the Form 2210 is out of scope, volunteers need to caution taxpayers they will receive a notice of an estimated tax penalty if it is applicable.
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Form 2441
Child and Dependent Care Expenses. Use Form 2441 to take the credit for child and dependent care expenses paid while working or looking for work.
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Form 2553
Form 2553 is filed by eligible domestic corporations to elect S corporation status under Section 1362(a). This election allows income, losses, deductions, and credits to pass through to shareholders for federal tax purposes.
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Form 2848
Power of Attorney and Declaration of Representative. Form 2848 gives an eligible person authorization to represent a taxpayer before the IRS, as well as receive and inspect that taxpayer’s confidential tax information.
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Form 3903
Moving Expenses. Taxpayers should use Form 3903 to figure any moving expense deduction for a move related to the start of work at a new workplace. If the new workplace is outside the United States, the taxpayer must be a U.S. citizen or resident alien to qualify for the deduction.
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Form 3911
Taxpayer Statement Regarding Refund. Form 3911 is for married taxpayers who filed a joint return and lost their refund check. Submission of this form will initiate the replacement process.
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Form 4029
Application for Exemption From Social Security and Medicare Taxes and Waiver of Benefits. Members of recognized religious groups may file Form 4029 to apply for exemption from social security and Medicare taxes.
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Form 4137
Social Security and Medicare Tax on Unreported Tip Income. Use Form 4137 to determine the Social Security and Medicare tax owed on tips not reported to an employer.
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Form 433-A
Collection Information Statement for Wage Earners and Self-Employed Individuals. Form 433-A is required by the IRS in certain situations where an individual owes federal income tax and is unable to pay in full. Typically used when a taxpayer requests a payment plan or temporary delay of payment due to hardship.
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Form 433-A (OIC)
Collection Information Statement for Wage Earners and Self-Employed Individuals. Form 433-A (OIC) is used by individual taxpayers requesting an Offer in Compromise.
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Form 4361
Application for Exemption From Self-Employment Tax for Use By Ministers, Members of Religious Orders and Christian Science Practitioners. Form 4361 may be used by those applying for an exemption from self-employment tax due to ministerial earnings. Must be an ordained, commissioned, or licensed minister of a church, a Christian Science practitioner, or a member of a religious order (who has not taken a vow of poverty).
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Form 4506
Depreciation and Amortization (Including Information on Listed Property). Use Form 4562 to claim depreciation and amortization, expense certain property, or to provide information on the business/investment use of automobiles and other listed property.
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Form 4852
Substitute for Form W-2, Wage and Tax Statement, or Form 1099-R, Distributions from Pensions, Annuities, Retirement or Profit-Sharing Plans, IRA’s, Insurance Contracts, Etc., used by taxpayers who have been unable to obtain (or have received incorrect) wage or distribution statements.
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Form 4868
Application for Automatic Extension of Time to File U.S. Individual Income Tax Return.
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Form 5329
Additional Taxes on Qualified Plans (including IRAs) and Other Tax Favored Accounts
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Form 5405
First-Time Homebuyer Credit
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Form 5471
Form 5471 is used by U.S. citizens, residents, and certain entities who are officers, directors, or shareholders in certain foreign corporations to report their ownership and transactions with these corporations. This form is required to comply with the reporting obligations under IRC §§ 6038 and 6046. Failure to file Form 5471 can result in substantial penalties.
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Form 5498
See Tax1099.com Glossary for 'Form 5498-SA'.
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Form 5695
Residential Energy Efficient Property Credit
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Form 656
Offer in Compromise. Individual taxpayers and businesses may use Form 656-B, if they wish to make an Offer in Compromise without the assistance of a tax professional.
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Form 656-PPV
Offer in Compromise – Periodic Payment Voucher. Form 656-PPV is for taxpayers who file an Offer in Compromise (OIC) that is expected to be paid within 6 to 24 months. Payments must be made during the IRS investigation until a decision is made to accept, reject, return, or withdraw the OIC request.
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Form 720
Quarterly Federal Excise Tax Return. Form 720 is used by businesses that deal in goods and services subject to excise tax.
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Form 8233
Release/Revocation of Release of Claim to Exemption for Child by Custodial Parent. This form allows a taxpayer who is a custodial parent (and who was married to his or her child’s noncustodial parent) to release his or her claim on the child’s exemption.
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Form 8316
Information Regarding Request for Refund of Social Security Tax
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Form 8379
Qualified Adoption Expenses. Form 8839 is used to figure the amount of adoption credit and any employer-provided adoption benefits a taxpayer may exclude from their income. The exclusion and the credit for expenses of adopting an eligible child may both be claimed.
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Form 843
Claim for Refund and Request for Abatement. Use Form 843 to request a refund or reduction of penalties, interest, and fees paid to the IRS.
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Form 8453-OL
Income tax declaration used for e-filing
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Form 8606
Nondeductible IRAs, reports nondeductible contributions to traditional IRAs and/or distributions taken from certain IRAs. Part I explains in detail when this form is used.
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Form 8615
Tax for Certain Children Who Have Unearned Income. Form 8615 is typically used by children under the age of 18 who have unearned income of $2100 or greater. The form helps figure the amount of tax due.
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Form 8822
Tax Information Authorization. Form 8821 gives authorization to any individual, corporation, firm, organization, or partnership designated to inspect and/or receive the taxpayer’s confidential information, either verbal or written, for the type of tax and timeframe listed on the form. It may also be used to revoke or delete prior authorizations.
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Form 8840
Closer Connection Exception Statement for Aliens
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Form 8857
Request for Innocent Spouse Relief. This form explains various forms of relief and who may qualify.
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Form 8863
Education Credits (American Opportunity and Lifetime Learning Credits). Taxpayers who have paid qualified education expenses to an eligible postsecondary educational institution may be eligible for the American Opportunity Tax Credit (partially refundable) or the Lifetime Learning Credit (non-refundable). Use Form 8863 determine and claim the appropriate credit.
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Form 8888
Allocation of Refund (Including Savings Bond Purchases). Taxpayers may use Form 8888 to allocate direct deposit of their refund into one or more bank accounts, as well as purchase up to $5,000 in paper series I savings bonds.
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Form 8901
Tuition and Fees Deduction. Taxpayers may use Form 8917 to determine their deduction for any tuition and fees paid to a qualified postsecondary institution.
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Form 8949
Sales and Other Dispositions of Capital Assets. This form is new in 2010 and used to report capital gains or losses.
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Form 940
Employer’s Quarterly Federal Tax Return. Employers use Form 941 to report income taxes, Social Security tax, or Medicare tax withheld from their employees’ paychecks, as well as pay the employer’s portion of Social Security and Medicare tax.
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Form 9423
Collection Appeal Request. Taxpayers who receive a notice of federal tax lien, levy, seizure, or termination of an installment agreement may request an appeal by completing Form 9423.
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Form 9465
Annual Return of Withheld Federal Income Tax. Use Form 945 to report federal income tax withheld from nonpayroll payments, such as gambling winnings, military retirement, or pensions.
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Form 982
Consent to Extend the Time to Assess Income Tax. Form 921 is used to request a filing extension when a taxpayer owns real estate that is under contract, but not yet sold.
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Form RRB-1099
Annuities or Pensions by the Railroad Retirement Board
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Form SS-5
Application for a Social Security Card.
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Form SSA-1099
Social Security Benefit Statement
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Form W-2
Form W-9 is used by U.S. individuals and entities to provide their correct Taxpayer Identification Number (TIN) to a requester, such as a business or financial institution. The information ensures proper IRS reporting for payments like income, dividends, or interest. It also includes a certification that the provided TIN is accurate and that the person is not subject to backup withholding.
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Form W-4, Employee's Withholding Allowance Certificate
Completed by the employee and used by the employer to determine the amount of income tax to withhold.
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Form W-4P
Voluntary Withholding Request, filed by taxpayers (or estates) who are recipients of social security benefits and want to request withholding from their payments from the Social Security Administration.
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Form W-8BEN
Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding top * * * ## G
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formal tax legislation process
Individuals and interest groups expressing and promoting their opinions about tax legislation.
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[ PracticeGrowth Tax Glossary (GitHub legacy) ]
Forms RRB-1099 and RRB-1099-R
These forms show various payments made by the Railroad Retirement Board, including annuity and pension payments. Form SSA-1099 This form shows Social Security benefit payments, which may or may not be taxable income, depending on the person's total income for the year. Form 1120, Corporation Income Tax Return Form 1120 is the standard federal tax return filed by C Corporations. These corporations generally must pay corporate income tax on net profits or earnings. Form 1120-S, Income Tax Return for S Corporation Form 1120-S is the standard federal tax return used by S corporations, as well as LLCs that elect to be taxed as S corporations. These companies file Form 1120-S to report income, expenses, deductions and credits. However, because S corporations are pass-through entities, they do not pay corporate income tax. Instead, the company allocates the amounts reported on Form 1120-S to owners, shareholders or members, who then pay individual income tax on their shares of net earnings. Each owner, member or shareholder's portion of income, deductions, credits, etc. is reported on a Form 1120-S Schedule K-1. Form 1120-S Schedule K-1, Shareholder's Share of Income, Deductions, Credits, etc. An S corporation uses this form to report each owner or shareholder's allocated portion of the income, expenses, deductions and credits reported on the corporation's tax return ( Form 1120-S). These allocations are based on percentages of ownership. Shareholders must report the figures shown on their Schedule K-1s on their personal tax returns, and pay any tax due. This process is known as pass-through taxation. Form 2120, Multiple Support Declaration (Qualifying Child or Qualifying Other Relative) In some cases, a person satisfies all the tests to be a qualifying child or qualifying other relative dependent, except that no one provides more than half of the person's support. Instead, the potential dependent's support comes from multiple different people. In these situations, the person who claims the dependent generally must file Form 2120. The form must list all other individuals who pay over 10% of the dependent's support, and include a statement certifying that they have waived their right to claim the dependent in writing. The IRS refers to these scenarios as multiple support agreements. Form 4137, Social Security and Medicare Tax on Unreported Tip Income Employees who receive tip income may need to use this form to report tips that they did not previously report to their employers. These tips may be subject to Social Security and Medicare ( FICA) taxes. Depending on the amount of tax due on the tips, a tax penalty may apply. Note also that only tips reported to an employer and shown on a year-end income statement like Form W-2 can qualify for the "No Tax on Tips" deduction. Form 4868, Application for Automatic Extension of Time to File Individual Income Tax Return You may use this form to request a six-month automatic filing extension to complete your tax return. Alternatively, you can submit your extension request electronically through the IRS website. It is important to remember that an automatic 6-month extension applies only to filing a tax return, not to paying any tax due. Payments made after the general filing deadline may be subject to tax penalties. Form 8379, Injured Spouse Claim and Allocation A person whose filing status is married filing jointly may use this form to request their share of a tax refund that was withheld by the IRS because of the other spouse's debts, such as past due child support. If the IRS accepts a claim made on Form 8379, up to half of the withheld refund will be issued to the injured spouse. Also see Form 8857. Form 8582, Passive Activity Loss Limitations The IRS limits the amount of losses from passive activities in business or real estate that a person may use to offset other income, and thus reduce their tax liability. If you have passive activity losses, use Form 8582 to calculate the limit on losses you can report for that particular year. Excess losses may generally be carried forward to future years. Form 8857, Request for Innocent Spouse Relief In most cases, couples whose filing status is married filing jointly share responsibility for their combined tax liability. In other words, the IRS holds both spouses responsible for paying any tax owed by the couple. However, in some situations, one spouse can legitimately claim that the other spouse should bear the sole responsibility for the couple's tax liability. A person with a sound basis for such a claim is called an innocent spouse. Innocent spouses may use Form 8857 to request relief from tax penalties and other consequences of the other spouse's actions. Residents of community property states whose filing status is married filing separately may also use this form to request relief from taxes or penalties related to community income or assets. Form 8829, Expenses for Business Use of Your Home Eligible people with business or other self-employment income may use this form to compute their home office deduction, which should then be reported on Schedule C. Form 8938, Statement of Specified Foreign Financial Assets Many people who are required to file an FBAR form must also include Form 8938 with their tax returns, providing detailed information about foreign bank accounts and assets. Note that the reporting thresholds for the FBAR and Form 8938 are different. The two forms also have different rules regarding which assets a person must report. Therefore, a person might need to file only an FBAR form, only Form 8938 or both forms. Also remember that Form 8938 should be filed with a person's federal tax return, whereas FBAR forms must be filed separately (and usually electronically) with FinCEN. Form 8949, Sales and Other Dispositions of Capital Assets Use this form to report transactions where you sold, donated or otherwise disposed of capital assets, including certain investments. For each transaction, you must state the selling price (if applicable), the amount realized, your basis or adjusted basis in the property, any other necessary adjustments, and any resulting capital gain or loss. Short-term gains and losses and long-term gains and losses must usually be reported separately. Report net gains and losses from this form on Schedule D. Form 8962, Premium Tax Credit People who purchase health insurance through the official Health Insurance Marketplace, and whose MAGI qualifies them for the Premium Tax Credit (PTC), use this form to compute the credit. If you receive the Advance Premium Tax Credit (APTC) during the year as a reduction in premiums, then you will use this form to reconcile those premium reductions with your actual credit amount. If your actual credit amount is more than the total APTC you received, you can claim the remaining credit on Form 1040, Schedule 3. However, if your total APTC was greater than your allowed PTC, then you may need to pay back a portion of your APTC, and may also have to pay a tax penalty. Form 9465, Installment Agreement Request If you are unable to pay the full amount of tax you owe to the IRS, you can request to make monthly payments over a period of up to 72 months (six years) to pay off the balance. You may request this installment agreement by filing Form 9465. Alternatively, you can submit your request online through the IRS website. Generally, people who enter into installment agreements must pay IRS interest charges with their monthly payments, so it is best to pay off a tax balance as quickly as possible. Form SS-4, Application for EIN You may use this form to apply for an Employer Identification Number (EIN). Alternatively, you can apply online through the IRS website. You will need an EIN if you pay any employees other than yourself, including household employees. Form W-2, Wages and Tax Statement This form reports the total wages or salary, along with any reported tips, that an employee received during a tax year. Form W-2 also shows all taxes that have been withheld from the employee's pay. Employees need the information on their W-2s to complete their tax returns. If you do not receive a W-2 from your workplace by mid-February, first contact your employer and request one. If the employer still does not send you the form, contact the IRS for assistance. Form W-2c, Corrected Wage and Tax Statement If you receive an inaccurate Form W-2 from your employer, you may request a new form. Your employer should use Form W-2c to correct the information from the original W-2. Similarly, if you own a business and mistakenly provide an inaccurate W-2 to an employee, then you can file form W-2c and give a copy to the employee to correct the error. People who receive a Form W-2c may need to file an amended tax return based on the updated information. Form W-4, Employee's Withholding Certificate Employees must give their employers information needed to compute how much tax to withhold from their paychecks. Generally, employees provide this information on Form W-4. In addition to giving basic information on the form like their filing status, employees can request withholding adjustments for situations like working multiple jobs or earning self-employment income. Employees should submit a new W-4 anytime their tax circumstances change. Form W-7A, Application for Taxpayer ID Number for Pending Adoptions Parents in the process of adopting a child may file this form to request an ATIN for the child. FSA \- see Flexible Spending Arrangement. FSA Carryover \- see Use It or Lose It Rule. FSA Grace Period \- see Use It or Lose It Rule. Fourteen-Day / 10% of Rental Time Rule for Rental Income and Expenses IRS rules for reporting rental income and expenses vary depending on whether you also use the rental property as a personal residence. The IRS 14-day / 10% Rule states that you have used a rental property as your residence during a given year if you used it for personal purposes for more than the greater of 14 days, or 10% of the total number of days you rented it out at a fair price. Note that renting the property to someone at a substantially reduced price, or letting them stay there for free, generally counts as personal use for you. Also see the Minimal Rental Use exception. Fourteen-Day Rental Exemption \- see Minimal Rental Use. FUTA Federal Unemployment Tax, or FUTA, must generally be paid by employers for all of their employees. Also see Unemployment Tax. Return to Top
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foster child
A foster child is any child placed with a taxpayer by an authorized placement agency or by court order. Eligible foster children may be claimed by taxpayers for tax benefits.
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Franchise tax
Franchise tax is a state-level business tax imposed on businesses and for-profit corporations in order to operate or be chartered in the state. Entities typically subject to franchise tax include C corporations, S corporations, partnerships, and limited liability companies (LLCs). The tax obligations vary by state and by the type of business structure.
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Free File
A public-private partnership between the IRS and many tax preparation and filing software industry leaders who provide their brand-name products for free to eligible taxpayers.
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Fresh Start Initiative
The Fresh Start Initiative, also referred to as the Fresh Start Program, is an updated set of guidelines for pre-existing IRS programs that help more people qualify for tax debt relief.
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Fringe Benefit
A fringe benefit is compensation given by an employer to an employee that is in addition to their regular pay/salary. Examples of common fringe benefits include company cars, stock options, childcare, and employee discounts. In general, the value of the fringe benefit is taxable.
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From Terminology to a Plan
A specialist reviews your situation. No hard sell, no obligation, just a clear read on where you stand and what the right next move is.
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FSA
Flexible Spending Account. An FSA is a type of savings account that allows taxpayers to contribute a portion of their regular earnings to pay for qualified medical, vision, dental or childcare costs. The funds contributed are not subject to payroll taxes, thereby lowering a taxpayer’s taxable income and tax liability.
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Full Expensing
Glossary [![gift tax definition gift taxes credit union exemption, credit union tax exemption
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FUTA Tax
FUTA stands for Federal Unemployment Tax Act. Under this act, the government can tax businesses with employees to help raise revenue for state unemployment agencies and to pay eligible unemployment claims. Employers who pay wages of $1,500 or more must file Form 940 annually in conjunction with paying this tax.
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FY/FYE
Fiscal Year/Fiscal Year End, which starts July 1 and ends June 30
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Gas Tax
Glossary [![Carbon Border Adjustment Mechanism EU CBAM carbon price ca
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gasoline excise tax
A type of excise tax paid by consumers when they purchase gasoline. The tax covers the manufacture, sale, and use of gasoline.
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Generally, a rollover is a tax
free distribution to the taxpayer from one retirement account (traditional IRA or employer's pension plan) that rolls over into a similar retirement account within 60 days. top * * * ## S
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Gift tax
To prevent people from avoiding the estate tax by giving their property away, the law imposes a gift tax. In 2026, you can give up to $19,000 yearly to each of as many people you want without worrying about this tax. This amount is the same for 2025. Amounts in excess of this annual limit reduce your estate tax credit amount available to your estate when you die. Any part of the credit used to offset taxable gifts during your lifetime will not be available to reduce your estate tax when you die. When the gift tax is owed, it is owed by the giver, not the recipient.
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GILTI
The Global Intangible Low-Taxed Income (GILTI) is a tax that affects U.S. companies and shareholders that own a majority stake in a foreign corporation. Specifically, the tax is applied to income from easily moved intangible assets - for example, intellectual property - in order to capture revenue that might otherwise get sheltered in low or no-tax jurisdictions.
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Government use
for purposes of property valuation, property owned and used by the government, but does not include property sold in tax sales, only property actually used by a government entity
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Graduated Rate Income Tax
Glossary [![Sales tax compared to gross receipts tax ca
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Grand List (GL)
1% of the listed value established by the local assessing officials and the value used to determine municipal taxes for a municipality. It includes any business personal property taxable at the local level and excludes locally voted exemptions. Properties subject to local stabilization agreements are included at their stabilized values. The education GL is 1% of the education property values per 32 V.S.A.§ 5404. It is the value used to determine the State Education Tax and the Local Share Tax and generally doesn’t include inventory or business personal property. It includes the value of properties exempted by local vote (if not “grandfathered”) as well as the full value of properties subject to local stabilization agreements as defined in 32 V.S.A. § 5401(5).
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Green Card Test
The determination that an individual has been issued a “green card” by the United States Citizenship and Immigration Services (USCIS), generally making that person a lawful, permanent resident of the United States
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Gross Income
Gross income refers to the total amount of money you earn from all taxable sources without subtracting any deductions, exemptions, or adjustments. This includes income from your job, investments, self-employment, and any other sources that are subject to taxation. Think of it as your total earnings before any tax breaks or reductions are applied. Understanding your gross income is an essential step in calculating your tax liability and planning your finances effectively. H Head of Household If you're an unmarried individual or a married person who is considered unmarried for tax purposes, you may be eligible for the head of household filing status. This status offers lower tax rates and is designed for those who bear the majority of the cost of maintaining a home for themselves and a qualifying person, such as a child or dependent, for more than half of the tax year. To qualify, you must pay more than half of the household expenses and meet certain other requirements. By filing as head of household, you may be able to reduce your tax liability and keep more of your hard-earned money.
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Gross Income Test
One of the tests for identifying a qualifying relative as a dependent. Example: “Did the potential dependent have a gross income in excess of the personal exemption amount during the tax year?”
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Head of Household
A filing status with lower tax rates than filing as Single for unmarried people or some married persons considered unmarried (for purposes of this filing status) who pay more than half the cost of maintaining a home, generally, for themselves and a qualifying person, for more than half the tax year.
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Head of Household Filing Status
You must meet the following requirements: 1. You are unmarried or considered unmarried on the last day of the year. 2. You paid more than half the cost of keeping up a home for the year. 3. A qualifying person lived with you in the home for more than half the year (except temporary absences, such as school). However, a dependent parent does not have to live with the taxpayer.
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Health Savings Account (HSA)
A Health Savings Account (HSA) is a special savings account that allows individuals under 65 to set aside money on a tax-deductible basis to cover medical expenses. To be eligible, you must have a high-deductible health insurance policy. The funds in an HSA grow tax-deferred, similar to an IRA, and can be used to pay for qualifying medical expenses, such as deductibles, copays, and prescriptions, without incurring taxes or penalties. Any unused funds can be rolled over to the next year. However, if you withdraw earnings for non-qualifying purposes before age 65, you'll face taxes and a 10% penalty. Once you reach 65, you can no longer contribute to an HSA, but you can still use the funds for medical expenses without penalty, although you'll pay taxes on non-qualifying withdrawals.
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High Taxed Income
Passive income that is taxed by a foreign government at a rate higher than the highest U.S. income tax rate, and may be classified as “general category income,” making it eligible for the foreign tax credit.
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Highly Compensated Employees (HCE)
Special anti-discrimination rules can limit retirement plan contributions for highly compensated employees, defined as anyone making more than $160,000 in 2026 or anyone who is a 5% owner of a company that offers the retirement plan in question. If lower-paid employees do not contribute to a 401(k) plan in sufficient numbers, for example, higher-paid employees can have part of their contributions returned at year-end, meaning it will be treated as taxable compensation. The limit defining highly compensated employees was also $160,000 for 2025.
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Highly-Paid Individuals
If you're a highly paid individual, you may face limits on your retirement plan contributions due to anti-discrimination rules. For 2023, you're considered highly paid if you earn over $150,000 or own 5% or more of a company that offers a retirement plan. These rules are in place to ensure that lower-paid employees have equal access to retirement benefits. If lower-paid employees don't contribute enough to a 401(k) plan, for example, higher-paid employees may have some of their contributions returned at the end of the year, which would be treated as taxable income. Note that the threshold for highly compensated employees increases to $155,000 for 2024.
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Hobby
A hobby is an activity that is done for sport or recreation, not to make a profit. Taxpayers may deduct hobby expenses that are equal to or less than any income derived from their hobby. Hobby losses, however, may not be deducted from other income.
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Hobby-loss rule
To deduct business losses on your tax return, you need to demonstrate that you're genuinely trying to make a profit. The IRS uses a simple test to determine whether your activity is a business or a hobby. If you report a taxable profit for at least three out of five years (or two out of seven years if you're involved in horse breeding, showing, or racing), the IRS assumes you're in business to make a profit. However, if you don't meet this threshold, your activity is presumed to be a hobby unless you can provide evidence to the contrary. This distinction is crucial because if your hobby expenses exceed your income, the difference is considered a personal expense, not a tax-deductible business loss.
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Holding Period
When you buy and sell an asset, the length of time you own it determines how your profit or loss is taxed. This period, known as the holding period, affects whether your gain or loss is considered short-term or long-term. If you sell an asset within a year of buying it, the result is a short-term capital gain or loss. On the other hand, if you hold onto the asset for more than 12 months, the result is a long-term capital gain or loss. The holding period starts the day after you purchase the asset and ends on the day you sell it. For example, if you buy an asset on January 4, your holding period begins on January 5. If you sell it on the following January 4, you've owned it for exactly one year, which means you'll be subject to short-term tax treatment. To qualify for the more favorable long-term tax treatment, you'd need to hold onto the asset until January 5 of the following year so that you've owned it for more than one year.
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Home equity loans
A home equity loan is a type of debt that uses your primary residence or second home as collateral. This can include a second mortgage or a home equity line of credit. Prior to 2018, the interest on up to $100,000 of home equity debt was tax-deductible, making it a popular way to finance large expenses or consolidate debt. However, starting in 2018, the rules changed, and home equity interest is no longer deductible unless it's used to buy, build, or substantially improve your home. This means that if you use a home equity loan for other purposes, such as paying off credit card debt or financing a vacation, the interest will not be tax-deductible. It's essential to understand these rules to make informed decisions about your finances and minimize your tax liability.
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Home Mortgage Interest Deduction
A deduction that may be claimed for mortgage interest paid on a loan/mortgage secured by the taxpayer's main home or second home.
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Home Office
A designated area or space within a taxpayer’s residence that is used primarily (or exclusively) for business purposes. Depending on the nature of the business, the taxpayer may be eligible for certain home office deductions or other business write-offs.
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Home Office Deduction
The home office deduction is available to taxpayers who use their home, regularly and exclusively, as their principal place of business. Taxpayers may use the simplified option or regular method to determine the amount of the deduction. Eligible deductions may include money spend to repair or maintain the office space, mortgage interest and property taxes, insurance, utilities, as well as other direct or indirect expenses.
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Home office expenses
If you use a dedicated space in your home regularly and exclusively for business purposes, you may be eligible to deduct certain expenses that would otherwise be considered personal expenses. This can include a portion of your utility bills, homeowner's insurance premiums, and even depreciation on your home (if you own it) or a part of your rent (if you're a renter). To qualify, the space must be used as the primary location for your business or as a meeting place for clients, patients, or customers. By deducting these expenses, you can reduce your taxable income and lower your tax liability.
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[ TurboTax/Intuit Tax Terms Glossary ][ TaxGPT Tax Glossary ]
Home sale profit
When selling your primary residence, you may be eligible for a significant tax break. If you've owned and lived in the home for at least two of the five years leading up to the sale, you can exclude up to $250,000 of profit from your taxable income ($500,000 for married couples filing jointly). This benefit can be used multiple times, but not more than once every two years. Additionally, if you're a surviving spouse, you're considered married and eligible for the $500,000 exclusion if you sell the home within two years of your spouse's passing. This tax-free profit can be a substantial advantage for homeowners, providing a welcome reduction in their tax liability.
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[ TaxGPT Tax Glossary ]
Homebuyer Credit
The Homebuyer Credit was a valuable tax incentive available to individuals who purchased a primary residence in the United States between April 9, 2008, and April 30, 2010. The credit amount varied depending on the purchase year and the buyer's situation. For 2008 purchases, the maximum credit was $7,500 or 10% of the purchase price, while for 2009 and 2010 purchases, it was $8,000 or 10% of the purchase price. Repeat buyers who had owned a primary residence for at least five consecutive years in the eight years leading up to the purchase date were eligible for a reduced credit of $6,500 or 10% of the purchase price. The credit was subject to income limits and was phased out at higher income levels. Additionally, the purchase price of the new primary residence could not exceed $800,000. The credit was fully refundable, meaning it could be used to offset regular tax and alternative minimum tax liabilities, with any excess amount refunded to the buyer in cash. It's worth noting that credits for 2008 purchases were required to be repaid over 15 years, starting in 2010, while credits for 2009 and 2010 purchases did not need to be repaid. Buyers could claim the credit on their tax return for the previous year, and certain military service members were eligible for liberalized rules.
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[ Vermont Department of Taxes Glossary ]
Homestead
the principal dwelling owned/occupied by a VT resident as the individual’s domicile. It includes the entire parcel of land surrounding the dwelling, determined without regard to any road, river or stream that intersects the land. It does not include buildings or improvements detached from the home and used for business purposes and does not include that portion of a principal dwelling used for business purposes if the portion used for business purposes includes more than 25% of the floor space of the building. The value of outbuildings and other improvements not used for business purposes includes more than 25 percent of the floor space of the building. The value of outbuildings and other improvements not used for business purposes are included in the value of the homestead, e.g., swimming pools, tennis courts, and landscaping. See 32 V.S.A. § 5401(7) and Reg. § 1.5401(7) for details and examples.
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[ TaxGPT Tax Glossary ]
Hope Credit (now the American Opportunity Credit)
The Hope Credit, now the American Opportunity Credit, is a tax credit for qualified education expenses paid for an eligible student for the first four years of higher education. It covers tuition, fees, and course materials, offering a maximum annual credit.
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[ IRS Understanding Taxes Student Glossary ][ Tax Defense Network Tax Definitions ]
horizontal equity
Horizontal equity is a concept based on the principle that “equals should be taxed equally” – in other words, taxpayers within the same income group are taxed at the same rate.
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[ TurboTax/Intuit Tax Terms Glossary ][ TaxGPT Tax Glossary ][ Tax Defense Network Tax Definitions ][ MyTaxRights.org Tax Glossary ]
Household employees
If you hire someone to work in your home, such as a nanny, housekeeper, or gardener, you may be responsible for paying certain taxes on their behalf. This is the case if you employ them directly rather than hiring them through a service company or considering them an independent contractor. In 2023, you'll need to pay Social Security and Medicare taxes if you pay your household employee $2,600 or more during the year. This is often referred to as the "nanny tax." Additionally, if you pay your employee $1,000 or more in any calendar quarter, you'll also need to pay federal unemployment tax. For 2024, the threshold for paying Social Security and Medicare taxes increases to $2,700 or more during the year. It's essential to understand these tax obligations to ensure you're meeting your responsibilities as a household employer.
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[ IRS VITA Glossary ]
Household Income
The sum of the taxpayer's modified adjusted gross income (MAGI), the spouse's MAGI (if Married Filing Jointly), and the MAGI of all dependents is required to file a tax return.
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[ H ]
[ TaxDome Glossary ]
How do I calculate shareholders equity?
See TaxDome Glossary for 'How do I calculate shareholders equity?'.
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[ H ]
[ TaxDome Glossary ]
How do I calculate variable expenses?
See TaxDome Glossary for 'How do I calculate variable expenses?'.
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[ H ]
[ TaxDome Glossary ]
How do I calculate working capital?
See TaxDome Glossary for 'How do I calculate working capital?'.
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[ H ]
[ TaxDome Glossary ]
How to calculate gross profit margin?
See TaxDome Glossary for 'How to calculate gross profit margin?'.
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[ H ]
[ TaxDome Glossary ]
How to calculate markup?
See TaxDome Glossary for 'How to calculate markup?'.
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[ H ]
[ TaxDome Glossary ]
How to calculate net profit?
See TaxDome Glossary for 'How to calculate net profit?'.
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[ H ]
[ TaxDome Glossary ]
How to calculate quick assets?
See TaxDome Glossary for 'How to calculate quick assets?'.
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[ H ]
[ Vermont Department of Taxes Glossary ]
HS-122
Homestead Declaration and/or Property Tax Credit
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[ H ]
[ PracticeGrowth Tax Glossary (GitHub legacy) ]
Human capital
Knowledge and skills that people acquire through education, training, and experience.
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[ H ]
[ Tax1099.com Glossary ]
Hybrid Tax Accounting Methods
See Tax1099.com Glossary for 'Hybrid Tax Accounting Methods'.
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[ I ]
[ HTJ Tax American Tax Glossary ][ NPBC Tax Glossary ]
Identity Protection PIN
There is a new field next to spouse’s occupation at the bottom of Form 1040 labeled Identity Protection PIN. This is designed to help prevent refunds from being issued to an identity thief. It the taxpayer has been a victim of identity theft, verify the special PIN (6 digit IPPIN) is correct using CP01A Notice or see Form 1040 Instructions for more information.
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[ I ]
[ TurboTax/Intuit Tax Terms Glossary ][ TaxGPT Tax Glossary ]
Imported drugs
Imported drugs are medications brought into the United States from other countries. Generally, these drugs are not deductible unless they are FDA-approved and legally imported, following strict regulations.
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[ I ]
[ TurboTax/Intuit Tax Terms Glossary ][ TaxGPT Tax Glossary ]
Imputed interest
Imputed interest is the interest you are deemed to have earned and must pay taxes on if you issue a loan at a below-market rate. This term also applies to the interest income that must be reported on taxable zero-coupon bonds. Even though these bonds do not pay interest until they mature, you are required to report and pay taxes on the interest as it accrues.
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[ I ]
[ TurboTax/Intuit Tax Terms Glossary ][ TaxGPT Tax Glossary ]
Incentive stock option
An award that allows an employee to purchase stock of the employer at a preset price typically below current market price. For regular income tax purposes, the "spread" or "bargain element"—the difference between the price paid and market value of the stock—is not taxed when the option is exercised. Rather, it is taxed when the stock is sold. For alternative minimum tax purposes, however, the spread is taxed in the year the option is exercised.
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[ I ]
[ IRS Understanding Taxes Student Glossary ]
Includes taxable and tax
exempt interest, dividends, capital gains net income, certain rent and royalty income, and net passive activity income.
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[ I ]
[ IRS VITA Glossary ][ IRS Understanding Taxes Student Glossary ][ HTJ Tax American Tax Glossary ][ NPBC Tax Glossary ][ Tax Defense Network Tax Definitions ][ MyTaxRights.org Tax Glossary ][ Tax1099.com Glossary ]
Income Taxes
Taxes on income, both earned (for example, salaries, wages, tips, commissions) and unearned (for example, interest and dividends). Income taxes can be levied both on individuals (personal income tax) and businesses (business and corporate income taxes).
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[ I ]
[ IRS Understanding Taxes Student Glossary ][ HTJ Tax American Tax Glossary ][ NPBC Tax Glossary ][ Tax Defense Network Tax Definitions ][ MyTaxRights.org Tax Glossary ]
independent contractor
People who are in an independent trade, business, or profession in which they offer their services to the general public are generally independent contractors. The general rule is that an individual is an independent contractor if the payer has the right to control or direct only the result of the work and not what will be done and how it will be done. The earnings of a person who is working as an independent contractor are subject to self-employment tax.
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[ I ]
[ PracticeGrowth Tax Glossary (GitHub legacy) ]
Indexation of the tax system
Annual adjustments to various parameters in the tax code to account for inflation and prevent Bracket creep. Many features of the federal individual income tax, including tax brackets, the standard deduction, and certain credits, have been automatically indexed for inflation based on the Consumer Price Index. For instance, after a year with 5 percent inflation, a $12,000 standard deduction would increase to $12,600. More broadly, the term applies to all efforts to adjust measures of income to account for the effects of price inflation.
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[ I ]
[ TaxGPT Tax Glossary ]
Indexing
Indexing automatically adjusts certain tax benefits, such as standard deductions, exemption amounts, and the thresholds of each tax bracket, annually based on increases in the consumer price index. This adjustment helps prevent inflation from reducing the value of these benefits.
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[ I ]
[ TurboTax/Intuit Tax Terms Glossary ]
Indexing for inflation
To prevent inflation from eroding certain tax benefits—including the Standard Deduction and the beginning and end of each tax bracket—they are automatically adjusted annually for increases in specified inflation indexes.
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[ I ]
[ TaxGPT Tax Glossary ]
Individual 401(k) Plan
The 401(k) rules allow self-employed individuals with no employees (except for their spouse) to contribute significantly more to their retirement savings than before. In 2023, self-employed individuals can contribute up to $66,000 to a solo 401(k). Those aged 50 and older can add an extra "catch-up" contribution of up to $7,500. For 2024, the contribution limit increases to $69,000, while the catch-up contribution limit remains the same.
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[ I ]
[ PracticeGrowth Tax Glossary (GitHub legacy) ]
Individual income tax. A tax on the income of an individual or household
In the US, a minimum level of income is exempt from tax and rates are progressive. Many spending-like programs (“tax expenditures”) take the form of deductions, credits, deferrals, and special rates in the income tax.
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[ I ]
[ TurboTax/Intuit Tax Terms Glossary ]
Individual or Solo 401(k) plan
The 401(k) rules allow a self-employed person with no employees (other than their spouse) to use a 401(k) plan to sock away—and deduct—far more in a retirement than in the past. For 2025, self-employed individuals can contribute up to $72,000 to a solo 401(k) (up from $70,000 for 2025). Those age 50 through 59, and 64 and older, can shelter up to an additional $8,000 by making extra "catch-up" contribution ($7,500 for 2025). Those age 60 through 63 can contribute up to an additional $11,250 as their catch-up amount (same amount for 2025).
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[ I ]
[ TurboTax/Intuit Tax Terms Glossary ][ TaxGPT Tax Glossary ]
Individual Retirement Account (IRA)
A reference to an IRA without the moniker "Roth" in front of it is a reference to a traditional IRA, a tax-favored account designed to encourage saving for retirement. If your income is below a certain level or you are not covered by a retirement plan at work, deposits into a traditional IRA can be deducted. The maximum annual contribution for 2026—deductible or not—is $7,500 or 100% of the compensation earned during the year, whichever is less (up from $7,000 for 2025). Those who are age 50 or older at the end of the year can add an extra $1,100 "catch-up" contribution ($1,000 for 2025), bringing their annual limit to $8,600 for 2026. Also, spouses can contribute part of his other compensation to an IRA for a non-working spouse. The tax on all earnings inside the IRA is postponed until you withdraw the funds. In most cases there is a penalty for withdrawing funds before you reach age 59½. The ability to deduct contributions phases out at higher income levels for those covered by a retirement plan at work. See also Roth IRA.
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[ I ]
[ TurboTax/Intuit Tax Terms Glossary ][ TaxGPT Tax Glossary ][ HTJ Tax American Tax Glossary ][ NPBC Tax Glossary ][ Tax Defense Network Tax Definitions ]
Individual Retirement Arrangement (IRA)
An IRA is a personal savings arrangement that allows a taxpayer to set aside money for retirement. There are certain benefits for making IRA contributions, such as tax deductions, tax-deferred growth on earnings, and nonrefundable tax credits, if eligible.
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[ I ]
[ Tax1099.com Glossary ]
Individual Tax
See Tax1099.com Glossary for 'Individual Tax'.
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[ I ]
[ NPBC Tax Glossary ]
Individual Taxpayer Identification Number (ITIN):
Income a person receives from certain financial accounts or from lending money to someone else.
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[ I ]
[ Vermont Department of Taxes Glossary ]
Industrial
for purposes of property valuation, property primarily used for industrial sites
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[ I ]
[ IRS Understanding Taxes Student Glossary ]
infant industry
A new or developing domestic industry whose costs of production are higher than those of established firms in the same industry in other countries.
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[ I ]
[ IRS Understanding Taxes Student Glossary ][ Tax Foundation TaxEDU Glossary ][ Tax Defense Network Tax Definitions ][ MyTaxRights.org Tax Glossary ]
inflation
[![2022 state individual income tax rates and brackets 2022 state income tax rates, state income taxes Biden fiscal policy, Biden federal taxes, Biden income taxes, Progressive federal fiscal policy and progressive federal income tax policy, 2021 federal income tax data, 2021 income taxes and income taxes paid. Latest federal income tax data. Progressive federal income tax 2021. What does it mea
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[ I ]
[ Tax Foundation TaxEDU Glossary ]
Inflation Indexing
Glossary Page 1 o
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[ I ]
[ PracticeGrowth Tax Glossary (GitHub legacy) ]
Inflation Reduction Act
A tax and spending bill adopted in 2022 that made available tax incentives for activities that mitigate climate change and increased the IRS budget by $80 billion to enhance tax compliance and enforcement. The law also implemented a new corporate minimum tax based on financial accounting Book income and levied a tax on Stock buybacks.
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[ I ]
[ MyTaxRights.org Tax Glossary ]
Information Return
A type of return required to be filed with the IRS by any person engaged in a trade or business who makes reportable transactions during the calendar year, including a corporation, partnership, individual, estate, and trust. Persons required to file information returns to the IRS must also furnish statements to the other party to the transaction, such as the recipients of income. Form 1099-Misc (Miscellaneous Income) and Form W-2 (Wage and Tax Statement) are examples of information returns.
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[ I ]
[ Tax Foundation TaxEDU Glossary ]
Inheritance Tax
See Tax Foundation TaxEDU for 'Inheritance Tax'.
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[ I ]
[ HTJ Tax American Tax Glossary ][ NPBC Tax Glossary ][ Tax Defense Network Tax Definitions ]
Injured Spouse Relief
Injured Spouse Relief may be available to a taxpayer who has had all or part of their tax refund offset to satisfy their spouse’s legally enforceable past-due taxes (federal or state), child support payments, or other federal non-tax debt. By completing Form 8379, the injured spouse may be eligible to receive their portion of the tax refund back.
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[ I ]
[ HTJ Tax American Tax Glossary ][ NPBC Tax Glossary ][ Tax Defense Network Tax Definitions ][ MyTaxRights.org Tax Glossary ]
Innocent Spouse Relief
A taxpayer may be relieved of their joint tax liability by requesting Innocent Spouse Relief ( Form 8857), if there was an understatement of tax and any of the following occurred: the taxpayer’s spouse omitted income or claimed false deductions/credits without the taxpayer’s knowledge; the taxpayer was divorced, separated or no longer living with their spouse; or it would be unfair, given the facts and circumstances, to hold the taxpayer liable for the tax debt.
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[ I ]
[ TurboTax/Intuit Tax Terms Glossary ][ TaxGPT Tax Glossary ]
Innocent-spouse rules
Tax rules designed to protect married taxpayers who file joint returns from being held responsible for taxes due to erroneous actions by their spouses—such as failing to report income or claiming unsubstantiated deductions. Basically, if you can show that you didn't know and didn't have reason to know about error that resulted in the underpayment of tax on the joint return, you can be relieved of responsibility for that underpayment. You have two years from the time the IRS begins trying to collect the underpayment to petition for innocent spouse relief.
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[ I ]
[ Tax Defense Network Tax Definitions ]
Installment Agreement
An installment agreement, also known as a payment plan, is arrangement with the IRS to pay taxes owed over an extended period of time.
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[ I ]
[ TurboTax/Intuit Tax Terms Glossary ][ TaxGPT Tax Glossary ]
Installment sale
In an installment sale, you agree to receive payment from the buyer over several years. This allows you to report the profit gradually as you receive the payments rather than reporting the entire profit in the year the sale occurs.
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[ I ]
[ HTJ Tax American Tax Glossary ]
Intake and Interview sheet
Form 13614-C used to conduct the initial interview and screen the taxpayer.
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[ I ]
[ Vermont Department of Taxes Glossary ]
Integrated licensee
a person licensed by the Cannabis Control Board to act as a cultivator, wholesaler, product manufacturer, retailer, or testing laboratory for cannabis or cannabis products.
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[ I ]
[ IRS Understanding Taxes Student Glossary ][ Tax Defense Network Tax Definitions ]
interest
Interest is money charged for the use of borrowed money, like a credit card or personal loan.
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[ I ]
[ IRS Understanding Taxes Student Glossary ][ HTJ Tax American Tax Glossary ][ NPBC Tax Glossary ][ Tax Defense Network Tax Definitions ][ MyTaxRights.org Tax Glossary ]
interest income
The income a person gains from keeping funds in certain bank accounts or from lending money to someone else. Interest income is considered unearned income for tax purposes.
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[ I ]
[ IRS Understanding Taxes Student Glossary ]
Interest income that is not subject to income tax. Tax
exempt interest income is earned from bonds issued by states, cities, or counties and the District of Columbia.
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[ I ]
[ IRS Understanding Taxes Student Glossary ]
Intermediate Service Provider
Assists in processing tax return information between the ERO (or the taxpayer, in the case of online filing) and the Transmitter.
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[ I ]
[ Vermont Department of Taxes Glossary ]
International Association of Assessing Officers (IAAO)
a non-profit educational association whose mission is to promote innovation and excellence in property appraisal and property tax policy and administration through professional development, education, research, and technical assistance
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[ I ]
[ IRS Understanding Taxes Student Glossary ][ HTJ Tax American Tax Glossary ][ NPBC Tax Glossary ][ Tax Defense Network Tax Definitions ][ MyTaxRights.org Tax Glossary ]
investment income
Investment Income includes taxable interest and dividends, tax-exempt interest, capital gain net income, net income from rents and royalties not derived from a trade or business, and net income from passive activities
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[ I ]
[ TurboTax/Intuit Tax Terms Glossary ][ TaxGPT Tax Glossary ]
Investment interest
Interest paid on loans used for investment purposes, such as to buy stock on margin. You can deduct this interest on Schedule A if you itemize, up to the amount of investment income (not including capital gains or dividends that qualify for the 0%, 15%, or 20% rates) you report. **Itemized deductions** See Deductions.
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[ I ]
[ Tax Defense Network Tax Definitions ]
IP PIN
IP PIN is a six-digit code assigned to taxpayers who have been victims of identity theft. The IRS uses the IP PIN to verify a taxpayer’s identity and prevent the misuse of their Social Security number on fraudulent tax returns.
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[ I ]
[ HTJ Tax American Tax Glossary ][ NPBC Tax Glossary ][ Vermont Department of Taxes Glossary ]
IRA
Individual Retirement Arrangement – A tax-sheltered savings plan set up by the taxpayer, generally for retirement income.
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[ I ]
[ TaxGPT Tax Glossary ]
IRA Payouts for First-Time Homebuyers
Typically, withdrawing funds from a traditional IRA before age 59½ incurs a 10% tax penalty. However, this penalty is waived for withdrawals up to $10,000 if the money is used to purchase a first home for yourself, your child or grandchild, or your parents or grandparents.
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[ I ]
[ TurboTax/Intuit Tax Terms Glossary ][ TaxGPT Tax Glossary ]
IRA withdrawals for education
The usual 10% penalty for early withdrawals from traditional IRAs before age 59½ is waived if the funds are used to pay for higher education expenses for yourself, your spouse, or a dependent. However, the withdrawn amount is still subject to regular income tax.
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[ I ]
[ TurboTax/Intuit Tax Terms Glossary ]
IRA withdrawals for first-time homebuyers
As a general rule, withdrawals from traditional IRA before age 59½ are hit with a 10% tax penalty. But the penalty is waived on up to $10,000 withdrawn to buy a first home for yourself, a child or grandchild, or your parents or grandparents. However, the payout is taxed.
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[ I ]
[ Tax1099.com Glossary ]
IRS Audit
See Tax1099.com Glossary for 'IRS Audit'.
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[ I ]
[ IRS VITA Glossary ]
IRS e
file Signature Authorization
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[ I ]
[ IRS Understanding Taxes Student Glossary ]
IRS e-file
Refers to the preparation and transmission of tax return information to the IRS using telephone lines or a computer with a modem or Internet access.
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[ I ]
[ Tax1099.com Glossary ]
IRS Form 8889 (HSA)
See Tax1099.com Glossary for 'IRS Form 8889 (HSA)'.
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[ I ]
[ Tax1099.com Glossary ]
IRS Notice CP71
See Tax1099.com Glossary for 'IRS Notice CP71'.
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[ I ]
[ TaxGPT Tax Glossary ][ HTJ Tax American Tax Glossary ][ NPBC Tax Glossary ][ Tax Defense Network Tax Definitions ][ MyTaxRights.org Tax Glossary ][ Vermont Department of Taxes Glossary ][ Tax1099.com Glossary ]
Itemized Deductions
An itemized deduction is an eligible expense that a taxpayer may claim on their federal tax return that decreases the amount of income subject to tax. Most taxpayers have a choice of either taking the standard deduction or itemizing deductions, and taxpayers should choose whichever option results in the lowest tax liability.
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[ I ]
[ NPBC Tax Glossary ][ Tax Defense Network Tax Definitions ]
ITIN:
Individual Taxpayer Identification Number (ITIN). This nine-digit tax processing number is available to certain non-resident and resident aliens, as well as their spouses and dependents. Those requesting an ITIN must complete Form W-7, Application for IRS Individual Taxpayer Identification Number.
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[ J ]
[ PracticeGrowth Tax Glossary (GitHub legacy) ]
JGTRRA
See the Jobs and Growth Tax Relief Reconciliation Act of 2003.
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[ J ]
[ TurboTax/Intuit Tax Terms Glossary ][ TaxGPT Tax Glossary ]
Job-hunting costs
For tax years prior to 2018, job-hunting costs in the same line of work were deductible. Qualifying expenses included want-ads, employment agency fees, printing and mailing resumes, and travel costs such as transportation, lodging, and 50% of food if your job search required overnight travel. However, starting in 2018, these expenses are no longer deductible.
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[ J ]
[ TaxGPT Tax Glossary ]
Job-Related Education
For tax years prior to 2018, the cost of education that maintains or improves skills for your current job or is required to keep your job was deductible. Starting in 2018, these expenses are no longer deductible. For the self-employed, however, the related education may still be deductible. Education that qualifies you for a new trade or business, such as law school, is not eligible for this deduction but may qualify for the American Opportunity or Lifetime Learning tax credit.
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[ J ]
[ TaxGPT Tax Glossary ]
Job-Related Move
Job-related move expenses refer to the costs of relocating for a new job or job location. Before 2018, these expenses were deductible if the move met certain distance and time tests, but the deduction is currently suspended except for active-duty military.
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[ J ]
[ PracticeGrowth Tax Glossary (GitHub legacy) ]
Jobs and Growth Tax Relief Reconciliation Act of 2003 (JGTRRA)
The 2003 tax act accelerated the phase-in of tax rate reductions scheduled under EGTRRA, reduced the taxation of Capital gains and Dividends, accelerated increases in the Child Tax Credit amount, and temporarily raised the exemption for the Alternative minimum tax (AMT). Most provisions were set to expire at the end of 2010, but many have since been made permanent. (See also Bush tax cuts.)
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[ J ]
[ Tax Defense Network Tax Definitions ]
Jock Tax
A state income tax levied against individuals who travel to other states for part of their employment. It is called “jock tax” because professional athletes are commonly subjected to this tax.
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[ J ]
[ PracticeGrowth Tax Glossary (GitHub legacy) ]
Joint Committee on Taxation
A nonpartisan committee of the US Congress charged with assisting members on tax legislation and related issues. The committee helps draft legislative proposals, estimates the revenue effects of all tax legislation considered by Congress, and examines various aspects of the federal tax code.
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[ J ]
[ Tax Defense Network Tax Definitions ][ Tax1099.com Glossary ]
Joint Return
A joint return is one that is filed by married taxpayers or those who were recently widowed.
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[ J ]
[ HTJ Tax American Tax Glossary ]
Joint Return Test
One of the tests for identifying a qualifying child or qualifying relative as a dependent. Generally, a married person cannot be claimed as a dependent if he or she files a joint return.
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[ J ]
[ Tax1099.com Glossary ]
Joint Tax Filing
See Tax1099.com Glossary for 'Joint Tax Filing'.
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[ J ]
[ Tax1099.com Glossary ]
Judicial Notice of Tax Law
See Tax1099.com Glossary for 'Judicial Notice of Tax Law'.
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[ J ]
[ TurboTax/Intuit Tax Terms Glossary ][ TaxGPT Tax Glossary ]
Jury duty pay repaid to employer
Jury fees you are required to turn over to your employer—in exchange for your salary continuing while you are on jury duty—are deductible. This will offset the jury fee income you are required to report if the money only passes through your hands to your employer.
[ VERIFIED AUTHORITY ][ CC-BY-4.0 ]
[ K ]
[ Tax1099.com Glossary ]
K-1 Reporting Rules
See Tax1099.com Glossary for 'K-1 Reporting Rules'.
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[ K ]
[ TurboTax/Intuit Tax Terms Glossary ][ TaxGPT Tax Glossary ][ Tax Defense Network Tax Definitions ]
Keogh plan
A Keogh plan, also known as an HR-10 plan, is a retirement plan designed for the self-employed. You can contribute up to 20% of your net earnings from self-employment, with a maximum contribution of $66,000 for 2023 and $69,000 for 2024, into a defined contribution Keogh plan. These contributions are tax-deductible, and the earnings grow tax-deferred until they are withdrawn. There are restrictions on accessing the funds before age 59½.
[ VERIFIED AUTHORITY ][ CC-BY-4.0 ]
[ K ]
[ TurboTax/Intuit Tax Terms Glossary ][ TaxGPT Tax Glossary ]
Kiddie cards
A reference to the Social Security cards needed by any child you claim as a dependent on your tax return. The nine-digit identifying number shown on the card must be reported on the tax return of the parent who claims the child as a dependent. What if a child is born late in the year and you haven't received a Social Security number by the time you're ready to file? The IRS says you must delay filing, even if it means getting an extension to file past the tax deadline. If you claim a dependent and fail to include the number, the dependent will be rejected and your tax bill likely hiked accordingly.
[ VERIFIED AUTHORITY ][ CC-BY-4.0 ]
[ K ]
[ TurboTax/Intuit Tax Terms Glossary ][ Thomson Reuters Tax Glossary ][ TaxGPT Tax Glossary ][ Tax Defense Network Tax Definitions ]
Kiddie tax
The tax—at the parents' higher tax rate—imposed on unearned income of children who are under age 19 at the end of the year and dependent students who are under age 24. For 2026, the kiddie tax typically applies to the child's unearned income in excess of $2,700. The amount was also $2,700 for 2025.
[ VERIFIED AUTHORITY ][ CC-BY-4.0 ]
[ L ]
[ PracticeGrowth Tax Glossary (GitHub legacy) ]
Lawfully Present
The taxpayer is a resident for tax purposes if, the taxpayer is a lawful permanent resident of the United States at any time during calendar year.
[ VERIFIED AUTHORITY ][ CC-BY-4.0 ]
[ L ]
[ HTJ Tax American Tax Glossary ][ NPBC Tax Glossary ]
Letter of Determination
Document from the Department of Veterans Affairs (VA) sent to discharged service members who qualify for severance pay subject to medical disability, which is nontaxable.
[ VERIFIED AUTHORITY ][ CC-BY-4.0 ]
[ L ]
[ Tax Defense Network Tax Definitions ][ MyTaxRights.org Tax Glossary ]
Levy
The legal seizure of property by the IRS to satisfy a tax debt. The IRS can levy a taxpayer's wages, bank accounts, vehicles, real property and other property.
[ VERIFIED AUTHORITY ][ CC-BY-4.0 ]
[ L ]
[ Tax Defense Network Tax Definitions ]
Lien
The government’s legal claim against a taxpayer’s property when they neglect or fail to pay their tax debt.
[ VERIFIED AUTHORITY ][ CC-BY-4.0 ]
[ L ]
[ Vermont Department of Taxes Glossary ]
Life estate
for purposes of property transfer tax, the retained life estate is created, or a retained life estate is being transferred
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[ L ]
[ TaxGPT Tax Glossary ][ HTJ Tax American Tax Glossary ][ NPBC Tax Glossary ][ Tax Defense Network Tax Definitions ]
Lifetime Learning Credit
One of two tax credits available to offset costs of higher education by reducing the amount of income tax. The Lifetime Learning credit is a nonrefundable credit of up to $2,000 for qualified education expenses for students enrolled in eligible educational institutions. It is available to students for all years of postsecondary education and for courses to acquire or improve job skills.
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[ L ]
[ TurboTax/Intuit Tax Terms Glossary ][ TaxGPT Tax Glossary ][ MyTaxRights.org Tax Glossary ]
Like-kind exchange
The potentially tax-deferred and possibly tax-free exchange of similar assets, such as real estate for real estate. The tax on profit accrued in the first property is partially or completely deferred until the subsequent property is sold.
[ VERIFIED AUTHORITY ][ CC-BY-4.0 ]
[ L ]
[ Tax Defense Network Tax Definitions ][ Tax1099.com Glossary ]
Limited Liability Company (LLC)
A limited liability company (LLC) may be formed by one or more people. Unlike a sole proprietorship, however, personal assets are protected from lawsuits brought against the company. Depending on the number of members, an LLC may file taxes as a sole proprietorship (one member), or as a partnership or corporation (two or more).
[ VERIFIED AUTHORITY ][ CC-BY-4.0 ]
[ L ]
[ TurboTax/Intuit Tax Terms Glossary ][ TaxGPT Tax Glossary ]
Limited partnerships
Limited partnerships are business entities with at least one general partner who manages the business and one or more limited partners who invest capital but have limited liability and no active role in management. Income and losses are passed through to partners.
[ VERIFIED AUTHORITY ][ CC-BY-4.0 ]
[ L ]
[ TurboTax/Intuit Tax Terms Glossary ][ TaxGPT Tax Glossary ]
Listed property
"Listed property" is the term used for depreciable assets that Congress has put on a special list for special scrutiny by the IRS. Basically, this includes things Congress worries you might use for personal as well as business purposes—a car, computer, phone, boat, airplane and photographic and video equipment. (If a computer or photographic or video equipment is used exclusively at your regular place of business, however, it is not considered listed property.) There are special restrictions on the depreciation of listed property if business use does not exceed 50%.
[ VERIFIED AUTHORITY ][ CC-BY-4.0 ]
[ L ]
[ Vermont Department of Taxes Glossary ]
LLC
Limited Liability Company
[ VERIFIED AUTHORITY ][ CC-BY-4.0 ]
[ L ]
[ IRS Understanding Taxes Student Glossary ]
lobbyist
A person who represents the concerns or special interests of a particular group or organization in meetings with lawmakers. Lobbyists work to persuade lawmakers to change laws in the group's favor.
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[ L ]
[ Tax Defense Network Tax Definitions ][ MyTaxRights.org Tax Glossary ]
Local Tax
A tax imposed by local officials, usually at the county, city, or municipality level.
[ VERIFIED AUTHORITY ][ CC-BY-4.0 ]
[ L ]
[ IRS Understanding Taxes Student Glossary ]
long-distance telephone tax refund
Taxpayers are eligible to file for refunds of all excise tax they have paid on long-distance service billed to them after Feb. 28, 2003.
[ VERIFIED AUTHORITY ][ CC-BY-4.0 ]
[ L ]
[ TurboTax/Intuit Tax Terms Glossary ][ TaxGPT Tax Glossary ]
Long-term care insurance premium
Premiums paid for long-term care insurance are deductible as a medical expense. The maximum annual deduction varies based on your age.
[ VERIFIED AUTHORITY ][ CC-BY-4.0 ]
[ L ]
[ TurboTax/Intuit Tax Terms Glossary ][ TaxGPT Tax Glossary ]
Long-term gain or loss
A long-term gain or loss results from the sale of a capital asset held for more than one year. Long-term gains are generally taxed at lower rates than short-term gains, while long-term losses can offset other capital gains and up to $3,000 of ordinary income.
[ VERIFIED AUTHORITY ][ CC-BY-4.0 ]
[ L ]
[ PracticeGrowth Tax Glossary (GitHub legacy) ]
Lowest Cost Bronze Plan (LCBP)
Used in the Marketplace Affordability Worksheet (for the unaffordable coverage exemption). For this purpose, use the lowest cost bronze plan available through the Marketplace that covers everyone in the tax household.
[ VERIFIED AUTHORITY ][ CC-BY-4.0 ]
[ L ]
[ TurboTax/Intuit Tax Terms Glossary ][ TaxGPT Tax Glossary ][ HTJ Tax American Tax Glossary ][ NPBC Tax Glossary ]
Lump-sum distribution
A lump-sum distribution is the distribution or payment within one tax year of an employee’s entire balance from all qualified pension, stock bonus, or profit-sharing plans that the employer maintains.
[ VERIFIED AUTHORITY ][ CC-BY-4.0 ]
[ L ]
[ TurboTax/Intuit Tax Terms Glossary ][ TaxGPT Tax Glossary ]
Luxury car rules
The restrictions that limit annual depreciation deductions for business automobiles that cost more than a certain amount.
[ VERIFIED AUTHORITY ][ CC-BY-4.0 ]
[ L ]
[ IRS Understanding Taxes Student Glossary ][ Tax Defense Network Tax Definitions ][ MyTaxRights.org Tax Glossary ]
luxury tax
A tax paid on expensive goods and services considered by the government to be nonessential (e.g., luxury cars). Revenue from luxury taxes is redistributed through government programs that benefit all citizens.
[ VERIFIED AUTHORITY ][ CC-BY-4.0 ]
[ M ]
[ NPBC Tax Glossary ]
MACRS:
Modified Accelerated Cost Recovery System, a method for calculating a taxpayer’s depreciation deduction that uses the property’s placed-in-service date, recovery period, and depreciable basis.
[ VERIFIED AUTHORITY ][ CC-BY-4.0 ]
[ M ]
[ NPBC Tax Glossary ]
Main home:
A taxpayer’s “main” home is where they live most of the time. It does not have to be a traditional house; for example, it may be a houseboat, mobile home, cooperative apartment, or condominium, but it must have cooking, sleeping, and bathroom facilities.
[ VERIFIED AUTHORITY ][ CC-BY-4.0 ]
[ M ]
[ NPBC Tax Glossary ]
Making Work Pay Tax Credit:
A refundable tax credit of up to $400 for working individuals ($800 for Married Filing Jointly) calculated at a rate of 6.2 percent of earned income and phased out for taxpayers with a modified Adjusted Gross Income (AGI) in excess of $75,000 ($150,000 for Married Filing Jointly). Claimed on Schedule M (Form 1040A or 1040).
[ VERIFIED AUTHORITY ][ CC-BY-4.0 ]
[ M ]
[ TaxGPT Tax Glossary ]
Margin Interest
Margin interest is the interest paid on borrowed funds used to purchase investments, typically through a brokerage account. This interest is deductible up to the amount of net investment income, subject to specific rules and limits.
[ VERIFIED AUTHORITY ][ CC-BY-4.0 ]
[ M ]
[ TurboTax/Intuit Tax Terms Glossary ][ TaxGPT Tax Glossary ][ Tax Defense Network Tax Definitions ][ MyTaxRights.org Tax Glossary ]
Marginal tax rate
The share of each extra dollar of income that will go to the IRS for taxes. It can be, but not necessarily, the same as the rate of your top tax bracket because in many cases rising income squeezes the value of tax breaks, so that the extra income can be effectively taxed more harshly than expected. Knowing your marginal rate tells you how much of each additional dollar you make will go to the IRS and how much you'll save for every dollar of deductions you claim, at least until you move into a new tax bracket.
[ VERIFIED AUTHORITY ][ CC-BY-4.0 ]
[ M ]
[ TurboTax/Intuit Tax Terms Glossary ][ TaxGPT Tax Glossary ]
Marital deduction
The marital deduction is a tax law provision that allows any amount of property to be transferred between spouses—either as lifetime gifts or bequests—without incurring federal gift or estate taxes.
[ VERIFIED AUTHORITY ][ CC-BY-4.0 ]
[ M ]
[ TurboTax/Intuit Tax Terms Glossary ][ TaxGPT Tax Glossary ]
Market discount
Market discount refers to the difference between the purchase price of a bond and its higher face value. The tax treatment of this discount depends on whether the bond is taxable or tax-free and whether you redeem it at maturity or sell it beforehand.
[ VERIFIED AUTHORITY ][ CC-BY-4.0 ]
[ M ]
[ IRS Understanding Taxes Student Glossary ]
market economy
An economic system based on private enterprise that rests upon three basic freedoms: freedom of the consumer to choose among competing products and services, freedom of the producer to start or expand a business, and freedom of the worker to choose a job and employer.
[ VERIFIED AUTHORITY ][ CC-BY-4.0 ]
[ M ]
[ PracticeGrowth Tax Glossary (GitHub legacy) ]
Marketplace (also: Exchange, Health Insurance Marketplace)
A governmental agency or nonprofit entity that makes qualified health plans available to individuals. The term "Marketplace" refers to state Marketplaces, regional Marketplaces, subsidiary Marketplaces, and a federally-facilitated Marketplace.
[ VERIFIED AUTHORITY ][ CC-BY-4.0 ]
[ M ]
[ PracticeGrowth Tax Glossary (GitHub legacy) ]
Marriage bonus
The reduction in the tax liability of some married couples that arises from filing jointly instead of as individuals. Marriage bonuses result from the combination of progressive tax rates and treating a family as a single tax unit. In general, couples in which spouses have quite different incomes are more likely to receive marriage bonuses. (See also Marriage penalty.)
[ VERIFIED AUTHORITY ][ CC-BY-4.0 ]
[ M ]
[ PracticeGrowth Tax Glossary (GitHub legacy) ]
Marriage penalty
The additional tax that some married couples pay from filing jointly instead of as individuals. Marriage penalties result from the combination of progressive tax rates and treating a family as a single tax unit. In general, couples in which spouses have similar incomes are more likely to incur marriage penalties. (See also Marriage bonus.)
[ VERIFIED AUTHORITY ][ CC-BY-4.0 ]
[ M ]
[ IRS Understanding Taxes Student Glossary ]
Married Filing Joint filing status
You are married and both you and your spouse agree to file a joint return. (On a joint return, you report your combined income and deduct your combined allowable expenses.)
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[ M ]
[ NPBC Tax Glossary ][ Tax Defense Network Tax Definitions ][ MyTaxRights.org Tax Glossary ][ Vermont Department of Taxes Glossary ]
Married Filing Jointly:
Filing status for taxpayers who are married to each other or live together in a common law marriage and combine their income and deductions on the same tax return. The status also applies to taxpayers who are separated but not divorced and to taxpayers whose spouse died during the tax year and has not remarried, as long as one tax return is used for both individuals.
[ VERIFIED AUTHORITY ][ CC-BY-4.0 ]
[ M ]
[ IRS Understanding Taxes Student Glossary ]
Married Filing Separate filing status
You must be married. This method may benefit you if you want to be responsible only for your own tax or if this method results in less tax than a joint return. If you and your spouse do not agree to file a joint return, you may have to use this filing status.
[ VERIFIED AUTHORITY ][ CC-BY-4.0 ]
[ M ]
[ NPBC Tax Glossary ][ Tax Defense Network Tax Definitions ][ MyTaxRights.org Tax Glossary ][ Vermont Department of Taxes Glossary ]
Married Filing Separately:
Filing status for taxpayers who are married to each other or live together in a common law marriage and report their own incomes and deductions on separate returns.
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[ M ]
[ IRS Understanding Taxes Student Glossary ]
mass tax
A broad tax that affects a majority of taxpayers.
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[ M ]
[ TurboTax/Intuit Tax Terms Glossary ][ TaxGPT Tax Glossary ]
Master Limited Partnerships (MLP)
Similar to regular limited partnerships, but MLP shares are typically traded on the major exchanges, making for a much more liquid investment. Although limited-partnership losses are considered passive, income from an MLP is considered investment income rather than passive income. That means passive losses can't be used to offset MLP income.
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[ M ]
[ TurboTax/Intuit Tax Terms Glossary ][ TaxGPT Tax Glossary ]
Material participation
Material participation is the test used to determine if you are sufficiently involved in a business to bypass the passive-loss rules. To qualify as a material participant, you must be involved in the business on a "regular, continuous, and substantial basis." One way to meet this requirement is by participating in the business for more than 500 hours during the year.
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[ M ]
[ Vermont Department of Taxes Glossary ]
Mean
also called the arithmetic mean or the average, the result of adding all the values and dividing by the number of values. For instance, the mean (average) of 3, 5 and 10 is 6. (3+5+10=18: 18/3=6).
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[ M ]
[ Vermont Department of Taxes Glossary ]
Median ratio
as used in the equalization study and other data analysis, the midpoint or middle value when a set of values is ranked in order of magnitude; if the number of values is even, the midpoint or average of the two middle values
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[ M ]
[ PracticeGrowth Tax Glossary (GitHub legacy) ]
Medicaid
A federal entitlement program that reimburses states for a portion of the costs associated with providing medical and long-term care services to certain low-income individuals. States must meet minimum federal coverage requirements but can also determine additional services and categories of people to cover. States also establish payment rates for providers and administer the program.
[ VERIFIED AUTHORITY ][ CC-BY-4.0 ]
[ M ]
[ NPBC Tax Glossary ]
Medical Severance Pay:
A type of includable military income given to service members who have been separated from the service for medical reasons
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[ M ]
[ PracticeGrowth Tax Glossary (GitHub legacy) ]
Medicare Part A
Supplementary medical insurance for Medicare beneficiaries that provides physician services and other ambulatory care (such as outpatient hospital services and tests). Beneficiaries must pay a premium to join; premiums cover about one-fourth of program costs. All persons over the age of 65 and other Medicare beneficiaries can enroll.
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[ M ]
[ IRS Understanding Taxes Student Glossary ][ TurboTax/Intuit Tax Terms Glossary ][ TaxGPT Tax Glossary ][ Tax Defense Network Tax Definitions ][ MyTaxRights.org Tax Glossary ][ Tax1099.com Glossary ]
Medicare tax
The portion of the combined Social Security and Medicare tax—1.45% for employees and 2.9% for self-employed taxpayers—that pays for Medicare. Although the part of the tax that pays for Social Security stops at $184,500 for 2026, the Medicare portion of the tax applies to all wages and self-employment income, no matter how high. The Social Security wage limit was $176,100 for 2025.
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[ M ]
[ NPBC Tax Glossary ]
Member of Household or Relationship Test:
One of the tests for identifying a qualifying relative as a dependent: Was the person related to the taxpayer in any of the following ways: Son, daughter, foster child, or a descendant of any of them; brother, sister, or a son or daughter of either of them; father, mother, or an ancestor or sibling of either of them; stepbrother, stepsister, stepfather, stepmother, son-in-law, daughter-in-law, father-in-law, mother-in-law, brother-in-law, or sister-in-law? Any other person (other than the taxpayer’s spouse) who lived with the taxpayer all year as a member of the taxpayer’s household?
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[ M ]
[ TurboTax/Intuit Tax Terms Glossary ][ TaxGPT Tax Glossary ]
Mid-quarter convention
In general, business property is depreciated under a midyear rule that allows half a year's depreciation for the first year, whether you buy property in January or December. However, if you buy more than 40% of the business property you put into service for the year during the fourth quarter, the mid-quarter convention can take over. With it, you depreciate each piece of property as though it were placed into service in the middle of the calendar quarter in which it was purchased. For example, under the rules, you would claim just six weeks' worth of depreciation for property put in service during the final quarter.
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[ M ]
[ TurboTax/Intuit Tax Terms Glossary ][ TaxGPT Tax Glossary ]
Midmonth convention
The midmonth convention is a rule that treats certain types of depreciable property, such as real estate, as if they were placed in service in the middle of the month they were first used.
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[ M ]
[ TurboTax/Intuit Tax Terms Glossary ][ TaxGPT Tax Glossary ]
Mileage rate
The mileage rate is the IRS-approved rate used to calculate the deductible costs of operating a vehicle for business, medical, moving, or charitable purposes. The rate is updated annually and reflects the average costs of operating a vehicle.
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[ M ]
[ PracticeGrowth Tax Glossary (GitHub legacy) ]
Minimum essential coverage (MEC)
Coverage under a government-sponsored program, an eligible employer-sponsored plan, a plan in the individual market, a grandfathered health plan, or other coverage recognized by the Department of Health and Human Services (HHS), in coordination with the Secretary of the Treasury, as minimum essential coverage.
[ VERIFIED AUTHORITY ][ CC-BY-4.0 ]
[ M ]
[ Tax1099.com Glossary ]
Minimum Taxable Income
See Tax1099.com Glossary for 'Minimum Taxable Income'.
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[ M ]
[ PracticeGrowth Tax Glossary (GitHub legacy) ]
Minimum Value
An ACA employer-sponsored plan provides minimum value if the plan covers at least 60 percent of the expected total allowed costs for covered services. Beginning in 2014, the employer will provide taxpayers with a document called a Summary of Benefits and Coverage. That document will provide information about the benefits and coverage under the employer-sponsored plan, including whether the plan provides minimum value. Also, under the Fair Labor Standards Act, most employers will provide employees with a notice about their options in the Marketplace and their potential eligibility for a premium tax credit. This one-time notice will include information about whether the employer has a plan that provides minimum value.
[ VERIFIED AUTHORITY ][ CC-BY-4.0 ]
[ M ]
[ Vermont Department of Taxes Glossary ]
Modernized E-Filing or Electronic Filing (MeF)
the IRS program, which is an integrated, web-based electronic filing platform replacing the legacy e-file system, which has been essentially unchanged for the IRS and the states since 1990
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[ M ]
[ NPBC Tax Glossary ][ Vermont Department of Taxes Glossary ]
Modified Adjusted Gross Income (MAGI):
for income tax purposes, usually, the adjusted gross income with various items added back in (different definitions exist in other contexts)
[ VERIFIED AUTHORITY ][ CC-BY-4.0 ]
[ M ]
[ IRS Understanding Taxes Student Glossary ]
Money
making activities that people don't report to the government, including both illegal and legal activities.
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[ M ]
[ PracticeGrowth Tax Glossary (GitHub legacy) ]
Moral hazard
The incentive created by insurance (explicit or implicit) to engage in risky behaviors, thereby raising the cost of insurance. The moral aspect refers to the observation that unscrupulous people covered by fire insurance were sometimes tempted to engage in arson. However, more generally, legal responses, such as engaging more in unhealthy behaviors (smoking, for example) when health services are covered by insurance, are also covered by the term.
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[ M ]
[ Tax Defense Network Tax Definitions ][ MyTaxRights.org Tax Glossary ]
Mortgage
A mortgage is a loan that is used to purchase property, such as a primary residence or an office building.
[ VERIFIED AUTHORITY ][ CC-BY-4.0 ]
[ M ]
[ NPBC Tax Glossary ]
Mortgage Insurance Premiums:
Qualified mortgage insurance is provided by the Department of Veterans Affairs, the Federal Housing Administration, the Rural Housing Service, and private mortgage insurance (PMI) companies. Taxpayers can treat qualified mortgage insurance premiums paid or accrued during the tax year as home mortgage interest. PMI is deductible on line 13 of Schedule A.
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[ M ]
[ TurboTax/Intuit Tax Terms Glossary ][ TaxGPT Tax Glossary ]
Mortgage interest
A term often used to refer to deductible interest paid on debt that qualifies as acquisition indebtedness or home equity debt. For tax years before 2018, the interest paid on up to $1 million of acquisition indebtedness is deductible if you itemize deductions. The interest on an additional $100,000 of home equity debt can be deductible if certain requirements are met. For tax years after 2017, deductible interest for new loans is limited to principal amounts of $750,000. Loans originated before December 16, 2017, or under a binding contract that closes before April 1, 2018, remain under the old rules for tax years prior to 2018; however, home equity debt is no longer eligible unless it is used to buy, build, or improve your home.
[ VERIFIED AUTHORITY ][ CC-BY-4.0 ]
[ M ]
[ NPBC Tax Glossary ][ MyTaxRights.org Tax Glossary ]
Mortgage Interest Credit:
A tax credit available to taxpayers who received a mortgage credit certificate (MCC) from a state or local government for low-income housing and who paid certain mortgage interest.
[ VERIFIED AUTHORITY ][ CC-BY-4.0 ]
[ M ]
[ TurboTax/Intuit Tax Terms Glossary ][ TaxGPT Tax Glossary ]
Moving expenses
For tax years prior to 2018, some moving costs related to starting a new job are deductible. To qualify, the new job must be at least 50 miles farther from your old home than your previous job. Deductible expenses include moving your household goods and travel and lodging costs for you and your family. If you moved for your first job, the 50-mile test applies to the distance between your old home and your new job. This deduction is available even if you claim the standard deduction instead of itemizing. Starting in 2018, moving expenses are no longer deductible, except for certain members of the military.
[ VERIFIED AUTHORITY ][ CC-BY-4.0 ]
[ M ]
[ Vermont Department of Taxes Glossary ]
Multi Family
for purposes of property tax, a residential structure with more than one residential unit, such as a duplex
[ VERIFIED AUTHORITY ][ CC-BY-4.0 ]
[ M ]
[ TaxGPT Tax Glossary ][ NPBC Tax Glossary ][ Tax Defense Network Tax Definitions ]
Multiple-Support Agreement
If one person has not provided over half the support, go to step 8 to determine if multiple support exists. Multiple support means that two or more people together, who could claim the person as a dependent except for the support test, provide more than half the dependent’s support. However, only one taxpayer can claim the exemption for a dependent with multiple support. In this situation, the individuals who provide more than 10% of the person’s total support (step 9), and who meet the other tests for a qualifying relative, can agree that one of them will take the person’s exemption.
[ VERIFIED AUTHORITY ][ CC-BY-4.0 ]
[ M ]
[ Tax1099.com Glossary ]
Mutual Fund Taxation
See Tax1099.com Glossary for 'Mutual Fund Taxation'.
[ VERIFIED AUTHORITY ][ CC-BY-4.0 ]
[ M ]
[ NPBC Tax Glossary ]
Mutual Funds:
A mutual fund is a regulated investment company generally created by pooling funds of investors, which allows investors to take advantage of a diversity of investments and professional management. Owners of mutual funds may receive both Form 1099-DIV and Form 1099-B. Form.
[ VERIFIED AUTHORITY ][ CC-BY-4.0 ]
[ M ]
[ Vermont Department of Taxes Glossary ]
myVTax
the secure online filing service provided by the Vermont Department of Taxes for Vermont taxpayers
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[ N ]
[ TaxGPT Tax Glossary ][ Tax Defense Network Tax Definitions ]
Nanny Tax
Nanny tax refers to the employment taxes paid by household employers for wages paid to household employees, such as nannies or cleaners. Employers must withhold and pay Social Security, Medicare, and federal unemployment taxes.
[ VERIFIED AUTHORITY ][ CC-BY-4.0 ]
[ N ]
[ Tax Defense Network Tax Definitions ]
Net Income
Net income is the amount a taxpayer earns after subtracting taxes and other deductions from their gross income. For businesses, net income is the amount of revenue left after expenses, taxes, and other costs are subtracted.
[ VERIFIED AUTHORITY ][ CC-BY-4.0 ]
[ N ]
[ Thomson Reuters Tax Glossary ]
Net investment income tax
Net investment income tax (NIIT) is a tax that some investors may be subject to if they have investment income, and their modified adjusted gross income surpasses a certain amount. The tax is paid on the lesser of the following: the net investment income received or the amount by which the modified adjusted gross income surpasses the threshold.
[ VERIFIED AUTHORITY ][ CC-BY-4.0 ]
[ N ]
[ Tax1099.com Glossary ]
Net Operating Loss (NOL)
See Tax1099.com Glossary for 'Net Operating Loss (NOL)'.
[ VERIFIED AUTHORITY ][ CC-BY-4.0 ]
[ N ]
[ TurboTax/Intuit Tax Terms Glossary ][ TaxGPT Tax Glossary ]
Net Unrealized Appreciation (NUA)
Net Unrealized Appreciation comes into play if you take a total payout from a company retirement plan that includes appreciated employer securities. Rather than make a tax-free rollover of the entire amount to an IRA, you can roll the stock into a taxable account and owe tax only on the stock's value when you acquired the shares. The NUA that accrued while the stock was inside the plan typically will not be taxed until you ultimately sell the stock. At that point, the profit can usually qualify for special long-term capital gain treatment. If you rolled the stock into an IRA, all appreciation would be taxed as ordinary income when withdrawn, at your tax rate thereby missing out on potential tax benefits.
[ VERIFIED AUTHORITY ][ CC-BY-4.0 ]
[ N ]
[ TaxGPT Tax Glossary ]
New, Temporary Advance Child Tax Credit Payments
The New Temporary Advance Child Tax Credit Payments were part of the American Rescue Plan, providing eligible families with advance monthly payments of the Child Tax Credit in 2021. These payments aimed to reduce child poverty and financial hardship.
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[ A ]
[ IRS VITA Glossary ]
A nine
digit tax-processing number issued by the IRS for children who are in the process of being adopted and who can be claimed as a dependent or claimed for a childcare credit. The ATIN is used wherever the child's social security number is requested.
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[ PracticeGrowth Tax Glossary (GitHub legacy) ]
Nominal income
A measure of income that is not adjusted for inflation. That is, nominal income is expressed in current dollars. (See also Real income.)
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[ PracticeGrowth Tax Glossary (GitHub legacy) ]
Non-filer
A person or household who does not file an individual income tax return. Most people without a filing requirement are not employed and many are also elderly.
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[ N ]
[ TurboTax/Intuit Tax Terms Glossary ][ TaxGPT Tax Glossary ]
Nonbusiness bad debt
If you've lent money to a friend or made a deposit to a contractor who's gone bankrupt, you may be able to claim a tax deduction for the loss. This type of debt is considered a nonbusiness bad debt, and it's deductible as a short-term capital loss on your tax return. To qualify for the deduction, you'll need to demonstrate that you've made a reasonable effort to collect the debt, but unfortunately, it's become entirely worthless. This could include sending reminders, making phone calls, or even taking legal action. Once you've exhausted all avenues and the debt is deemed unrecoverable, you can claim the loss on your tax return. This can help offset your taxable income and reduce your tax liability.
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[ PracticeGrowth Tax Glossary (GitHub legacy) ]
Nonbusiness credit card debt cancellation
If a taxpayer receives Form 1099-C for canceled credit card debt and was solvent (assets greater than liabilities) immediately before the debt was canceled, all the canceled debt will be included on the tax return as other income.
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[ NPBC Tax Glossary ]
Nonbusiness energy property credit:
Taxpayers may be able to claim a nonbusiness energy property credit for certain energy efficient property or improvements.
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[ TurboTax/Intuit Tax Terms Glossary ][ TaxGPT Tax Glossary ]
Noncash contributions
When you donate assets to a charity, you can claim a tax deduction for their fair market value, but there are some rules to keep in mind. If you've owned the asset for more than a year, you can deduct its full fair market value. However, if you've owned it for a year or less, your deduction is limited to what you originally paid for it. If your total donations are worth more than $500, you'll need to file Form 8283 and provide details about each asset, including its description and value. If the value of your donations exceeds $5,000, you'll typically need to include an appraisal to support your claim unless you're donating publicly traded securities. It's also important to note that when donating used items like clothing, furniture, or household goods, you can only deduct their value if they're in excellent or good condition.
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[ NPBC Tax Glossary ]
Nondeductible Traditional IRA Contributions:
Traditional IRA contributions that taxpayers may not deduct from their adjusted gross income because the taxpayers do not meet the requirements; also includes remaining contributions from a partial IRA deduction.
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[ TurboTax/Intuit Tax Terms Glossary ][ TaxGPT Tax Glossary ]
Nonqualified stock options
Nonqualified stock options are a type of employee compensation that allows workers to purchase company stock at a predetermined price. Unlike incentive stock options, they don't meet specific requirements to qualify for special tax treatment. When these options are granted, there's no immediate tax impact. However, when employees exercise their nonqualified stock options to buy company stock, they'll face tax consequences. The "spread" or "bargain element" - the difference between the option's exercise price and the stock's current market value - is considered taxable income. This means the employee will be taxed on the gain as if it were additional compensation, such as a bonus or salary.
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[ NPBC Tax Glossary ]
Nonrecourse Debt:
Recourse debt holds the borrower personally liable for any amount not satisfied by the surrender of secured property. If a lender forecloses on property subject to a recourse debt and cancels the portion of the debt in excess of the fair market value (FMV) of the property, the canceled portion of the debt will be treated as ordinary income from cancellation of indebtedness and will be required to be included in gross income unless the cancellation of indebtedness qualifies for one of the exceptions or exclusions from gross income under some provision of the Internal Revenue Code.
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[ Vermont Department of Taxes Glossary ]
Nonrefundable
for income tax purposes, a nonrefundable credit is subtracted from income tax liability up to the total amount owed. But unlike a refundable tax credit, a nonrefundable credit cannot reduce a tax balance beyond zero. Any unused portion of a nonrefundable tax credit will expire in the year the credit is claimed and cannot be carried over.
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[ IRS Understanding Taxes Student Glossary ][ NPBC Tax Glossary ][ Tax Defense Network Tax Definitions ][ MyTaxRights.org Tax Glossary ]
nonrefundable credit
When a tax credit is greater than the amount of tax owed, and the taxpayer cannot receive a refund of any amount in excess, it is considered to be a nonrefundable credit. This type of credit may only reduce the tax owed to zero.
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[ N ]
[ Tax Defense Network Tax Definitions ][ MyTaxRights.org Tax Glossary ]
Nonresident
A person who does not live in a particular state but is still required to file an income tax return for that state because he or she did business in the state.
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[ Tax Defense Network Tax Definitions ][ MyTaxRights.org Tax Glossary ]
Nontaxable
Certain income that is not subject to federal income tax.
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[ N ]
[ Tax Defense Network Tax Definitions ]
Not Collectible
See “ Currently Not Collectible.”
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[ N ]
[ Tax Defense Network Tax Definitions ]
Notice of Deficiency
A taxpayer will receive a Notice of Deficiency ( CP3219A Notice) when the information provided on their tax return is different from the information the IRS has received from an employer, financial institution, or other third party. The notice will explain how the new tax amount was calculated, as well as options for challenging the decision.
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[ N ]
[ IRS Understanding Taxes Student Glossary ]
nullification
A state's refusal to recognize or obey a federal law.
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[ PracticeGrowth Tax Glossary (GitHub legacy) ]
OASDI (Old Age, Survivors, and Disability Insurance)
The Social Security programs that pay monthly benefits to retired workers and their spouses and children, to survivors of deceased workers, and to disabled workers and their spouses and children.
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[ Tax Defense Network Tax Definitions ]
Offer in Compromise (OIC)
When a taxpayer owes the IRS more money than they can afford to pay, the IRS may agree to settle the tax debt for less than the amount owed. This is known as Offer in Compromise.
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[ NPBC Tax Glossary ]
OHA:
Overseas housing allowance, a type of excludable military income.
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[ PracticeGrowth Tax Glossary (GitHub legacy) ]
Omnibus Budget Reconciliation Act of 1987
This Act introduced 36 percent and 39.6 percent income tax brackets, repealed the wage cap on Medicare payroll taxes, increased the portion of Social Security benefits subject to income taxation for those with higher incomes, made more workers with children eligible for the Earned Income Tax Credit and increased their benefits, and made permanent the temporary high-income phase-outs of the personal exemption and itemized deductions. Overall, the bill was focused on deficit reduction.
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[ Vermont Department of Taxes Glossary ]
Open land
for purposes of property tax, land with no buildings
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[ Vermont Department of Taxes Glossary ]
Operating farm
for purposes of property taxes, property that is or will be a working farm
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[ Tax1099.com Glossary ]
Opportunity Zone Tax Benefits
See Tax1099.com Glossary for 'Opportunity Zone Tax Benefits'.
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[ NPBC Tax Glossary ]
Ordinary Dividends:
Corporate distributions paid out of the earnings and profits of the corporation.
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[ TurboTax/Intuit Tax Terms Glossary ][ TaxGPT Tax Glossary ]
Original Issue Discount (OID)
When you purchase a bond at a price lower than its face value, the difference between the two is known as the Original Issue Discount (OID). This discount is essentially a form of interest that accrues over the life of the bond. For taxable bonds, a portion of the OID must be reported as taxable interest income each year you hold the bond. This means that even though you haven't received any cash interest payments, you'll still need to report a portion of the OID as income on your tax return. This can impact your tax liability, so it's essential to understand how OID works and how it affects your bond investments.
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[ Blue Water Tax Glossary ]
Original text
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[ Vermont Department of Taxes Glossary ]
Orthophotograph
a composite product made from overlapping aerial photographs. It appears similar to a standard enlarged aerial photograph, but because tilt and relief displacement have been eliminated (the land is essentially flattened out), the photo becomes close to being a map upon which property lines and other data can be plotted.
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[ Vermont Department of Taxes Glossary ]
Other interest in property
for purposes of real estate transfer taxes, transfers such as a contingent remainder unrelated to life estates, boundary line adjustment, conservation easements, etc.
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[ Vermont Department of Taxes Glossary ]
Other State Credit (OSCR)
for purposes of income tax, credit for residents paying tax to another state and Vermont on the same income
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[ Vermont Department of Taxes Glossary ]
Other types of building construction
for purposes of real estate transfer taxes, may include a garage, motels, hotels, filling stations, restaurants, office buildings, telephone switching offices, etc.
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[ TurboTax/Intuit Tax Terms Glossary ][ TaxGPT Tax Glossary ]
Out-of-pocket charitable contributions
When you volunteer your time and resources to help a charitable organization, you may incur various expenses that can be deducted from your tax return. These out-of-pocket charitable contributions can add up and provide a valuable tax benefit. From the cost of gas for driving to and from charity events (typically 14 cents per mile) to the expense of stamps, stationery, and other supplies for fundraising activities, you can deduct these expenditures as charitable contributions. By keeping track of these expenses and itemizing them on your tax return, you can reduce your taxable income and lower your tax liability.
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[ Vermont Department of Taxes Glossary ]
Outside Collection Agency (OCA)
a collection agency under contract with the Vermont Department of Taxes to collect outstanding tax liabilities that have been inactive for more than sixty days. The collection agency contract is awarded through the competitive bidding process.
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[ Tax1099.com Glossary ]
Overpayment
See Tax1099.com Glossary for 'Overpayment'.
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[ NPBC Tax Glossary ]
Paid Preparers:
Paid preparers are legally liable under federal law for the returns they prepare; volunteers are not.
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[ Vermont Department of Taxes Glossary ]
Parcel
for purposes of tax administration, the base unit to be reported in the Grand List book and defined as “all contiguous land in the same ownership, together with all improvements thereon” (32 V.S.A. § 4152(a) (3)). For purposes of property valuation, the following factors must be considered when determining whether land is one or more parcels: the highest and best use; whether or not the property was conveyed in one deed; the land’s character and use; whether separately deeded tracts are contiguous; and whether the property functions as one tract for the owner.
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[ Tax Defense Network Tax Definitions ][ MyTaxRights.org Tax Glossary ]
Part-Year Resident
A taxpayer who must file a state income tax return, but only lives within the state for a portion of the year is known as a part-time or part-year resident.
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[ Tax Defense Network Tax Definitions ]
Partnership
A simple business structure where profits are passed through the owners’ personal income tax returns. Partnerships must file Form 1065, U.S. Return of Partnership Income, to report their income, losses and other financial details.
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[ TaxGPT Tax Glossary ]
Partnership Basis
The partnership basis refers to the adjusted basis of a partner’s interest in the partnership. It is used to determine the taxability of distributions and the deductibility of losses. A partner’s basis is initially determined by their contributions to the partnership and is adjusted annually for their share of income, deductions, and distributions.
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[ PracticeGrowth Tax Glossary (GitHub legacy) ]
Pass-through business deduction
The Tax Cuts and Jobs Act introduced a new provision allowing pass-through businesses to deduct up to 20 percent of qualified business income (QBI) from Taxable income.
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[ Thomson Reuters Tax Glossary ][ TaxGPT Tax Glossary ]
Pass-through entity
Pass-through entities (PTEs) are business structures where income, deductions, and credits "pass through" to the owners or shareholders, who report them on their individual tax returns. Examples include partnerships, S corporations, and sole proprietorships. These entities do not pay income tax at the entity level, avoiding double taxation.
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[ Thomson Reuters Tax Glossary ][ NPBC Tax Glossary ]
Passive activity loss
When a taxpayer receives income mainly from the use of property rather than for services. Passive activity means the taxpayer is not involved in making significant rental or business management decisions (versus active participation). Because rental activities are generally considered passive activities, rental losses may not fully deductible.
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[ NPBC Tax Glossary ]
Passive Income:
Taxable income that comes from passive activity, such as dividends, interest, royalties, rents, and annuities.
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[ TurboTax/Intuit Tax Terms Glossary ][ TaxGPT Tax Glossary ]
Passive-loss rules
If you invest in activities where you don't actively participate, such as rental properties or limited partnerships, these are considered passive activities. The losses you incur from these investments can only be used to offset income from similar passive investments. Unfortunately, you can't use these losses to reduce your taxable income from other sources, like your salary, interest, dividends, or capital gains. There are some exceptions to this rule, however. Real estate professionals, for example, may be able to deduct losses from their investments against their ordinary income. Additionally, if you're an individual who actively participates in rental real estate, you may be able to deduct some losses against your ordinary income. If you have passive losses that you can't use in the current year because you don't have enough passive income to offset them, don't worry. You can carry these losses over to future years, where they may be deductible against the passive income you earn in those years.
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[ PracticeGrowth Tax Glossary (GitHub legacy) ]
Pay-as-you-go (PAYGO)
PAYGO is a budget rule requiring that tax cuts, as well as increases in entitlement and other mandatory spending, be offset by tax increases or cuts in mandatory spending. PAYGO does not apply to discretionary spending (spending that is controlled through the appropriations process).
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[ Thomson Reuters Tax Glossary ]
Paycheck Protection Program
Initially introduced in the CARES Act for COVID-19 pandemic relief, the Paycheck Protection Program (PPP) provided forgivable loans to small businesses to maintain payroll and other expenses (rent, utilities, etc.) and which are now applying for loan forgiveness.
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[ Tax Defense Network Tax Definitions ]
Payment Plan
See “ Installment Agreement.”
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[ Vermont Department of Taxes Glossary ]
Payment-In-Lieu-of-Taxes (PILOT)
a payment to a town or city to compensate for a part of the cost for services on property which is exempt from the regular tax. For example, the State of Vermont makes a PILOT for state-owned buildings. Towns and cities may enter agreements with owners of low- and moderate-income housing whereby a PILOT is paid, rather than the full tax based on fair market value. 32 V.S.A. § 3709.
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[ IRS Understanding Taxes Student Glossary ][ NPBC Tax Glossary ][ Tax Defense Network Tax Definitions ][ MyTaxRights.org Tax Glossary ][ Tax1099.com Glossary ]
payroll taxes
Payroll tax refers to the Social Security and Medicare taxes that an employer withholds from an employee’s paycheck and pays to the government on behalf of the employee. It is part of the employment taxes an employer must pay.
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[ Tax1099.com Glossary ]
Payroll Withholding
See Tax1099.com Glossary for 'Payroll Withholding'.
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[ NPBC Tax Glossary ]
PCS:
Permanent change of station for a military service member.
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[ Tax Defense Network Tax Definitions ][ MyTaxRights.org Tax Glossary ]
Penalty
An additional charge (or assessment) added to one's tax bill usually as a result of late-filing a tax return or making a late tax payment.
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[ TaxGPT Tax Glossary ][ Tax Defense Network Tax Definitions ]
Penalty Abatement
Penalty abatement is IRS relief that reduces or removes penalties imposed for late filing, late payment, or other tax issues. Taxpayers may qualify under the First-Time Abate program if they have a clean compliance history, or they can request relief by showing reasonable cause supported with evidence. Administrative waivers and statutory exceptions may also apply. Proper documentation is key to securing approval for penalty relief.
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[ NPBC Tax Glossary ][ Tax Defense Network Tax Definitions ][ MyTaxRights.org Tax Glossary ]
Pension:
A series of definitely determinable payments made to an employee or survivor (the beneficiary of a deceased employee’s pension) after the employee retires from work.
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[ NPBC Tax Glossary ]
Period of Stay:
Amount of time a taxpayer stays in a foreign country, which is one of the factors used to determine whether the taxpayer is eligible for the foreign earned income exclusion. To meet the period of stay requirement, the taxpayer must meet either the Bona Fide Residency test or the Physical Presence test.
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[ Vermont Department of Taxes Glossary ]
Permanent and total disability
a disability that is expected to last at least a year and keeps an individual from any gainful activity (employment earning income)
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[ IRS Understanding Taxes Student Glossary ][ TaxGPT Tax Glossary ][ NPBC Tax Glossary ][ Tax Defense Network Tax Definitions ]
personal exemption
Personal exemption was an amount taxpayers could deduct for themselves, their spouses, and dependents. This exemption reduced taxable income but was suspended from 2018 to 2025 by the Tax Cuts and Jobs Act.
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[ IRS Understanding Taxes Student Glossary ]
Personal Identification Number (PIN)
Allow taxpayers to "sign" their tax returns electronically. The PIN, a five-digit self-selected number, ensures that electronically submitted tax returns are authentic. Most taxpayers can qualify to use a PIN.
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[ TaxGPT Tax Glossary ]
Personal Interest
Personal interest refers to the interest you pay on various personal loans and debts that don't qualify for tax deductions. This includes interest on credit cards, car loans, life insurance policy loans, and any other personal borrowing that isn't secured by your primary residence or a qualified second home. Unlike mortgage interest, business interest, student loan interest, and investment interest, personal interest is not tax-deductible. This means you won't be able to claim these interest expenses on your tax return to reduce your taxable income. As a result, it's essential to manage your personal debt wisely and explore ways to minimize your interest payments to avoid unnecessary expenses.
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[ TurboTax/Intuit Tax Terms Glossary ]
Personal interest expense
This is interest expense that doesn't qualify as mortgage, business, student loan or investment interest. Included is interest you pay on credit cards, life insurance loans and any other personal borrowing not secured by your home. Personal interest cannot be deducted. An exception is for interest on certain qualifying car loans made available through the " One Big Beautiful Bill" (also known as the working Families Tax Cut) that became law in July 2025.
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[ NPBC Tax Glossary ]
Physical Presence Test:
To meet the physical presence test for the foreign earned income exclusion, a taxpayer must be physically present in a foreign country 330 full days during a period of twelve consecutive months.
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[ TurboTax/Intuit Tax Terms Glossary ][ TaxGPT Tax Glossary ]
Points
When you take out a mortgage to buy or improve your primary residence, you may encounter points, which are fees equal to 1% of the mortgage amount. The good news is that points paid on a mortgage to purchase or improve your principal home are generally fully tax-deductible in the year you pay them. Here's a bonus: even if the seller agrees to pay the points on your behalf, you can still deduct them as long as you've contributed enough cash at closing, such as a down payment, to cover the points. However, if you're refinancing your mortgage or buying a different property, the rules change. In these cases, you'll need to deduct the points over the life of the loan rather than all at once. It's essential to understand how mortgage points work and how they impact your tax situation so you can make the most of this valuable deduction.
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[ Tax Defense Network Tax Definitions ]
Power of Attorney (POA)
Written authorization for an individual to receive confidential information from the IRS, as well as perform certain actions on behalf of a taxpayer.
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[ TurboTax/Intuit Tax Terms Glossary ][ TaxGPT Tax Glossary ]
Preference items
When it comes to taxes, there are certain benefits that are allowed under the regular income tax system but not under the Alternative Minimum Tax (AMT). These benefits are known as preference items, and they can have a significant impact on your tax liability. Some common examples of preference items include the deduction of state and local taxes, as well as interest on home equity loans. However, one preference item that's becoming increasingly important for many taxpayers is the "spread" between the exercise price and the value of stock purchased with incentive stock options. While this amount isn't subject to regular income tax, it is considered a preference item and can trigger the AMT. This means that if you're affected by the AMT, you may end up paying taxes on this amount, even though you wouldn't have to under the regular tax system. It's essential to understand how preference items work and how they can impact your tax situation, especially if you're someone who exercises incentive stock options or has other tax benefits that could trigger the AMT.
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[ TurboTax/Intuit Tax Terms Glossary ][ TaxGPT Tax Glossary ]
Premature distribution
If you withdraw money from your company's retirement plan before turning 55 (in most cases) or from a traditional IRA before reaching age 59½, you may face a 10% penalty. This means you'll have to pay an extra 10% of the withdrawn amount as a penalty, in addition to any taxes owed. It's essential to consider these rules before making an early withdrawal from your retirement savings."
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[ Tax1099.com Glossary ]
Preparer Tax Identification Number (PTIN)
See Tax1099.com Glossary for 'Preparer Tax Identification Number (PTIN)'.
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[ Vermont Department of Taxes Glossary ]
Price-Related Differential (PRD)
for purposes of property valuation and the equalization study, also called the regressivity index, the mean ratio is divided by the aggregate ratio. This statistic is used to determine whether assessment practices are progressive or regressive. A PRD above 1.03 tends to indicate assessment regressivity (lower-valued properties are assessed at higher ratios). A PRD below .98 tends to indicate assessment progressivity (higher-valued properties are assessed at a higher ratio).
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[ Vermont Department of Taxes Glossary ]
Primary Residence
for purposes of land gains tax, includes a building with four apartments or less and non-operating farms with the highest and best use as a year-round residence. This does not mean the seller or buyer used the property as their primary residence. The best use of the property is capable of being used as a primary residence. Even if the property will be a rental, it is still considered a primary residence. By choosing the primary residence for the buyer, you are not stating that they will be using it as their primary. If primary is chosen it also does not automatically mean that the buyer is entitled to the lower rate; this only applies if the buyer will be using it as their primary residence. If someone is adding additional contiguous land to their primary residence you can use primary residence as the use of the property. Please note that additional acreage does not qualify for the lower rate.
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[ Tax Defense Network Tax Definitions ][ MyTaxRights.org Tax Glossary ]
Principal Residence
The place a taxpayer lives for majority of the year is known as their primary or principal residence.
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[ TurboTax/Intuit Tax Terms Glossary ][ TaxGPT Tax Glossary ]
Prizes and awards
If you're lucky enough to win a prize or award, congratulations are in order! However, it's essential to remember that the value of your prize or award is generally considered taxable income. This means that if you hit the jackpot in a lottery or sweepstakes, you'll need to report the winnings on your tax return and pay taxes on them. There is one exception to this rule, though. Certain non-cash employee awards, such as a traditional "gold watch" or other symbolic recognition, may be tax-free. These types of awards are typically given to employees in recognition of their service or achievements, and they're not considered taxable income. It's always a good idea to check the tax implications of any prize or award you receive so you can plan accordingly and avoid any unexpected tax bills.
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[ IRS Understanding Taxes Student Glossary ][ Tax Policy Center Briefing Book ][ Tax Defense Network Tax Definitions ][ MyTaxRights.org Tax Glossary ]
progressive tax
The U.S. federal income tax system uses progressive tax to determine a person’s tax rate. The higher the taxpayer’s income, the larger percentage of tax they will pay.
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[ Vermont Department of Taxes Glossary ]
Property tax credit
the Vermont Property Tax Credit assists many Vermont homeowners with paying their property taxes. Individuals who are eligible must file the HS-122 and HI-144. The property tax credit is sent directly to the town of residence and will be reflected on the property tax bill received by the taxpayer.
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[ IRS Understanding Taxes Student Glossary ][ TurboTax/Intuit Tax Terms Glossary ][ Tax Policy Center Briefing Book ][ TaxGPT Tax Glossary ][ NPBC Tax Glossary ][ Tax Defense Network Tax Definitions ][ MyTaxRights.org Tax Glossary ]
property taxes
Property taxes are taxes assessed on real estate by local governments. Homeowners can deduct these taxes if they itemize deductions, subject to the overall limit on state and local tax deductions.
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[ IRS Understanding Taxes Student Glossary ][ Tax Defense Network Tax Definitions ]
proportional tax
Proportional tax is a tax percentage that is the same, regardless of income level.
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[ P ]
[ Vermont Department of Taxes Glossary ]
Proprietorship
for purposes of income tax, a business owned and controlled by one person
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[ P ]
[ IRS Understanding Taxes Student Glossary ]
protective tariff
A tax levied on imported goods with the purpose of reducing domestic consumption of foreign-produced goods.
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[ P ]
[ IRS Understanding Taxes Student Glossary ]
public goods and services
Benefits that cannot be withheld from those who don't pay for them, and benefits that may be "consumed" by one person without reducing the amount of the product available for others. Examples include national defense, streetlights, and roads and highways. Public services include welfare programs, law enforcement, and monitoring and regulating trade and the economy.
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[ PracticeGrowth Tax Glossary (GitHub legacy) ]
Publication 17
Innocent Spouse Relief, addresses how one spouse may request relief from past taxes due solely based on the other spouse's debt.
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[ PracticeGrowth Tax Glossary (GitHub legacy) ]
Publication 463
Travel, Entertainment, Gift, and Car Expenses
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[ PracticeGrowth Tax Glossary (GitHub legacy) ]
Publication 552
Individual Retirement Arrangements (IRAs)
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[ Tax1099.com Glossary ]
Purchase Price Allocation for Tax
See Tax1099.com Glossary for 'Purchase Price Allocation for Tax'.
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[ Vermont Department of Taxes Glossary ]
PVR
the Vermont Department of Taxes’ Division of Property Valuation and Review
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[ Tax1099.com Glossary ]
Qualified ABLE Program
See Tax1099.com Glossary for 'Qualified ABLE Program'.
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[ Thomson Reuters Tax Glossary ]
Qualified business income
Qualified business income (QBI) deduction is Section 199A of the Internal Revenue Code. It provides eligible owners of partnerships, S corporations, sole proprietorships, single-member limited liability companies (LLCs), as well as some trusts and estates, a deduction of income from a qualified trade or business.
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[ NPBC Tax Glossary ]
Qualified Charitable Contributions (QCD):
A QCD is a distribution from an IRA made to an organization eligible to receive tax-deductible contributions. If all requirements are met, this will exclude any part of the distribution that would otherwise be taxable.
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[ Tax1099.com Glossary ]
Qualified Intermediary (QI)
See Tax1099.com Glossary for 'Qualified Intermediary (QI)'.
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[ PracticeGrowth Tax Glossary (GitHub legacy) ]
Qualified Medicaid waiver payments
Qualified Medicaid waiver payments are payments by a state, a political subdivision of a state, or a certified Medicaid provider under a Medicaid waiver program to an individual care provider for nonmedical support services provided under a plan of care to an individual (whether related or unrelated) living in the individual care provider's home.
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[ NPBC Tax Glossary ]
Qualified Medical Expenses:
For HSA, MSA, FSA, and HRA purposes, a medicine or drug will be a qualified medical expense only if the medicine or drug: requires a prescription, is available without a prescription (an over-the-counter medicine or drug) and you get a prescription for it, or is insulin.
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[ TaxGPT Tax Glossary ]
Qualified Opportunity Zone (QOZ)
Qualified Opportunity Zones (QOZs) were established under the Tax Cuts and Jobs Act (TCJA) to encourage investment in economically distressed areas. Investors can defer taxes on eligible capital gains by investing in Qualified Opportunity Funds (QOFs). Additional benefits include potential reductions in deferred gains and exclusions of post-investment gains if the investment is held for at least 10 years.
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[ TurboTax/Intuit Tax Terms Glossary ][ TaxGPT Tax Glossary ]
Qualified plan
A qualified plan is a type of employee benefit plan, such as a pension or profit-sharing plan, that meets the strict requirements set by the Internal Revenue Service (IRS). The purpose of these plans is to safeguard the interests of employees, ensuring they receive the benefits they're entitled to. By meeting IRS standards, qualified plans provide a secure way for employers to offer retirement savings and other benefits to their employees.
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[ NPBC Tax Glossary ]
Qualified Principal Residence Indebtedness:
Qualified principal residence indebtedness is any debt incurred in acquiring, constructing, or substantially improving a principal residence and which is secured by the principal residence. Qualified principal residence indebtedness also includes any debt secured by the principal residence resulting from the refinancing of debt incurred to acquire, construct, or substantially improve a principal residence but only to the extent the amount of the debt does not exceed the amount of the refinanced debt.
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[ NPBC Tax Glossary ]
Qualified Tuition Program:
A program set up to allow taxpayers to either prepay, or contribute to an account established for paying a student’s qualified expenses at an eligible educational institution. The program must meet certain requirements set by the state. Also known as a 529 program.
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[ IRS Understanding Taxes Student Glossary ][ NPBC Tax Glossary ][ Tax Defense Network Tax Definitions ][ MyTaxRights.org Tax Glossary ]
qualifying child
To be a qualifying child, the dependent must meet eight tests: (1) relationship, (2) age, (3) residence, (4) support, (5) citizenship or residency, (6) joint return, (7) qualifying child of more than one person, and (8) dependent taxpayer.
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[ NPBC Tax Glossary ]
Qualifying Child of More than One Person Test:
One of the tests for identifying a qualifying child or qualifying relative as a dependent: Is the person the qualified child of any other person?
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[ IRS Understanding Taxes Student Glossary ][ NPBC Tax Glossary ][ Tax Defense Network Tax Definitions ][ MyTaxRights.org Tax Glossary ]
qualifying relative
To be identified as a qualifying relative, a person must meet seven tests: Member of household or relationship test, Qualifying child of another taxpayer test, Citizen or resident test, Gross income test, Support test, Joint return test, and Dependent taxpayer test.
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[ Tax Defense Network Tax Definitions ][ Vermont Department of Taxes Glossary ]
Qualifying Widow(er)
Qualifying widow(er) is a filing status available to taxpayers for up to two years after their spouse has died, if the following apply: (1) the taxpayer would have been entitled to file a joint return in the year the spouse died, (2) the taxpayer did not remarry, (3) the taxpayer has a qualifying child who lives with them for the majority of the year, and (4) the taxpayer has paid more than 50% of the costs to maintain the home for the year.
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[ IRS Understanding Taxes Student Glossary ]
Qualifying Widow(er) filing status
If your spouse died in 2010, you can use married filing jointly as your filing status for 2010 if you otherwise qualify to use that status. The year of death is the last year for which you can file jointly with your deceased spouse. You may be eligible to use qualifying widow(er) with dependent child as your filing status for two years following the year of death of your spouse. For example, if your spouse died in 2010, and you have not remarried, you may be able to use this filing status for 2011 and 2012. This filing status entitles you to use joint return tax rates and the highest standard deduction amount (if you do not itemize deductions). This status does not entitle you to file a joint return.
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[ NPBC Tax Glossary ]
Qualifying Widow(er) With Dependent Child:
Filing status is for widow or widower with one or more dependent children.
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[ NPBC Tax Glossary ]
Railroad Retirement Benefits (RRBs):
Benefits paid to railroad retirees covered by the Railroad Retirement Act. The RRA has two components. Tier 1 is the equivalent of social security benefits and Tier 2 is like an employer’s pension plan.
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[ TurboTax/Intuit Tax Terms Glossary ][ TaxGPT Tax Glossary ]
Real estate taxes
Qualifying real estate taxes that you pay are deductible as an itemized deduction. Beginning in 2025, the limit increases to up to $40,000 but can be reduced when your income exceeds certain amounts. For tax years 2026 through 2030, the limit will increase each year before it reverts to $10,000 for 2031. For tax years 2018 through 2024, deductions for state and local taxes, including real estate taxes, are limited to $10,000 per year. For tax years prior to 2018, you can deduct the state and local property taxes you paid on any number of personal residences or other real property you own.
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[ Vermont Department of Taxes Glossary ]
Reappraisal
for purposes of property valuation, having property reassessed in order to find the real market value and adjust taxes owed
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[ TaxGPT Tax Glossary ]
Reasonable Cause Relief
Reasonable cause relief is granted when taxpayers show they exercised ordinary business care and prudence but could not meet tax obligations due to circumstances beyond their control. Examples include serious illness, death in the family, natural disasters, or reliance on incorrect professional advice. Each case is reviewed individually, and strong documentation is required to support the request.
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[ MyTaxRights.org Tax Glossary ]
Recapture
The repayment of a tax credit if requirements were not met by the taxpayer at the time the credit was claimed.
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[ TurboTax/Intuit Tax Terms Glossary ][ TaxGPT Tax Glossary ]
Recapture of depreciation
When you depreciate an investment property, its tax basis decreases over time. However, when you sell the property, the IRS takes a closer look at the profit. If the profit is partly due to the reduced basis (rather than the property's appreciation in value), you'll face a tax consequence known as depreciation recapture. This means that up to 25% of the profit will be taxed at a higher rate rather than the standard 20% long-term capital gains rate. This recapture provision ensures that you don't get to keep the entire depreciation tax break you claimed over the years.
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[ IRS Understanding Taxes Student Glossary ][ Tax Defense Network Tax Definitions ][ MyTaxRights.org Tax Glossary ]
refund
An amount of money received from the U.S. Treasury because a taxpayer either overpaid their tax liability for the year or received refundable tax credits in excess of their tax liability.
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[ Tax1099.com Glossary ]
Refundable vs Nonrefundable Tax Credits
See Tax1099.com Glossary for 'Refundable vs Nonrefundable Tax Credits'.
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[ Vermont Department of Taxes Glossary ]
Regressivity Index (RI)
see price-related differential
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[ PracticeGrowth Tax Glossary (GitHub legacy) ]
Regular Method
Most common method for computing self-employment tax. Under the regular method, the net self-employment income entered on Schedule SE is the sum of net self-employment earnings from the taxpayer's Schedules C, C-EZ, and F. (Taxpayers should consult a professional tax preparer or a military legal assistance officer if they use a different method or require Schedule F.
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[ PracticeGrowth Tax Glossary (GitHub legacy) ]
Regular Place of Abode
Regular place of abode is defined as one's home, habitation, domicile, or place of dwelling. It does not necessarily include one's principal place of business. For purposes of the foreign earned income exclusion, if taxpayers work overseas for an indefinite period of time, and their regular place of abode is the U.S., the taxpayers cannot designate the foreign country as the tax home.
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[ TurboTax/Intuit Tax Terms Glossary ][ TaxGPT Tax Glossary ]
Reimbursement account
A reimbursement account, also known as a flexible spending account or salary reduction plan, is a valuable fringe benefit offered by some employers. It allows employees to set aside a portion of their salary on a pre-tax basis, which is then used to reimburse them for eligible medical or childcare expenses. The best part? The funds contributed to the account are exempt from federal income taxes, Social Security taxes, and state income taxes, reducing the employee's overall tax liability. This means employees can save money on taxes while also covering essential expenses.
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[ PracticeGrowth Tax Glossary (GitHub legacy) ]
Relationship Test
One of the tests for identifying a qualifying child as a dependent: Was the person the taxpayer's son, daughter, stepchild, eligible foster child, brother, sister, stepbrother, stepsister, or a descendant of any of them (i.e., the taxpayer's grandchild, niece, or nephew)?
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[ PracticeGrowth Tax Glossary (GitHub legacy) ]
Relative
Someone related to the taxpayer by blood, marriage, or adoption, including the following: - Child, grandchild, great grandchild - Stepchild, stepbrother, stepsister - Brother, sister - Half-brother, half sister - Parent, grandparent, or other direct ancestor (but not foster parent) - Stepmother or stepfather - Brother or sister of one's father or mother - Son or daughter of one's brother or sister - Father-in-law, mother-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law.
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[ NPBC Tax Glossary ]
Rental Expenses:
Ordinary and necessary expenses attributable to the production of rental income and maintenance of the rental property, such as advertising, cleaning and repairs, insurance premiums, and property management fees.
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[ NPBC Tax Glossary ]
Rental Income:
Payments received by a taxpayer from tenants who rent the taxpayer’s property, including regular and advanced rent, payments for breaking a lease, expenses paid by the tenant, and the fair market value of property or services received in lieu of monetary rental payments.
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[ Tax1099.com Glossary ]
Reporting Period (Tax Year)
See Tax1099.com Glossary for 'Reporting Period (Tax Year)'.
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[ Thomson Reuters Tax Glossary ][ NPBC Tax Glossary ]
Required minimum distributions
Required minimum distribution (RMD) is the minimum amount that must be withdrawn each year from certain tax-deferred retirement accounts, generally starting at age 73. RMDs are typically taxable as ordinary income, and failing to take the full required amount can result in penalties.
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[ TaxGPT Tax Glossary ]
Research & Development (R&D) Tax Credit
The R&D Tax Credit incentivizes businesses to invest in research and development activities. It is calculated based on qualified research expenses (QREs) such as wages, supplies, and contract research. Businesses claim the credit using Form 6765, Credit for Increasing Research Activities.
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[ NPBC Tax Glossary ]
Residence Test:
One of the tests for identifying a qualifying child as a dependent: Did the potential dependent live with the taxpayer as a member of the taxpayer’s household for more than half of the year?
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[ NPBC Tax Glossary ][ Tax Defense Network Tax Definitions ]
Resident Alien:
An individual is considered to be a U.S. resident alien if he or she meets either the Green Card Test or the Substantial Presence Test.
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[ Vermont Department of Taxes Glossary ]
Resident Estate
is the estate of a decedent who was domiciled in Vermont at the time of death.
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[ TaxGPT Tax Glossary ]
Residential Clean Energy Credit
The Residential Clean Energy Credit under IRC § 25D allows homeowners to claim a credit for installing qualified clean energy systems, such as solar panels or battery storage. The credit is generally 30% of the installation costs for systems placed in service before 2033.
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[ NPBC Tax Glossary ]
Residential Energy Efficient Property Credit:
Taxpayers may qualify for an energy credit for qualified solar electric property costs, qualified solar water heating property costs, qualified small wind energy property costs, and qualified geothermal heat pump property costs. This credit is claimed on Part II of Form 5695. This information is out of scope for the VITA/TCE programs and is included for your awareness only.
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[ Vermont Department of Taxes Glossary ]
Residential New Construction
for purposes of real estate transfers, house or modular home that was placed on the property after the purchase by the seller, such as open land purchase where a home was constructed and is now being sold
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[ IRS Understanding Taxes Student Glossary ]
resources
Factors needed to produce goods and services (natural, human, and capital goods).
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[ IRS VITA Glossary ]
Retirement Income
Retirement income can include Social Security benefits as well as any benefits from annuities, retirement or profit sharing plans, insurance contracts, IRAs, etc. Retirement income may be fully or partially taxable.
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[ TaxGPT Tax Glossary ]
Retirement Saver's Credit
The Retirement Saver's Credit is a valuable incentive designed to encourage lower-income workers to save for their golden years. If you contribute to an IRA, 401(k), or other retirement plan, you may be eligible for a credit worth up to 50% of your contributions, with a maximum credit amount of $1,000 ($2,000 for joint filers). The credit is available for contributions of up to $2,000. However, the credit amount phases out as your income increases. Additionally, taxpayers under 18 and those claimed as dependents on their parent's tax returns are not eligible, regardless of their income. This credit is a great way to get a head start on your retirement savings while reducing your tax liability.
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[ IRS VITA Glossary ][ TurboTax/Intuit Tax Terms Glossary ][ NPBC Tax Glossary ]
Retirement Savings Contributions Credit
This credit—generally known as the Saver's Credit—is worth as much as 50% of up to $2,000 contributed to an IRA, 401(k) or other retirement plan, for a maximum credit amount of $1,000 ($2,000 if filing jointly). The credit is designed to encourage lower-income workers to save for their retirement. The credit is phased out as income rises. Taxpayers under age 18 and those claimed as dependents on their parents' returns are not eligible, regardless of their income. The credit will generally be replaced with the "Saver's Match" in 2027, which will be a matching contribution (instead of a tax credit) into your retirement account.
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[ IRS VITA Glossary ][ NPBC Tax Glossary ]
Retirement Tax Act (RTTA)
Tier I Railroad Retirement Tax is the railroad retirement equivalent of social security wages and benefit amounts.
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[ Tax1099.com Glossary ]
Retrieve EIN
See Tax1099.com Glossary for 'Retrieve EIN'.
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[ Vermont Department of Taxes Glossary ]
Return
a form submitted by the taxpayer to the Vermont Department of Taxes or IRS with information regarding their taxes and other information
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[ IRS Understanding Taxes Student Glossary ][ Tax Defense Network Tax Definitions ][ MyTaxRights.org Tax Glossary ]
revenue
Revenue, also referred to as “gross sales,” is income that is generated by the sale of goods and services through a company’s primary operations.
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[ IRS Understanding Taxes Student Glossary ][ Tax Defense Network Tax Definitions ]
revenue tariff
A tax on imported goods levied primarily to generate revenue for the federal government.
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[ Tax1099.com Glossary ]
Reverse Mortgages and Taxes
See Tax1099.com Glossary for 'Reverse Mortgages and Taxes'.
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[ IRS VITA Glossary ][ TurboTax/Intuit Tax Terms Glossary ][ TaxGPT Tax Glossary ][ NPBC Tax Glossary ]
Rollover
A rollover is a tax-free transfer of funds from one individual retirement account (IRA) to another or from a company-sponsored retirement plan to an IRA. This allows you to consolidate your retirement savings or switch to a new plan without incurring taxes or penalties. However, it's essential to follow the rules: if you take possession of the funds, you must deposit them into the new IRA within 60 days to avoid taxes and penalties. Be aware that if you're rolling over funds from a company plan to an IRA, 20% of the amount will be automatically withheld for the IRS, even though the rollover is tax-free. To avoid this withholding, consider using the direct transfer method, which allows you to move funds directly from the company plan to the IRA without taking possession of the money. See Direct Transfer for more information.
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[ TurboTax/Intuit Tax Terms Glossary ][ TaxGPT Tax Glossary ]
Roth 401(k)
Roth options are often available with 401(k) plans to allow employees to invest after-tax money with the promise of tax-free withdrawals in retirement. With the regular 401(k), you invest pre-tax money but have to pay tax on all withdrawals in retirement. If your firm offers a matching contribution, it can go into the traditional 401(k) or a Roth 401(k). The same dollar limits apply to Roth 401(k)s as to regular plans. The maximum employee contribution for 2026 is $24,500 ($23,500 for 2025). Plus, you can make an extra $8,000 “catch-up” contribution in 2026 if you are age 50 through 59 or 64 or older ($7,500 for 2025). For those aged 60 through 63, the catch-up amount is creased to $11,250 (same amount for 2025). You can choose to divert part of your pay to each kind of 401(k) account, but your combined contributions can’t exceed the preceding limits.
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[ TurboTax/Intuit Tax Terms Glossary ][ TaxGPT Tax Glossary ][ Tax Defense Network Tax Definitions ][ MyTaxRights.org Tax Glossary ]
Roth IRA
The Roth IRA, named after Senator William Roth of Delaware, offers a unique benefit: tax-free withdrawals in retirement. Unlike traditional IRAs, contributions to a Roth IRA are not tax-deductible, but all earnings and withdrawals are tax-free, as long as you wait until age 59½ and at least five years after opening your first Roth account. The annual contribution limits are the same as traditional IRAs: $6,500 in 2023, with an additional $1,000 catch-up contribution allowed for those 50 and older. However, there's an income limit: if you earn too much, you won't be eligible to contribute to a Roth IRA. Note that the limits increase to $7,000 for 2024, with the catch-up limit remaining at $1,000. Another option is to convert a traditional IRA to a Roth IRA, which allows future earnings to grow tax-free. This is called a Roth IRA conversion. However, you'll need to pay taxes on the amount you transfer from the traditional IRA to the Roth IRA. Starting in 2010, there's no income restriction on Roth IRA conversions, making it a more accessible option for many individuals.
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[ TurboTax/Intuit Tax Terms Glossary ][ TaxGPT Tax Glossary ][ Blue Water Tax Glossary ][ Tax Defense Network Tax Definitions ]
S Corporation
Also called a traditional or true corporation, a C corporation is a **business entity** that, for tax and legal purposes, exists separately from its owners or shareholders. C corporations generally must pay corporate income tax, which can lead to **double taxation**. However, the C corporation structure also provides the highest degree of personal asset protection for shareowners in the event of a business failure, lawsuit or other legal action against the company.
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[ IRS Understanding Taxes Student Glossary ][ Tax Defense Network Tax Definitions ][ MyTaxRights.org Tax Glossary ]
salary
The compensation received by an employee for services performed. A salary is a fixed sum paid for a specific period of time worked, such as weekly or monthly.
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[ TurboTax/Intuit Tax Terms Glossary ][ TaxGPT Tax Glossary ]
Salary reduction plan
A salary reduction plan allows employees to contribute a portion of their salary to a retirement plan, such as a 401(k) or 403(b), on a pre-tax basis. These contributions reduce taxable income and grow tax-deferred until withdrawn.
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[ IRS VITA Glossary ][ NPBC Tax Glossary ]
Sale of Main Home
Only a gain from the sale of a taxpayer's main home may be excluded from the taxpayer's income; a gain from a sale of a home that is not the taxpayer's main home will generally have to be reported as income.
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[ IRS Understanding Taxes Student Glossary ][ TurboTax/Intuit Tax Terms Glossary ][ Tax Foundation TaxEDU Glossary ][ TaxGPT Tax Glossary ][ Tax Defense Network Tax Definitions ][ MyTaxRights.org Tax Glossary ]
sales tax
If you itemize your deductions, you may be eligible to claim a deduction for state and local sales taxes you've paid. However, you'll need to choose between deducting sales taxes or state and local income taxes. If you live in a state with no income tax, the sales tax deduction is likely your best bet. The good news is that you don't need to keep every single receipt to take advantage of this deduction. The IRS provides a helpful table that estimates your sales tax payments based on your income, family size, and location. You can also add to this amount any sales taxes paid on major purchases, such as vehicles, boats, or planes. In some cases, these big-ticket items may result in higher sales tax payments than income tax, making the sales tax deduction a more valuable choice. Ultimately, you can choose the deduction that yields the greatest tax benefit for you.
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[ Thomson Reuters Tax Glossary ]
SALT deduction
When filing federal taxes, some taxpayers who itemize may be able to deduct certain taxes paid to state and local governments and avoid double taxation. This is known as the state and local tax (SALT) deduction.
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[ TurboTax/Intuit Tax Terms Glossary ][ TaxGPT Tax Glossary ]
Saver's credit
The Saver's Credit is a tax credit for low- and moderate-income taxpayers who contribute to a retirement plan, such as an IRA or 401(k). The credit can reduce overall tax liability and encourage retirement savings.
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[ PracticeGrowth Tax Glossary (GitHub legacy) ]
Schedule 1, Additional Income and Adjustments to Income
Use this form to report income not accounted for on Form 1040 itself, including business income and certain capital gains. Schedule 1 also enables you to claim various above-the-line deductions, such as the educator expense deduction, the deduction for one-half of self-employment tax and the deduction for student loan interest. - Schedule 2, Additional Taxes Many people must use this form to report other federal taxes they must pay besides income tax. These additional taxes may include alternative minimum tax (AMT), self-employment tax and household employment taxes. - Schedule 3, Additional Credits and Payments This form enables people to claim credits and report payments not shown on Form 1040 itself. Credits that may be claimed on Schedule 3 include the foreign tax credit, the credit for child and dependent care, various education credits and the healthcare Premium Tax Credit. - Schedule A, Itemized Deductions People who choose to itemize deductions instead of claiming the standard deduction use this form to list their deductions and calculate their total deduction amount. - Schedule B, Interest and Ordinary Dividends It may be necessary to use this form to report unearned income from interest and ordinary dividends, and also to report foreign financial accounts that you hold or control. - Schedule C or C-EZ, Profit or Loss from Business People classified as sole proprietors by the IRS must generally use one of these two forms to report their business income and deduct business expenses. For tax purposes, the sole proprietor designation includes many self-employed people, such as independent contractors, freelancers and gig economy workers. Net profits shown on Schedule C are usually subject to self-employment tax. - Schedule D, Capital Gains and Losses If you have capital gains or losses, you will summarize them on this schedule, and compute your net gain or loss. In most cases, you will also have to complete Form 8949 to report the details of each transaction that resulted in a gain or loss. - Schedule E, Supplemental Income and Loss People use this form to report rental income, real estate royalties, and some other types of income that are not accounted for on Form 1040 or other schedules. - Schedule EIC, Earned Income Credit If you are claiming the Earned Income Tax Credit (EITC), you must file this form if you have one or more qualifying children. - Schedule H, Household Employment Taxes People use this form to calculate the taxes they must remit on wages paid to household employees like nannies, housekeepers or gardeners. If you owe such household employment taxes, you will generally also report them on Schedule 2. - Schedule SE, Self-Employment Tax You typically must file this schedule if you earn more than $400 during a year through self-employment activities, such as operating a business, freelancing, or working as an independent contractor or gig economy worker. Use Schedule SE to calculate your self-employment tax, which you must also report on Schedule 2. Form 1040-SR, Tax Return for Seniors People of age 65 or older may use either the standard Form 1040 or the specialized Form 1040-SR to file their annual tax returns. Form 1040-SR uses larger fonts and emphasizes tax benefits available to many seniors, including a larger standard deduction. Form 1040-X, Amended Individual Income Tax Return Use Form 1040-X to make corrections or adjustments to a tax return that you have already filed. You may need to file an amended return if you made a significant error when completing your original return, such as miscalculating or failing to report income, or neglecting to claim a tax credit or tax deduction. In order to complete Form 1040-X, you will need a copy of your previously filed return. Form 1041, Income Tax Return for Estates and Trusts Many trusts and estates have annual tax return filing obligations, just like individuals and businesses. The responsibility for filing required returns typically falls to an authorized representative of the trust or estate (such as an executor, manager or primary trustee), often called the fiduciary. Generally, the fiduciary files Form 1041 to report the trust or estate's gross income, deductions, taxable income, tax credits and, if applicable, tax liability. Form 1041 Schedule K-1, Beneficiary's Share of Income, Deductions, Credits, etc. When Form 1041 must be filed for a trust or estate, the income, deductions, credits and other amounts reported on that return usually get allocated to beneficiaries. A Schedule K-1 (Form 1041) must then be filed for each beneficiary, showing that person's share of income, credits and deductions. The main advantage of allocating figures from Form 1041 to beneficiaries is that individuals can often claim more tax benefits than an entity like an estate or trust. Therefore, assigning trust or estate income to individual beneficiaries may result in lower overall tax liability. Form 1065, U.S. Return of Partnership Income Most businesses that operate as partnerships (including many limited liability partnerships and LLCs) must file Form 1065 as their annual tax return. Generally, the partnership itself does not pay tax. Rather, the income, deductions, credits and other amounts reported on Form 1065 are allocated to partners or LLC members on Form 1065 Schedule K-1. The partners or members then report their shares of these amounts on their individual tax returns. Form 1065 Schedule K-1, Partner's Share of Income, Deductions, Credits, etc. Businesses that operate as partnerships use Schedule K-1 (Form 1065) to report each partner or member's share of the income, deductions and other amounts shown on the partnership's tax return (usually Form 1065). Partners or members then report the figures shown on their Schedule K-1s on their individual tax returns. Form 1098-T, Tuition Statement This form shows tuition and related fees that a person has paid to an eligible college, university, trade school or other educational institution. You will need this form to claim certain education tax credits, such as the American Opportunity Tax Credit (AOTC) or Lifelong Learning Credit. Form 1099 Series IRS Forms with the number 1099 are used to report forms of income that do not appear on other information returns like Form W-2. The person or organization that made the payments completes the appropriate 1099 form, and sends copies to the IRS and the payment recipient. In most cases, people who receive 1099 forms must report the income shown on them on their tax returns, and may face tax penalties for failing to do so. Here are the most commonly used forms in the 1099 series: - Form 1099-DIV This form shows ordinary dividends, qualified dividends and certain other distributions of corporate earnings, capital gains or profits to shareholders. - Form 1099-G, Certain Government Payments This form shows potentially taxable payments that a person received through a government program (such as unemployment compensation). - Form 1099-INT This form shows various types of interest income. - Form 1099-K This form shows payments received for goods or services through a third-party payment processor. - Form 1099-MISC This form covers various payments and income types not accounted for on other 1099 forms, such as rental income. - Form 1099-NEC (Non-employee Compensation) This form is used to report payments made by a business or self-employed person to independent contractors and other non-employees. - Form 1099-R This form reports distributions from pensions, annuities, IRAs, other retirement plans, profit-sharing plans, insurance contracts and similar sources. - Form 1099-S This form shows proceeds from real estate transactions, such as home sales. You may need to report information from Form 1099-S when claiming the home sale capital gain exclusion. - Form 1099-SA This form shows distributions received from a health savings account (HSA), Archer MSA or Medicare Advantage MSA. - Forms RRB-1099 and RRB-1099-R These forms show various payments made by the Railroad Retirement Board, including annuity and pension payments. Form SSA-1099 This form shows Social Security benefit payments, which may or may not be taxable income, depending on the person's total income for the year. Form 1120, Corporation Income Tax Return Form 1120 is the standard federal tax return filed by C Corporations. These corporations generally must pay corporate income tax on net profits or earnings. Form 1120-S, Income Tax Return for S Corporation Form 1120-S is the standard federal tax return used by S corporations, as well as LLCs that elect to be taxed as S corporations. These companies file Form 1120-S to report income, expenses, deductions and credits. However, because S corporations are pass-through entities, they do not pay corporate income tax. Instead, the company allocates the amounts reported on Form 1120-S to owners, shareholders or members, who then pay individual income tax on their shares of net earnings. Each owner, member or shareholder's portion of income, deductions, credits, etc. is reported on a Form 1120-S Schedule K-1. Form 1120-S Schedule K-1, Shareholder's Share of Income, Deductions, Credits, etc. An S corporation uses this form to report each owner or shareholder's allocated portion of the income, expenses, deductions and credits reported on the corporation's tax return ( Form 1120-S). These allocations are based on percentages of ownership. Shareholders must report the figures shown on their Schedule K-1s on their personal tax returns, and pay any tax due. This process is known as pass-through taxation. Form 2120, Multiple Support Declaration (Qualifying Child or Qualifying Other Relative) In some cases, a person satisfies all the tests to be a qualifying child or qualifying other relative dependent, except that no one provides more than half of the person's support. Instead, the potential dependent's support comes from multiple different people. In these situations, the person who claims the dependent generally must file Form 2120. The form must list all other individuals who pay over 10% of the dependent's support, and include a statement certifying that they have waived their right to claim the dependent in writing. The IRS refers to these scenarios as multiple support agreements. Form 4137, Social Security and Medicare Tax on Unreported Tip Income Employees who receive tip income may need to use this form to report tips that they did not previously report to their employers. These tips may be subject to Social Security and Medicare ( FICA) taxes. Depending on the amount of tax due on the tips, a tax penalty may apply. Note also that only tips reported to an employer and shown on a year-end income statement like Form W-2 can qualify for the "No Tax on Tips" deduction. Form 4868, Application for Automatic Extension of Time to File Individual Income Tax Return You may use this form to request a six-month automatic filing extension to complete your tax return. Alternatively, you can submit your extension request electronically through the IRS website. It is important to remember that an automatic 6-month extension applies only to filing a tax return, not to paying any tax due. Payments made after the general filing deadline may be subject to tax penalties. Form 8379, Injured Spouse Claim and Allocation A person whose filing status is married filing jointly may use this form to request their share of a tax refund that was withheld by the IRS because of the other spouse's debts, such as past due child support. If the IRS accepts a claim made on Form 8379, up to half of the withheld refund will be issued to the injured spouse. Also see Form 8857. Form 8582, Passive Activity Loss Limitations The IRS limits the amount of losses from passive activities in business or real estate that a person may use to offset other income, and thus reduce their tax liability. If you have passive activity losses, use Form 8582 to calculate the limit on losses you can report for that particular year. Excess losses may generally be carried forward to future years. Form 8857, Request for Innocent Spouse Relief In most cases, couples whose filing status is married filing jointly share responsibility for their combined tax liability. In other words, the IRS holds both spouses responsible for paying any tax owed by the couple. However, in some situations, one spouse can legitimately claim that the other spouse should bear the sole responsibility for the couple's tax liability. A person with a sound basis for such a claim is called an innocent spouse. Innocent spouses may use Form 8857 to request relief from tax penalties and other consequences of the other spouse's actions. Residents of community property states whose filing status is married filing separately may also use this form to request relief from taxes or penalties related to community income or assets. Form 8829, Expenses for Business Use of Your Home Eligible people with business or other self-employment income may use this form to compute their home office deduction, which should then be reported on Schedule C. Form 8938, Statement of Specified Foreign Financial Assets Many people who are required to file an FBAR form must also include Form 8938 with their tax returns, providing detailed information about foreign bank accounts and assets. Note that the reporting thresholds for the FBAR and Form 8938 are different. The two forms also have different rules regarding which assets a person must report. Therefore, a person might need to file only an FBAR form, only Form 8938 or both forms. Also remember that Form 8938 should be filed with a person's federal tax return, whereas FBAR forms must be filed separately (and usually electronically) with FinCEN. Form 8949, Sales and Other Dispositions of Capital Assets Use this form to report transactions where you sold, donated or otherwise disposed of capital assets, including certain investments. For each transaction, you must state the selling price (if applicable), the amount realized, your basis or adjusted basis in the property, any other necessary adjustments, and any resulting capital gain or loss. Short-term gains and losses and long-term gains and losses must usually be reported separately. Report net gains and losses from this form on Schedule D. Form 8962, Premium Tax Credit People who purchase health insurance through the official Health Insurance Marketplace, and whose MAGI qualifies them for the Premium Tax Credit (PTC), use this form to compute the credit. If you receive the Advance Premium Tax Credit (APTC) during the year as a reduction in premiums, then you will use this form to reconcile those premium reductions with your actual credit amount. If your actual credit amount is more than the total APTC you received, you can claim the remaining credit on Form 1040, Schedule 3. However, if your total APTC was greater than your allowed PTC, then you may need to pay back a portion of your APTC, and may also have to pay a tax penalty. Form 9465, Installment Agreement Request If you are unable to pay the full amount of tax you owe to the IRS, you can request to make monthly payments over a period of up to 72 months (six years) to pay off the balance. You may request this installment agreement by filing Form 9465. Alternatively, you can submit your request online through the IRS website. Generally, people who enter into installment agreements must pay IRS interest charges with their monthly payments, so it is best to pay off a tax balance as quickly as possible. Form SS-4, Application for EIN You may use this form to apply for an Employer Identification Number (EIN). Alternatively, you can apply online through the IRS website. You will need an EIN if you pay any employees other than yourself, including household employees. Form W-2, Wages and Tax Statement This form reports the total wages or salary, along with any reported tips, that an employee received during a tax year. Form W-2 also shows all taxes that have been withheld from the employee's pay. Employees need the information on their W-2s to complete their tax returns. If you do not receive a W-2 from your workplace by mid-February, first contact your employer and request one. If the employer still does not send you the form, contact the IRS for assistance. Form W-2c, Corrected Wage and Tax Statement If you receive an inaccurate Form W-2 from your employer, you may request a new form. Your employer should use Form W-2c to correct the information from the original W-2. Similarly, if you own a business and mistakenly provide an inaccurate W-2 to an employee, then you can file form W-2c and give a copy to the employee to correct the error. People who receive a Form W-2c may need to file an amended tax return based on the updated information. Form W-4, Employee's Withholding Certificate Employees must give their employers information needed to compute how much tax to withhold from their paychecks. Generally, employees provide this information on Form W-4. In addition to giving basic information on the form like their filing status, employees can request withholding adjustments for situations like working multiple jobs or earning self-employment income. Employees should submit a new W-4 anytime their tax circumstances change. Form W-7A, Application for Taxpayer ID Number for Pending Adoptions Parents in the process of adopting a child may file this form to request an ATIN for the child. FSA \- see Flexible Spending Arrangement. FSA Carryover \- see Use It or Lose It Rule. FSA Grace Period \- see Use It or Lose It Rule. Fourteen-Day / 10% of Rental Time Rule for Rental Income and Expenses IRS rules for reporting rental income and expenses vary depending on whether you also use the rental property as a personal residence. The IRS 14-day / 10% Rule states that you have used a rental property as your residence during a given year if you used it for personal purposes for more than the greater of 14 days, or 10% of the total number of days you rented it out at a fair price. Note that renting the property to someone at a substantially reduced price, or letting them stay there for free, generally counts as personal use for you. Also see the Minimal Rental Use exception. Fourteen-Day Rental Exemption \- see Minimal Rental Use. FUTA Federal Unemployment Tax, or FUTA, must generally be paid by employers for all of their employees. Also see Unemployment Tax. Return to Top
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[ PracticeGrowth Tax Glossary (GitHub legacy) ]
Schedule 2, Additional Taxes
Many people must use this form to report other federal taxes they must pay besides income tax. These additional taxes may include alternative minimum tax (AMT), self-employment tax and household employment taxes. - Schedule 3, Additional Credits and Payments This form enables people to claim credits and report payments not shown on Form 1040 itself. Credits that may be claimed on Schedule 3 include the foreign tax credit, the credit for child and dependent care, various education credits and the healthcare Premium Tax Credit. - Schedule A, Itemized Deductions People who choose to itemize deductions instead of claiming the standard deduction use this form to list their deductions and calculate their total deduction amount. - Schedule B, Interest and Ordinary Dividends It may be necessary to use this form to report unearned income from interest and ordinary dividends, and also to report foreign financial accounts that you hold or control. - Schedule C or C-EZ, Profit or Loss from Business People classified as sole proprietors by the IRS must generally use one of these two forms to report their business income and deduct business expenses. For tax purposes, the sole proprietor designation includes many self-employed people, such as independent contractors, freelancers and gig economy workers. Net profits shown on Schedule C are usually subject to self-employment tax. - Schedule D, Capital Gains and Losses If you have capital gains or losses, you will summarize them on this schedule, and compute your net gain or loss. In most cases, you will also have to complete Form 8949 to report the details of each transaction that resulted in a gain or loss. - Schedule E, Supplemental Income and Loss People use this form to report rental income, real estate royalties, and some other types of income that are not accounted for on Form 1040 or other schedules. - Schedule EIC, Earned Income Credit If you are claiming the Earned Income Tax Credit (EITC), you must file this form if you have one or more qualifying children. - Schedule H, Household Employment Taxes People use this form to calculate the taxes they must remit on wages paid to household employees like nannies, housekeepers or gardeners. If you owe such household employment taxes, you will generally also report them on Schedule 2. - Schedule SE, Self-Employment Tax You typically must file this schedule if you earn more than $400 during a year through self-employment activities, such as operating a business, freelancing, or working as an independent contractor or gig economy worker. Use Schedule SE to calculate your self-employment tax, which you must also report on Schedule 2. Form 1040-SR, Tax Return for Seniors People of age 65 or older may use either the standard Form 1040 or the specialized Form 1040-SR to file their annual tax returns. Form 1040-SR uses larger fonts and emphasizes tax benefits available to many seniors, including a larger standard deduction. Form 1040-X, Amended Individual Income Tax Return Use Form 1040-X to make corrections or adjustments to a tax return that you have already filed. You may need to file an amended return if you made a significant error when completing your original return, such as miscalculating or failing to report income, or neglecting to claim a tax credit or tax deduction. In order to complete Form 1040-X, you will need a copy of your previously filed return. Form 1041, Income Tax Return for Estates and Trusts Many trusts and estates have annual tax return filing obligations, just like individuals and businesses. The responsibility for filing required returns typically falls to an authorized representative of the trust or estate (such as an executor, manager or primary trustee), often called the fiduciary. Generally, the fiduciary files Form 1041 to report the trust or estate's gross income, deductions, taxable income, tax credits and, if applicable, tax liability. Form 1041 Schedule K-1, Beneficiary's Share of Income, Deductions, Credits, etc. When Form 1041 must be filed for a trust or estate, the income, deductions, credits and other amounts reported on that return usually get allocated to beneficiaries. A Schedule K-1 (Form 1041) must then be filed for each beneficiary, showing that person's share of income, credits and deductions. The main advantage of allocating figures from Form 1041 to beneficiaries is that individuals can often claim more tax benefits than an entity like an estate or trust. Therefore, assigning trust or estate income to individual beneficiaries may result in lower overall tax liability. Form 1065, U.S. Return of Partnership Income Most businesses that operate as partnerships (including many limited liability partnerships and LLCs) must file Form 1065 as their annual tax return. Generally, the partnership itself does not pay tax. Rather, the income, deductions, credits and other amounts reported on Form 1065 are allocated to partners or LLC members on Form 1065 Schedule K-1. The partners or members then report their shares of these amounts on their individual tax returns. Form 1065 Schedule K-1, Partner's Share of Income, Deductions, Credits, etc. Businesses that operate as partnerships use Schedule K-1 (Form 1065) to report each partner or member's share of the income, deductions and other amounts shown on the partnership's tax return (usually Form 1065). Partners or members then report the figures shown on their Schedule K-1s on their individual tax returns. Form 1098-T, Tuition Statement This form shows tuition and related fees that a person has paid to an eligible college, university, trade school or other educational institution. You will need this form to claim certain education tax credits, such as the American Opportunity Tax Credit (AOTC) or Lifelong Learning Credit. Form 1099 Series IRS Forms with the number 1099 are used to report forms of income that do not appear on other information returns like Form W-2. The person or organization that made the payments completes the appropriate 1099 form, and sends copies to the IRS and the payment recipient. In most cases, people who receive 1099 forms must report the income shown on them on their tax returns, and may face tax penalties for failing to do so. Here are the most commonly used forms in the 1099 series: - Form 1099-DIV This form shows ordinary dividends, qualified dividends and certain other distributions of corporate earnings, capital gains or profits to shareholders. - Form 1099-G, Certain Government Payments This form shows potentially taxable payments that a person received through a government program (such as unemployment compensation). - Form 1099-INT This form shows various types of interest income. - Form 1099-K This form shows payments received for goods or services through a third-party payment processor. - Form 1099-MISC This form covers various payments and income types not accounted for on other 1099 forms, such as rental income. - Form 1099-NEC (Non-employee Compensation) This form is used to report payments made by a business or self-employed person to independent contractors and other non-employees. - Form 1099-R This form reports distributions from pensions, annuities, IRAs, other retirement plans, profit-sharing plans, insurance contracts and similar sources. - Form 1099-S This form shows proceeds from real estate transactions, such as home sales. You may need to report information from Form 1099-S when claiming the home sale capital gain exclusion. - Form 1099-SA This form shows distributions received from a health savings account (HSA), Archer MSA or Medicare Advantage MSA. - Forms RRB-1099 and RRB-1099-R These forms show various payments made by the Railroad Retirement Board, including annuity and pension payments. Form SSA-1099 This form shows Social Security benefit payments, which may or may not be taxable income, depending on the person's total income for the year. Form 1120, Corporation Income Tax Return Form 1120 is the standard federal tax return filed by C Corporations. These corporations generally must pay corporate income tax on net profits or earnings. Form 1120-S, Income Tax Return for S Corporation Form 1120-S is the standard federal tax return used by S corporations, as well as LLCs that elect to be taxed as S corporations. These companies file Form 1120-S to report income, expenses, deductions and credits. However, because S corporations are pass-through entities, they do not pay corporate income tax. Instead, the company allocates the amounts reported on Form 1120-S to owners, shareholders or members, who then pay individual income tax on their shares of net earnings. Each owner, member or shareholder's portion of income, deductions, credits, etc. is reported on a Form 1120-S Schedule K-1. Form 1120-S Schedule K-1, Shareholder's Share of Income, Deductions, Credits, etc. An S corporation uses this form to report each owner or shareholder's allocated portion of the income, expenses, deductions and credits reported on the corporation's tax return ( Form 1120-S). These allocations are based on percentages of ownership. Shareholders must report the figures shown on their Schedule K-1s on their personal tax returns, and pay any tax due. This process is known as pass-through taxation. Form 2120, Multiple Support Declaration (Qualifying Child or Qualifying Other Relative) In some cases, a person satisfies all the tests to be a qualifying child or qualifying other relative dependent, except that no one provides more than half of the person's support. Instead, the potential dependent's support comes from multiple different people. In these situations, the person who claims the dependent generally must file Form 2120. The form must list all other individuals who pay over 10% of the dependent's support, and include a statement certifying that they have waived their right to claim the dependent in writing. The IRS refers to these scenarios as multiple support agreements. Form 4137, Social Security and Medicare Tax on Unreported Tip Income Employees who receive tip income may need to use this form to report tips that they did not previously report to their employers. These tips may be subject to Social Security and Medicare ( FICA) taxes. Depending on the amount of tax due on the tips, a tax penalty may apply. Note also that only tips reported to an employer and shown on a year-end income statement like Form W-2 can qualify for the "No Tax on Tips" deduction. Form 4868, Application for Automatic Extension of Time to File Individual Income Tax Return You may use this form to request a six-month automatic filing extension to complete your tax return. Alternatively, you can submit your extension request electronically through the IRS website. It is important to remember that an automatic 6-month extension applies only to filing a tax return, not to paying any tax due. Payments made after the general filing deadline may be subject to tax penalties. Form 8379, Injured Spouse Claim and Allocation A person whose filing status is married filing jointly may use this form to request their share of a tax refund that was withheld by the IRS because of the other spouse's debts, such as past due child support. If the IRS accepts a claim made on Form 8379, up to half of the withheld refund will be issued to the injured spouse. Also see Form 8857. Form 8582, Passive Activity Loss Limitations The IRS limits the amount of losses from passive activities in business or real estate that a person may use to offset other income, and thus reduce their tax liability. If you have passive activity losses, use Form 8582 to calculate the limit on losses you can report for that particular year. Excess losses may generally be carried forward to future years. Form 8857, Request for Innocent Spouse Relief In most cases, couples whose filing status is married filing jointly share responsibility for their combined tax liability. In other words, the IRS holds both spouses responsible for paying any tax owed by the couple. However, in some situations, one spouse can legitimately claim that the other spouse should bear the sole responsibility for the couple's tax liability. A person with a sound basis for such a claim is called an innocent spouse. Innocent spouses may use Form 8857 to request relief from tax penalties and other consequences of the other spouse's actions. Residents of community property states whose filing status is married filing separately may also use this form to request relief from taxes or penalties related to community income or assets. Form 8829, Expenses for Business Use of Your Home Eligible people with business or other self-employment income may use this form to compute their home office deduction, which should then be reported on Schedule C. Form 8938, Statement of Specified Foreign Financial Assets Many people who are required to file an FBAR form must also include Form 8938 with their tax returns, providing detailed information about foreign bank accounts and assets. Note that the reporting thresholds for the FBAR and Form 8938 are different. The two forms also have different rules regarding which assets a person must report. Therefore, a person might need to file only an FBAR form, only Form 8938 or both forms. Also remember that Form 8938 should be filed with a person's federal tax return, whereas FBAR forms must be filed separately (and usually electronically) with FinCEN. Form 8949, Sales and Other Dispositions of Capital Assets Use this form to report transactions where you sold, donated or otherwise disposed of capital assets, including certain investments. For each transaction, you must state the selling price (if applicable), the amount realized, your basis or adjusted basis in the property, any other necessary adjustments, and any resulting capital gain or loss. Short-term gains and losses and long-term gains and losses must usually be reported separately. Report net gains and losses from this form on Schedule D. Form 8962, Premium Tax Credit People who purchase health insurance through the official Health Insurance Marketplace, and whose MAGI qualifies them for the Premium Tax Credit (PTC), use this form to compute the credit. If you receive the Advance Premium Tax Credit (APTC) during the year as a reduction in premiums, then you will use this form to reconcile those premium reductions with your actual credit amount. If your actual credit amount is more than the total APTC you received, you can claim the remaining credit on Form 1040, Schedule 3. However, if your total APTC was greater than your allowed PTC, then you may need to pay back a portion of your APTC, and may also have to pay a tax penalty. Form 9465, Installment Agreement Request If you are unable to pay the full amount of tax you owe to the IRS, you can request to make monthly payments over a period of up to 72 months (six years) to pay off the balance. You may request this installment agreement by filing Form 9465. Alternatively, you can submit your request online through the IRS website. Generally, people who enter into installment agreements must pay IRS interest charges with their monthly payments, so it is best to pay off a tax balance as quickly as possible. Form SS-4, Application for EIN You may use this form to apply for an Employer Identification Number (EIN). Alternatively, you can apply online through the IRS website. You will need an EIN if you pay any employees other than yourself, including household employees. Form W-2, Wages and Tax Statement This form reports the total wages or salary, along with any reported tips, that an employee received during a tax year. Form W-2 also shows all taxes that have been withheld from the employee's pay. Employees need the information on their W-2s to complete their tax returns. If you do not receive a W-2 from your workplace by mid-February, first contact your employer and request one. If the employer still does not send you the form, contact the IRS for assistance. Form W-2c, Corrected Wage and Tax Statement If you receive an inaccurate Form W-2 from your employer, you may request a new form. Your employer should use Form W-2c to correct the information from the original W-2. Similarly, if you own a business and mistakenly provide an inaccurate W-2 to an employee, then you can file form W-2c and give a copy to the employee to correct the error. People who receive a Form W-2c may need to file an amended tax return based on the updated information. Form W-4, Employee's Withholding Certificate Employees must give their employers information needed to compute how much tax to withhold from their paychecks. Generally, employees provide this information on Form W-4. In addition to giving basic information on the form like their filing status, employees can request withholding adjustments for situations like working multiple jobs or earning self-employment income. Employees should submit a new W-4 anytime their tax circumstances change. Form W-7A, Application for Taxpayer ID Number for Pending Adoptions Parents in the process of adopting a child may file this form to request an ATIN for the child. FSA \- see Flexible Spending Arrangement. FSA Carryover \- see Use It or Lose It Rule. FSA Grace Period \- see Use It or Lose It Rule. Fourteen-Day / 10% of Rental Time Rule for Rental Income and Expenses IRS rules for reporting rental income and expenses vary depending on whether you also use the rental property as a personal residence. The IRS 14-day / 10% Rule states that you have used a rental property as your residence during a given year if you used it for personal purposes for more than the greater of 14 days, or 10% of the total number of days you rented it out at a fair price. Note that renting the property to someone at a substantially reduced price, or letting them stay there for free, generally counts as personal use for you. Also see the Minimal Rental Use exception. Fourteen-Day Rental Exemption \- see Minimal Rental Use. FUTA Federal Unemployment Tax, or FUTA, must generally be paid by employers for all of their employees. Also see Unemployment Tax. Return to Top
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[ PracticeGrowth Tax Glossary (GitHub legacy) ]
Schedule 3, Additional Credits and Payments
This form enables people to claim credits and report payments not shown on Form 1040 itself. Credits that may be claimed on Schedule 3 include the foreign tax credit, the credit for child and dependent care, various education credits and the healthcare Premium Tax Credit. - Schedule A, Itemized Deductions People who choose to itemize deductions instead of claiming the standard deduction use this form to list their deductions and calculate their total deduction amount. - Schedule B, Interest and Ordinary Dividends It may be necessary to use this form to report unearned income from interest and ordinary dividends, and also to report foreign financial accounts that you hold or control. - Schedule C or C-EZ, Profit or Loss from Business People classified as sole proprietors by the IRS must generally use one of these two forms to report their business income and deduct business expenses. For tax purposes, the sole proprietor designation includes many self-employed people, such as independent contractors, freelancers and gig economy workers. Net profits shown on Schedule C are usually subject to self-employment tax. - Schedule D, Capital Gains and Losses If you have capital gains or losses, you will summarize them on this schedule, and compute your net gain or loss. In most cases, you will also have to complete Form 8949 to report the details of each transaction that resulted in a gain or loss. - Schedule E, Supplemental Income and Loss People use this form to report rental income, real estate royalties, and some other types of income that are not accounted for on Form 1040 or other schedules. - Schedule EIC, Earned Income Credit If you are claiming the Earned Income Tax Credit (EITC), you must file this form if you have one or more qualifying children. - Schedule H, Household Employment Taxes People use this form to calculate the taxes they must remit on wages paid to household employees like nannies, housekeepers or gardeners. If you owe such household employment taxes, you will generally also report them on Schedule 2. - Schedule SE, Self-Employment Tax You typically must file this schedule if you earn more than $400 during a year through self-employment activities, such as operating a business, freelancing, or working as an independent contractor or gig economy worker. Use Schedule SE to calculate your self-employment tax, which you must also report on Schedule 2. Form 1040-SR, Tax Return for Seniors People of age 65 or older may use either the standard Form 1040 or the specialized Form 1040-SR to file their annual tax returns. Form 1040-SR uses larger fonts and emphasizes tax benefits available to many seniors, including a larger standard deduction. Form 1040-X, Amended Individual Income Tax Return Use Form 1040-X to make corrections or adjustments to a tax return that you have already filed. You may need to file an amended return if you made a significant error when completing your original return, such as miscalculating or failing to report income, or neglecting to claim a tax credit or tax deduction. In order to complete Form 1040-X, you will need a copy of your previously filed return. Form 1041, Income Tax Return for Estates and Trusts Many trusts and estates have annual tax return filing obligations, just like individuals and businesses. The responsibility for filing required returns typically falls to an authorized representative of the trust or estate (such as an executor, manager or primary trustee), often called the fiduciary. Generally, the fiduciary files Form 1041 to report the trust or estate's gross income, deductions, taxable income, tax credits and, if applicable, tax liability. Form 1041 Schedule K-1, Beneficiary's Share of Income, Deductions, Credits, etc. When Form 1041 must be filed for a trust or estate, the income, deductions, credits and other amounts reported on that return usually get allocated to beneficiaries. A Schedule K-1 (Form 1041) must then be filed for each beneficiary, showing that person's share of income, credits and deductions. The main advantage of allocating figures from Form 1041 to beneficiaries is that individuals can often claim more tax benefits than an entity like an estate or trust. Therefore, assigning trust or estate income to individual beneficiaries may result in lower overall tax liability. Form 1065, U.S. Return of Partnership Income Most businesses that operate as partnerships (including many limited liability partnerships and LLCs) must file Form 1065 as their annual tax return. Generally, the partnership itself does not pay tax. Rather, the income, deductions, credits and other amounts reported on Form 1065 are allocated to partners or LLC members on Form 1065 Schedule K-1. The partners or members then report their shares of these amounts on their individual tax returns. Form 1065 Schedule K-1, Partner's Share of Income, Deductions, Credits, etc. Businesses that operate as partnerships use Schedule K-1 (Form 1065) to report each partner or member's share of the income, deductions and other amounts shown on the partnership's tax return (usually Form 1065). Partners or members then report the figures shown on their Schedule K-1s on their individual tax returns. Form 1098-T, Tuition Statement This form shows tuition and related fees that a person has paid to an eligible college, university, trade school or other educational institution. You will need this form to claim certain education tax credits, such as the American Opportunity Tax Credit (AOTC) or Lifelong Learning Credit. Form 1099 Series IRS Forms with the number 1099 are used to report forms of income that do not appear on other information returns like Form W-2. The person or organization that made the payments completes the appropriate 1099 form, and sends copies to the IRS and the payment recipient. In most cases, people who receive 1099 forms must report the income shown on them on their tax returns, and may face tax penalties for failing to do so. Here are the most commonly used forms in the 1099 series: - Form 1099-DIV This form shows ordinary dividends, qualified dividends and certain other distributions of corporate earnings, capital gains or profits to shareholders. - Form 1099-G, Certain Government Payments This form shows potentially taxable payments that a person received through a government program (such as unemployment compensation). - Form 1099-INT This form shows various types of interest income. - Form 1099-K This form shows payments received for goods or services through a third-party payment processor. - Form 1099-MISC This form covers various payments and income types not accounted for on other 1099 forms, such as rental income. - Form 1099-NEC (Non-employee Compensation) This form is used to report payments made by a business or self-employed person to independent contractors and other non-employees. - Form 1099-R This form reports distributions from pensions, annuities, IRAs, other retirement plans, profit-sharing plans, insurance contracts and similar sources. - Form 1099-S This form shows proceeds from real estate transactions, such as home sales. You may need to report information from Form 1099-S when claiming the home sale capital gain exclusion. - Form 1099-SA This form shows distributions received from a health savings account (HSA), Archer MSA or Medicare Advantage MSA. - Forms RRB-1099 and RRB-1099-R These forms show various payments made by the Railroad Retirement Board, including annuity and pension payments. Form SSA-1099 This form shows Social Security benefit payments, which may or may not be taxable income, depending on the person's total income for the year. Form 1120, Corporation Income Tax Return Form 1120 is the standard federal tax return filed by C Corporations. These corporations generally must pay corporate income tax on net profits or earnings. Form 1120-S, Income Tax Return for S Corporation Form 1120-S is the standard federal tax return used by S corporations, as well as LLCs that elect to be taxed as S corporations. These companies file Form 1120-S to report income, expenses, deductions and credits. However, because S corporations are pass-through entities, they do not pay corporate income tax. Instead, the company allocates the amounts reported on Form 1120-S to owners, shareholders or members, who then pay individual income tax on their shares of net earnings. Each owner, member or shareholder's portion of income, deductions, credits, etc. is reported on a Form 1120-S Schedule K-1. Form 1120-S Schedule K-1, Shareholder's Share of Income, Deductions, Credits, etc. An S corporation uses this form to report each owner or shareholder's allocated portion of the income, expenses, deductions and credits reported on the corporation's tax return ( Form 1120-S). These allocations are based on percentages of ownership. Shareholders must report the figures shown on their Schedule K-1s on their personal tax returns, and pay any tax due. This process is known as pass-through taxation. Form 2120, Multiple Support Declaration (Qualifying Child or Qualifying Other Relative) In some cases, a person satisfies all the tests to be a qualifying child or qualifying other relative dependent, except that no one provides more than half of the person's support. Instead, the potential dependent's support comes from multiple different people. In these situations, the person who claims the dependent generally must file Form 2120. The form must list all other individuals who pay over 10% of the dependent's support, and include a statement certifying that they have waived their right to claim the dependent in writing. The IRS refers to these scenarios as multiple support agreements. Form 4137, Social Security and Medicare Tax on Unreported Tip Income Employees who receive tip income may need to use this form to report tips that they did not previously report to their employers. These tips may be subject to Social Security and Medicare ( FICA) taxes. Depending on the amount of tax due on the tips, a tax penalty may apply. Note also that only tips reported to an employer and shown on a year-end income statement like Form W-2 can qualify for the "No Tax on Tips" deduction. Form 4868, Application for Automatic Extension of Time to File Individual Income Tax Return You may use this form to request a six-month automatic filing extension to complete your tax return. Alternatively, you can submit your extension request electronically through the IRS website. It is important to remember that an automatic 6-month extension applies only to filing a tax return, not to paying any tax due. Payments made after the general filing deadline may be subject to tax penalties. Form 8379, Injured Spouse Claim and Allocation A person whose filing status is married filing jointly may use this form to request their share of a tax refund that was withheld by the IRS because of the other spouse's debts, such as past due child support. If the IRS accepts a claim made on Form 8379, up to half of the withheld refund will be issued to the injured spouse. Also see Form 8857. Form 8582, Passive Activity Loss Limitations The IRS limits the amount of losses from passive activities in business or real estate that a person may use to offset other income, and thus reduce their tax liability. If you have passive activity losses, use Form 8582 to calculate the limit on losses you can report for that particular year. Excess losses may generally be carried forward to future years. Form 8857, Request for Innocent Spouse Relief In most cases, couples whose filing status is married filing jointly share responsibility for their combined tax liability. In other words, the IRS holds both spouses responsible for paying any tax owed by the couple. However, in some situations, one spouse can legitimately claim that the other spouse should bear the sole responsibility for the couple's tax liability. A person with a sound basis for such a claim is called an innocent spouse. Innocent spouses may use Form 8857 to request relief from tax penalties and other consequences of the other spouse's actions. Residents of community property states whose filing status is married filing separately may also use this form to request relief from taxes or penalties related to community income or assets. Form 8829, Expenses for Business Use of Your Home Eligible people with business or other self-employment income may use this form to compute their home office deduction, which should then be reported on Schedule C. Form 8938, Statement of Specified Foreign Financial Assets Many people who are required to file an FBAR form must also include Form 8938 with their tax returns, providing detailed information about foreign bank accounts and assets. Note that the reporting thresholds for the FBAR and Form 8938 are different. The two forms also have different rules regarding which assets a person must report. Therefore, a person might need to file only an FBAR form, only Form 8938 or both forms. Also remember that Form 8938 should be filed with a person's federal tax return, whereas FBAR forms must be filed separately (and usually electronically) with FinCEN. Form 8949, Sales and Other Dispositions of Capital Assets Use this form to report transactions where you sold, donated or otherwise disposed of capital assets, including certain investments. For each transaction, you must state the selling price (if applicable), the amount realized, your basis or adjusted basis in the property, any other necessary adjustments, and any resulting capital gain or loss. Short-term gains and losses and long-term gains and losses must usually be reported separately. Report net gains and losses from this form on Schedule D. Form 8962, Premium Tax Credit People who purchase health insurance through the official Health Insurance Marketplace, and whose MAGI qualifies them for the Premium Tax Credit (PTC), use this form to compute the credit. If you receive the Advance Premium Tax Credit (APTC) during the year as a reduction in premiums, then you will use this form to reconcile those premium reductions with your actual credit amount. If your actual credit amount is more than the total APTC you received, you can claim the remaining credit on Form 1040, Schedule 3. However, if your total APTC was greater than your allowed PTC, then you may need to pay back a portion of your APTC, and may also have to pay a tax penalty. Form 9465, Installment Agreement Request If you are unable to pay the full amount of tax you owe to the IRS, you can request to make monthly payments over a period of up to 72 months (six years) to pay off the balance. You may request this installment agreement by filing Form 9465. Alternatively, you can submit your request online through the IRS website. Generally, people who enter into installment agreements must pay IRS interest charges with their monthly payments, so it is best to pay off a tax balance as quickly as possible. Form SS-4, Application for EIN You may use this form to apply for an Employer Identification Number (EIN). Alternatively, you can apply online through the IRS website. You will need an EIN if you pay any employees other than yourself, including household employees. Form W-2, Wages and Tax Statement This form reports the total wages or salary, along with any reported tips, that an employee received during a tax year. Form W-2 also shows all taxes that have been withheld from the employee's pay. Employees need the information on their W-2s to complete their tax returns. If you do not receive a W-2 from your workplace by mid-February, first contact your employer and request one. If the employer still does not send you the form, contact the IRS for assistance. Form W-2c, Corrected Wage and Tax Statement If you receive an inaccurate Form W-2 from your employer, you may request a new form. Your employer should use Form W-2c to correct the information from the original W-2. Similarly, if you own a business and mistakenly provide an inaccurate W-2 to an employee, then you can file form W-2c and give a copy to the employee to correct the error. People who receive a Form W-2c may need to file an amended tax return based on the updated information. Form W-4, Employee's Withholding Certificate Employees must give their employers information needed to compute how much tax to withhold from their paychecks. Generally, employees provide this information on Form W-4. In addition to giving basic information on the form like their filing status, employees can request withholding adjustments for situations like working multiple jobs or earning self-employment income. Employees should submit a new W-4 anytime their tax circumstances change. Form W-7A, Application for Taxpayer ID Number for Pending Adoptions Parents in the process of adopting a child may file this form to request an ATIN for the child. FSA \- see Flexible Spending Arrangement. FSA Carryover \- see Use It or Lose It Rule. FSA Grace Period \- see Use It or Lose It Rule. Fourteen-Day / 10% of Rental Time Rule for Rental Income and Expenses IRS rules for reporting rental income and expenses vary depending on whether you also use the rental property as a personal residence. The IRS 14-day / 10% Rule states that you have used a rental property as your residence during a given year if you used it for personal purposes for more than the greater of 14 days, or 10% of the total number of days you rented it out at a fair price. Note that renting the property to someone at a substantially reduced price, or letting them stay there for free, generally counts as personal use for you. Also see the Minimal Rental Use exception. Fourteen-Day Rental Exemption \- see Minimal Rental Use. FUTA Federal Unemployment Tax, or FUTA, must generally be paid by employers for all of their employees. Also see Unemployment Tax. Return to Top
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[ PracticeGrowth Tax Glossary (GitHub legacy) ]
Schedule B, Interest and Ordinary Dividends
It may be necessary to use this form to report unearned income from interest and ordinary dividends, and also to report foreign financial accounts that you hold or control. - Schedule C or C-EZ, Profit or Loss from Business People classified as sole proprietors by the IRS must generally use one of these two forms to report their business income and deduct business expenses. For tax purposes, the sole proprietor designation includes many self-employed people, such as independent contractors, freelancers and gig economy workers. Net profits shown on Schedule C are usually subject to self-employment tax. - Schedule D, Capital Gains and Losses If you have capital gains or losses, you will summarize them on this schedule, and compute your net gain or loss. In most cases, you will also have to complete Form 8949 to report the details of each transaction that resulted in a gain or loss. - Schedule E, Supplemental Income and Loss People use this form to report rental income, real estate royalties, and some other types of income that are not accounted for on Form 1040 or other schedules. - Schedule EIC, Earned Income Credit If you are claiming the Earned Income Tax Credit (EITC), you must file this form if you have one or more qualifying children. - Schedule H, Household Employment Taxes People use this form to calculate the taxes they must remit on wages paid to household employees like nannies, housekeepers or gardeners. If you owe such household employment taxes, you will generally also report them on Schedule 2. - Schedule SE, Self-Employment Tax You typically must file this schedule if you earn more than $400 during a year through self-employment activities, such as operating a business, freelancing, or working as an independent contractor or gig economy worker. Use Schedule SE to calculate your self-employment tax, which you must also report on Schedule 2. Form 1040-SR, Tax Return for Seniors People of age 65 or older may use either the standard Form 1040 or the specialized Form 1040-SR to file their annual tax returns. Form 1040-SR uses larger fonts and emphasizes tax benefits available to many seniors, including a larger standard deduction. Form 1040-X, Amended Individual Income Tax Return Use Form 1040-X to make corrections or adjustments to a tax return that you have already filed. You may need to file an amended return if you made a significant error when completing your original return, such as miscalculating or failing to report income, or neglecting to claim a tax credit or tax deduction. In order to complete Form 1040-X, you will need a copy of your previously filed return. Form 1041, Income Tax Return for Estates and Trusts Many trusts and estates have annual tax return filing obligations, just like individuals and businesses. The responsibility for filing required returns typically falls to an authorized representative of the trust or estate (such as an executor, manager or primary trustee), often called the fiduciary. Generally, the fiduciary files Form 1041 to report the trust or estate's gross income, deductions, taxable income, tax credits and, if applicable, tax liability. Form 1041 Schedule K-1, Beneficiary's Share of Income, Deductions, Credits, etc. When Form 1041 must be filed for a trust or estate, the income, deductions, credits and other amounts reported on that return usually get allocated to beneficiaries. A Schedule K-1 (Form 1041) must then be filed for each beneficiary, showing that person's share of income, credits and deductions. The main advantage of allocating figures from Form 1041 to beneficiaries is that individuals can often claim more tax benefits than an entity like an estate or trust. Therefore, assigning trust or estate income to individual beneficiaries may result in lower overall tax liability. Form 1065, U.S. Return of Partnership Income Most businesses that operate as partnerships (including many limited liability partnerships and LLCs) must file Form 1065 as their annual tax return. Generally, the partnership itself does not pay tax. Rather, the income, deductions, credits and other amounts reported on Form 1065 are allocated to partners or LLC members on Form 1065 Schedule K-1. The partners or members then report their shares of these amounts on their individual tax returns. Form 1065 Schedule K-1, Partner's Share of Income, Deductions, Credits, etc. Businesses that operate as partnerships use Schedule K-1 (Form 1065) to report each partner or member's share of the income, deductions and other amounts shown on the partnership's tax return (usually Form 1065). Partners or members then report the figures shown on their Schedule K-1s on their individual tax returns. Form 1098-T, Tuition Statement This form shows tuition and related fees that a person has paid to an eligible college, university, trade school or other educational institution. You will need this form to claim certain education tax credits, such as the American Opportunity Tax Credit (AOTC) or Lifelong Learning Credit. Form 1099 Series IRS Forms with the number 1099 are used to report forms of income that do not appear on other information returns like Form W-2. The person or organization that made the payments completes the appropriate 1099 form, and sends copies to the IRS and the payment recipient. In most cases, people who receive 1099 forms must report the income shown on them on their tax returns, and may face tax penalties for failing to do so. Here are the most commonly used forms in the 1099 series: - Form 1099-DIV This form shows ordinary dividends, qualified dividends and certain other distributions of corporate earnings, capital gains or profits to shareholders. - Form 1099-G, Certain Government Payments This form shows potentially taxable payments that a person received through a government program (such as unemployment compensation). - Form 1099-INT This form shows various types of interest income. - Form 1099-K This form shows payments received for goods or services through a third-party payment processor. - Form 1099-MISC This form covers various payments and income types not accounted for on other 1099 forms, such as rental income. - Form 1099-NEC (Non-employee Compensation) This form is used to report payments made by a business or self-employed person to independent contractors and other non-employees. - Form 1099-R This form reports distributions from pensions, annuities, IRAs, other retirement plans, profit-sharing plans, insurance contracts and similar sources. - Form 1099-S This form shows proceeds from real estate transactions, such as home sales. You may need to report information from Form 1099-S when claiming the home sale capital gain exclusion. - Form 1099-SA This form shows distributions received from a health savings account (HSA), Archer MSA or Medicare Advantage MSA. - Forms RRB-1099 and RRB-1099-R These forms show various payments made by the Railroad Retirement Board, including annuity and pension payments. Form SSA-1099 This form shows Social Security benefit payments, which may or may not be taxable income, depending on the person's total income for the year. Form 1120, Corporation Income Tax Return Form 1120 is the standard federal tax return filed by C Corporations. These corporations generally must pay corporate income tax on net profits or earnings. Form 1120-S, Income Tax Return for S Corporation Form 1120-S is the standard federal tax return used by S corporations, as well as LLCs that elect to be taxed as S corporations. These companies file Form 1120-S to report income, expenses, deductions and credits. However, because S corporations are pass-through entities, they do not pay corporate income tax. Instead, the company allocates the amounts reported on Form 1120-S to owners, shareholders or members, who then pay individual income tax on their shares of net earnings. Each owner, member or shareholder's portion of income, deductions, credits, etc. is reported on a Form 1120-S Schedule K-1. Form 1120-S Schedule K-1, Shareholder's Share of Income, Deductions, Credits, etc. An S corporation uses this form to report each owner or shareholder's allocated portion of the income, expenses, deductions and credits reported on the corporation's tax return ( Form 1120-S). These allocations are based on percentages of ownership. Shareholders must report the figures shown on their Schedule K-1s on their personal tax returns, and pay any tax due. This process is known as pass-through taxation. Form 2120, Multiple Support Declaration (Qualifying Child or Qualifying Other Relative) In some cases, a person satisfies all the tests to be a qualifying child or qualifying other relative dependent, except that no one provides more than half of the person's support. Instead, the potential dependent's support comes from multiple different people. In these situations, the person who claims the dependent generally must file Form 2120. The form must list all other individuals who pay over 10% of the dependent's support, and include a statement certifying that they have waived their right to claim the dependent in writing. The IRS refers to these scenarios as multiple support agreements. Form 4137, Social Security and Medicare Tax on Unreported Tip Income Employees who receive tip income may need to use this form to report tips that they did not previously report to their employers. These tips may be subject to Social Security and Medicare ( FICA) taxes. Depending on the amount of tax due on the tips, a tax penalty may apply. Note also that only tips reported to an employer and shown on a year-end income statement like Form W-2 can qualify for the "No Tax on Tips" deduction. Form 4868, Application for Automatic Extension of Time to File Individual Income Tax Return You may use this form to request a six-month automatic filing extension to complete your tax return. Alternatively, you can submit your extension request electronically through the IRS website. It is important to remember that an automatic 6-month extension applies only to filing a tax return, not to paying any tax due. Payments made after the general filing deadline may be subject to tax penalties. Form 8379, Injured Spouse Claim and Allocation A person whose filing status is married filing jointly may use this form to request their share of a tax refund that was withheld by the IRS because of the other spouse's debts, such as past due child support. If the IRS accepts a claim made on Form 8379, up to half of the withheld refund will be issued to the injured spouse. Also see Form 8857. Form 8582, Passive Activity Loss Limitations The IRS limits the amount of losses from passive activities in business or real estate that a person may use to offset other income, and thus reduce their tax liability. If you have passive activity losses, use Form 8582 to calculate the limit on losses you can report for that particular year. Excess losses may generally be carried forward to future years. Form 8857, Request for Innocent Spouse Relief In most cases, couples whose filing status is married filing jointly share responsibility for their combined tax liability. In other words, the IRS holds both spouses responsible for paying any tax owed by the couple. However, in some situations, one spouse can legitimately claim that the other spouse should bear the sole responsibility for the couple's tax liability. A person with a sound basis for such a claim is called an innocent spouse. Innocent spouses may use Form 8857 to request relief from tax penalties and other consequences of the other spouse's actions. Residents of community property states whose filing status is married filing separately may also use this form to request relief from taxes or penalties related to community income or assets. Form 8829, Expenses for Business Use of Your Home Eligible people with business or other self-employment income may use this form to compute their home office deduction, which should then be reported on Schedule C. Form 8938, Statement of Specified Foreign Financial Assets Many people who are required to file an FBAR form must also include Form 8938 with their tax returns, providing detailed information about foreign bank accounts and assets. Note that the reporting thresholds for the FBAR and Form 8938 are different. The two forms also have different rules regarding which assets a person must report. Therefore, a person might need to file only an FBAR form, only Form 8938 or both forms. Also remember that Form 8938 should be filed with a person's federal tax return, whereas FBAR forms must be filed separately (and usually electronically) with FinCEN. Form 8949, Sales and Other Dispositions of Capital Assets Use this form to report transactions where you sold, donated or otherwise disposed of capital assets, including certain investments. For each transaction, you must state the selling price (if applicable), the amount realized, your basis or adjusted basis in the property, any other necessary adjustments, and any resulting capital gain or loss. Short-term gains and losses and long-term gains and losses must usually be reported separately. Report net gains and losses from this form on Schedule D. Form 8962, Premium Tax Credit People who purchase health insurance through the official Health Insurance Marketplace, and whose MAGI qualifies them for the Premium Tax Credit (PTC), use this form to compute the credit. If you receive the Advance Premium Tax Credit (APTC) during the year as a reduction in premiums, then you will use this form to reconcile those premium reductions with your actual credit amount. If your actual credit amount is more than the total APTC you received, you can claim the remaining credit on Form 1040, Schedule 3. However, if your total APTC was greater than your allowed PTC, then you may need to pay back a portion of your APTC, and may also have to pay a tax penalty. Form 9465, Installment Agreement Request If you are unable to pay the full amount of tax you owe to the IRS, you can request to make monthly payments over a period of up to 72 months (six years) to pay off the balance. You may request this installment agreement by filing Form 9465. Alternatively, you can submit your request online through the IRS website. Generally, people who enter into installment agreements must pay IRS interest charges with their monthly payments, so it is best to pay off a tax balance as quickly as possible. Form SS-4, Application for EIN You may use this form to apply for an Employer Identification Number (EIN). Alternatively, you can apply online through the IRS website. You will need an EIN if you pay any employees other than yourself, including household employees. Form W-2, Wages and Tax Statement This form reports the total wages or salary, along with any reported tips, that an employee received during a tax year. Form W-2 also shows all taxes that have been withheld from the employee's pay. Employees need the information on their W-2s to complete their tax returns. If you do not receive a W-2 from your workplace by mid-February, first contact your employer and request one. If the employer still does not send you the form, contact the IRS for assistance. Form W-2c, Corrected Wage and Tax Statement If you receive an inaccurate Form W-2 from your employer, you may request a new form. Your employer should use Form W-2c to correct the information from the original W-2. Similarly, if you own a business and mistakenly provide an inaccurate W-2 to an employee, then you can file form W-2c and give a copy to the employee to correct the error. People who receive a Form W-2c may need to file an amended tax return based on the updated information. Form W-4, Employee's Withholding Certificate Employees must give their employers information needed to compute how much tax to withhold from their paychecks. Generally, employees provide this information on Form W-4. In addition to giving basic information on the form like their filing status, employees can request withholding adjustments for situations like working multiple jobs or earning self-employment income. Employees should submit a new W-4 anytime their tax circumstances change. Form W-7A, Application for Taxpayer ID Number for Pending Adoptions Parents in the process of adopting a child may file this form to request an ATIN for the child. FSA \- see Flexible Spending Arrangement. FSA Carryover \- see Use It or Lose It Rule. FSA Grace Period \- see Use It or Lose It Rule. Fourteen-Day / 10% of Rental Time Rule for Rental Income and Expenses IRS rules for reporting rental income and expenses vary depending on whether you also use the rental property as a personal residence. The IRS 14-day / 10% Rule states that you have used a rental property as your residence during a given year if you used it for personal purposes for more than the greater of 14 days, or 10% of the total number of days you rented it out at a fair price. Note that renting the property to someone at a substantially reduced price, or letting them stay there for free, generally counts as personal use for you. Also see the Minimal Rental Use exception. Fourteen-Day Rental Exemption \- see Minimal Rental Use. FUTA Federal Unemployment Tax, or FUTA, must generally be paid by employers for all of their employees. Also see Unemployment Tax. Return to Top
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Schedule C
See Tax1099.com Glossary for 'Schedule C'.
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[ PracticeGrowth Tax Glossary (GitHub legacy) ]
Schedule C or C-EZ, Profit or Loss from Business
People classified as sole proprietors by the IRS must generally use one of these two forms to report their business income and deduct business expenses. For tax purposes, the sole proprietor designation includes many self-employed people, such as independent contractors, freelancers and gig economy workers. Net profits shown on Schedule C are usually subject to self-employment tax. - Schedule D, Capital Gains and Losses If you have capital gains or losses, you will summarize them on this schedule, and compute your net gain or loss. In most cases, you will also have to complete Form 8949 to report the details of each transaction that resulted in a gain or loss. - Schedule E, Supplemental Income and Loss People use this form to report rental income, real estate royalties, and some other types of income that are not accounted for on Form 1040 or other schedules. - Schedule EIC, Earned Income Credit If you are claiming the Earned Income Tax Credit (EITC), you must file this form if you have one or more qualifying children. - Schedule H, Household Employment Taxes People use this form to calculate the taxes they must remit on wages paid to household employees like nannies, housekeepers or gardeners. If you owe such household employment taxes, you will generally also report them on Schedule 2. - Schedule SE, Self-Employment Tax You typically must file this schedule if you earn more than $400 during a year through self-employment activities, such as operating a business, freelancing, or working as an independent contractor or gig economy worker. Use Schedule SE to calculate your self-employment tax, which you must also report on Schedule 2. Form 1040-SR, Tax Return for Seniors People of age 65 or older may use either the standard Form 1040 or the specialized Form 1040-SR to file their annual tax returns. Form 1040-SR uses larger fonts and emphasizes tax benefits available to many seniors, including a larger standard deduction. Form 1040-X, Amended Individual Income Tax Return Use Form 1040-X to make corrections or adjustments to a tax return that you have already filed. You may need to file an amended return if you made a significant error when completing your original return, such as miscalculating or failing to report income, or neglecting to claim a tax credit or tax deduction. In order to complete Form 1040-X, you will need a copy of your previously filed return. Form 1041, Income Tax Return for Estates and Trusts Many trusts and estates have annual tax return filing obligations, just like individuals and businesses. The responsibility for filing required returns typically falls to an authorized representative of the trust or estate (such as an executor, manager or primary trustee), often called the fiduciary. Generally, the fiduciary files Form 1041 to report the trust or estate's gross income, deductions, taxable income, tax credits and, if applicable, tax liability. Form 1041 Schedule K-1, Beneficiary's Share of Income, Deductions, Credits, etc. When Form 1041 must be filed for a trust or estate, the income, deductions, credits and other amounts reported on that return usually get allocated to beneficiaries. A Schedule K-1 (Form 1041) must then be filed for each beneficiary, showing that person's share of income, credits and deductions. The main advantage of allocating figures from Form 1041 to beneficiaries is that individuals can often claim more tax benefits than an entity like an estate or trust. Therefore, assigning trust or estate income to individual beneficiaries may result in lower overall tax liability. Form 1065, U.S. Return of Partnership Income Most businesses that operate as partnerships (including many limited liability partnerships and LLCs) must file Form 1065 as their annual tax return. Generally, the partnership itself does not pay tax. Rather, the income, deductions, credits and other amounts reported on Form 1065 are allocated to partners or LLC members on Form 1065 Schedule K-1. The partners or members then report their shares of these amounts on their individual tax returns. Form 1065 Schedule K-1, Partner's Share of Income, Deductions, Credits, etc. Businesses that operate as partnerships use Schedule K-1 (Form 1065) to report each partner or member's share of the income, deductions and other amounts shown on the partnership's tax return (usually Form 1065). Partners or members then report the figures shown on their Schedule K-1s on their individual tax returns. Form 1098-T, Tuition Statement This form shows tuition and related fees that a person has paid to an eligible college, university, trade school or other educational institution. You will need this form to claim certain education tax credits, such as the American Opportunity Tax Credit (AOTC) or Lifelong Learning Credit. Form 1099 Series IRS Forms with the number 1099 are used to report forms of income that do not appear on other information returns like Form W-2. The person or organization that made the payments completes the appropriate 1099 form, and sends copies to the IRS and the payment recipient. In most cases, people who receive 1099 forms must report the income shown on them on their tax returns, and may face tax penalties for failing to do so. Here are the most commonly used forms in the 1099 series: - Form 1099-DIV This form shows ordinary dividends, qualified dividends and certain other distributions of corporate earnings, capital gains or profits to shareholders. - Form 1099-G, Certain Government Payments This form shows potentially taxable payments that a person received through a government program (such as unemployment compensation). - Form 1099-INT This form shows various types of interest income. - Form 1099-K This form shows payments received for goods or services through a third-party payment processor. - Form 1099-MISC This form covers various payments and income types not accounted for on other 1099 forms, such as rental income. - Form 1099-NEC (Non-employee Compensation) This form is used to report payments made by a business or self-employed person to independent contractors and other non-employees. - Form 1099-R This form reports distributions from pensions, annuities, IRAs, other retirement plans, profit-sharing plans, insurance contracts and similar sources. - Form 1099-S This form shows proceeds from real estate transactions, such as home sales. You may need to report information from Form 1099-S when claiming the home sale capital gain exclusion. - Form 1099-SA This form shows distributions received from a health savings account (HSA), Archer MSA or Medicare Advantage MSA. - Forms RRB-1099 and RRB-1099-R These forms show various payments made by the Railroad Retirement Board, including annuity and pension payments. Form SSA-1099 This form shows Social Security benefit payments, which may or may not be taxable income, depending on the person's total income for the year. Form 1120, Corporation Income Tax Return Form 1120 is the standard federal tax return filed by C Corporations. These corporations generally must pay corporate income tax on net profits or earnings. Form 1120-S, Income Tax Return for S Corporation Form 1120-S is the standard federal tax return used by S corporations, as well as LLCs that elect to be taxed as S corporations. These companies file Form 1120-S to report income, expenses, deductions and credits. However, because S corporations are pass-through entities, they do not pay corporate income tax. Instead, the company allocates the amounts reported on Form 1120-S to owners, shareholders or members, who then pay individual income tax on their shares of net earnings. Each owner, member or shareholder's portion of income, deductions, credits, etc. is reported on a Form 1120-S Schedule K-1. Form 1120-S Schedule K-1, Shareholder's Share of Income, Deductions, Credits, etc. An S corporation uses this form to report each owner or shareholder's allocated portion of the income, expenses, deductions and credits reported on the corporation's tax return ( Form 1120-S). These allocations are based on percentages of ownership. Shareholders must report the figures shown on their Schedule K-1s on their personal tax returns, and pay any tax due. This process is known as pass-through taxation. Form 2120, Multiple Support Declaration (Qualifying Child or Qualifying Other Relative) In some cases, a person satisfies all the tests to be a qualifying child or qualifying other relative dependent, except that no one provides more than half of the person's support. Instead, the potential dependent's support comes from multiple different people. In these situations, the person who claims the dependent generally must file Form 2120. The form must list all other individuals who pay over 10% of the dependent's support, and include a statement certifying that they have waived their right to claim the dependent in writing. The IRS refers to these scenarios as multiple support agreements. Form 4137, Social Security and Medicare Tax on Unreported Tip Income Employees who receive tip income may need to use this form to report tips that they did not previously report to their employers. These tips may be subject to Social Security and Medicare ( FICA) taxes. Depending on the amount of tax due on the tips, a tax penalty may apply. Note also that only tips reported to an employer and shown on a year-end income statement like Form W-2 can qualify for the "No Tax on Tips" deduction. Form 4868, Application for Automatic Extension of Time to File Individual Income Tax Return You may use this form to request a six-month automatic filing extension to complete your tax return. Alternatively, you can submit your extension request electronically through the IRS website. It is important to remember that an automatic 6-month extension applies only to filing a tax return, not to paying any tax due. Payments made after the general filing deadline may be subject to tax penalties. Form 8379, Injured Spouse Claim and Allocation A person whose filing status is married filing jointly may use this form to request their share of a tax refund that was withheld by the IRS because of the other spouse's debts, such as past due child support. If the IRS accepts a claim made on Form 8379, up to half of the withheld refund will be issued to the injured spouse. Also see Form 8857. Form 8582, Passive Activity Loss Limitations The IRS limits the amount of losses from passive activities in business or real estate that a person may use to offset other income, and thus reduce their tax liability. If you have passive activity losses, use Form 8582 to calculate the limit on losses you can report for that particular year. Excess losses may generally be carried forward to future years. Form 8857, Request for Innocent Spouse Relief In most cases, couples whose filing status is married filing jointly share responsibility for their combined tax liability. In other words, the IRS holds both spouses responsible for paying any tax owed by the couple. However, in some situations, one spouse can legitimately claim that the other spouse should bear the sole responsibility for the couple's tax liability. A person with a sound basis for such a claim is called an innocent spouse. Innocent spouses may use Form 8857 to request relief from tax penalties and other consequences of the other spouse's actions. Residents of community property states whose filing status is married filing separately may also use this form to request relief from taxes or penalties related to community income or assets. Form 8829, Expenses for Business Use of Your Home Eligible people with business or other self-employment income may use this form to compute their home office deduction, which should then be reported on Schedule C. Form 8938, Statement of Specified Foreign Financial Assets Many people who are required to file an FBAR form must also include Form 8938 with their tax returns, providing detailed information about foreign bank accounts and assets. Note that the reporting thresholds for the FBAR and Form 8938 are different. The two forms also have different rules regarding which assets a person must report. Therefore, a person might need to file only an FBAR form, only Form 8938 or both forms. Also remember that Form 8938 should be filed with a person's federal tax return, whereas FBAR forms must be filed separately (and usually electronically) with FinCEN. Form 8949, Sales and Other Dispositions of Capital Assets Use this form to report transactions where you sold, donated or otherwise disposed of capital assets, including certain investments. For each transaction, you must state the selling price (if applicable), the amount realized, your basis or adjusted basis in the property, any other necessary adjustments, and any resulting capital gain or loss. Short-term gains and losses and long-term gains and losses must usually be reported separately. Report net gains and losses from this form on Schedule D. Form 8962, Premium Tax Credit People who purchase health insurance through the official Health Insurance Marketplace, and whose MAGI qualifies them for the Premium Tax Credit (PTC), use this form to compute the credit. If you receive the Advance Premium Tax Credit (APTC) during the year as a reduction in premiums, then you will use this form to reconcile those premium reductions with your actual credit amount. If your actual credit amount is more than the total APTC you received, you can claim the remaining credit on Form 1040, Schedule 3. However, if your total APTC was greater than your allowed PTC, then you may need to pay back a portion of your APTC, and may also have to pay a tax penalty. Form 9465, Installment Agreement Request If you are unable to pay the full amount of tax you owe to the IRS, you can request to make monthly payments over a period of up to 72 months (six years) to pay off the balance. You may request this installment agreement by filing Form 9465. Alternatively, you can submit your request online through the IRS website. Generally, people who enter into installment agreements must pay IRS interest charges with their monthly payments, so it is best to pay off a tax balance as quickly as possible. Form SS-4, Application for EIN You may use this form to apply for an Employer Identification Number (EIN). Alternatively, you can apply online through the IRS website. You will need an EIN if you pay any employees other than yourself, including household employees. Form W-2, Wages and Tax Statement This form reports the total wages or salary, along with any reported tips, that an employee received during a tax year. Form W-2 also shows all taxes that have been withheld from the employee's pay. Employees need the information on their W-2s to complete their tax returns. If you do not receive a W-2 from your workplace by mid-February, first contact your employer and request one. If the employer still does not send you the form, contact the IRS for assistance. Form W-2c, Corrected Wage and Tax Statement If you receive an inaccurate Form W-2 from your employer, you may request a new form. Your employer should use Form W-2c to correct the information from the original W-2. Similarly, if you own a business and mistakenly provide an inaccurate W-2 to an employee, then you can file form W-2c and give a copy to the employee to correct the error. People who receive a Form W-2c may need to file an amended tax return based on the updated information. Form W-4, Employee's Withholding Certificate Employees must give their employers information needed to compute how much tax to withhold from their paychecks. Generally, employees provide this information on Form W-4. In addition to giving basic information on the form like their filing status, employees can request withholding adjustments for situations like working multiple jobs or earning self-employment income. Employees should submit a new W-4 anytime their tax circumstances change. Form W-7A, Application for Taxpayer ID Number for Pending Adoptions Parents in the process of adopting a child may file this form to request an ATIN for the child. FSA \- see Flexible Spending Arrangement. FSA Carryover \- see Use It or Lose It Rule. FSA Grace Period \- see Use It or Lose It Rule. Fourteen-Day / 10% of Rental Time Rule for Rental Income and Expenses IRS rules for reporting rental income and expenses vary depending on whether you also use the rental property as a personal residence. The IRS 14-day / 10% Rule states that you have used a rental property as your residence during a given year if you used it for personal purposes for more than the greater of 14 days, or 10% of the total number of days you rented it out at a fair price. Note that renting the property to someone at a substantially reduced price, or letting them stay there for free, generally counts as personal use for you. Also see the Minimal Rental Use exception. Fourteen-Day Rental Exemption \- see Minimal Rental Use. FUTA Federal Unemployment Tax, or FUTA, must generally be paid by employers for all of their employees. Also see Unemployment Tax. Return to Top
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[ PracticeGrowth Tax Glossary (GitHub legacy) ]
Schedule D, Capital Gains and Losses
If you have capital gains or losses, you will summarize them on this schedule, and compute your net gain or loss. In most cases, you will also have to complete Form 8949 to report the details of each transaction that resulted in a gain or loss. - Schedule E, Supplemental Income and Loss People use this form to report rental income, real estate royalties, and some other types of income that are not accounted for on Form 1040 or other schedules. - Schedule EIC, Earned Income Credit If you are claiming the Earned Income Tax Credit (EITC), you must file this form if you have one or more qualifying children. - Schedule H, Household Employment Taxes People use this form to calculate the taxes they must remit on wages paid to household employees like nannies, housekeepers or gardeners. If you owe such household employment taxes, you will generally also report them on Schedule 2. - Schedule SE, Self-Employment Tax You typically must file this schedule if you earn more than $400 during a year through self-employment activities, such as operating a business, freelancing, or working as an independent contractor or gig economy worker. Use Schedule SE to calculate your self-employment tax, which you must also report on Schedule 2. Form 1040-SR, Tax Return for Seniors People of age 65 or older may use either the standard Form 1040 or the specialized Form 1040-SR to file their annual tax returns. Form 1040-SR uses larger fonts and emphasizes tax benefits available to many seniors, including a larger standard deduction. Form 1040-X, Amended Individual Income Tax Return Use Form 1040-X to make corrections or adjustments to a tax return that you have already filed. You may need to file an amended return if you made a significant error when completing your original return, such as miscalculating or failing to report income, or neglecting to claim a tax credit or tax deduction. In order to complete Form 1040-X, you will need a copy of your previously filed return. Form 1041, Income Tax Return for Estates and Trusts Many trusts and estates have annual tax return filing obligations, just like individuals and businesses. The responsibility for filing required returns typically falls to an authorized representative of the trust or estate (such as an executor, manager or primary trustee), often called the fiduciary. Generally, the fiduciary files Form 1041 to report the trust or estate's gross income, deductions, taxable income, tax credits and, if applicable, tax liability. Form 1041 Schedule K-1, Beneficiary's Share of Income, Deductions, Credits, etc. When Form 1041 must be filed for a trust or estate, the income, deductions, credits and other amounts reported on that return usually get allocated to beneficiaries. A Schedule K-1 (Form 1041) must then be filed for each beneficiary, showing that person's share of income, credits and deductions. The main advantage of allocating figures from Form 1041 to beneficiaries is that individuals can often claim more tax benefits than an entity like an estate or trust. Therefore, assigning trust or estate income to individual beneficiaries may result in lower overall tax liability. Form 1065, U.S. Return of Partnership Income Most businesses that operate as partnerships (including many limited liability partnerships and LLCs) must file Form 1065 as their annual tax return. Generally, the partnership itself does not pay tax. Rather, the income, deductions, credits and other amounts reported on Form 1065 are allocated to partners or LLC members on Form 1065 Schedule K-1. The partners or members then report their shares of these amounts on their individual tax returns. Form 1065 Schedule K-1, Partner's Share of Income, Deductions, Credits, etc. Businesses that operate as partnerships use Schedule K-1 (Form 1065) to report each partner or member's share of the income, deductions and other amounts shown on the partnership's tax return (usually Form 1065). Partners or members then report the figures shown on their Schedule K-1s on their individual tax returns. Form 1098-T, Tuition Statement This form shows tuition and related fees that a person has paid to an eligible college, university, trade school or other educational institution. You will need this form to claim certain education tax credits, such as the American Opportunity Tax Credit (AOTC) or Lifelong Learning Credit. Form 1099 Series IRS Forms with the number 1099 are used to report forms of income that do not appear on other information returns like Form W-2. The person or organization that made the payments completes the appropriate 1099 form, and sends copies to the IRS and the payment recipient. In most cases, people who receive 1099 forms must report the income shown on them on their tax returns, and may face tax penalties for failing to do so. Here are the most commonly used forms in the 1099 series: - Form 1099-DIV This form shows ordinary dividends, qualified dividends and certain other distributions of corporate earnings, capital gains or profits to shareholders. - Form 1099-G, Certain Government Payments This form shows potentially taxable payments that a person received through a government program (such as unemployment compensation). - Form 1099-INT This form shows various types of interest income. - Form 1099-K This form shows payments received for goods or services through a third-party payment processor. - Form 1099-MISC This form covers various payments and income types not accounted for on other 1099 forms, such as rental income. - Form 1099-NEC (Non-employee Compensation) This form is used to report payments made by a business or self-employed person to independent contractors and other non-employees. - Form 1099-R This form reports distributions from pensions, annuities, IRAs, other retirement plans, profit-sharing plans, insurance contracts and similar sources. - Form 1099-S This form shows proceeds from real estate transactions, such as home sales. You may need to report information from Form 1099-S when claiming the home sale capital gain exclusion. - Form 1099-SA This form shows distributions received from a health savings account (HSA), Archer MSA or Medicare Advantage MSA. - Forms RRB-1099 and RRB-1099-R These forms show various payments made by the Railroad Retirement Board, including annuity and pension payments. Form SSA-1099 This form shows Social Security benefit payments, which may or may not be taxable income, depending on the person's total income for the year. Form 1120, Corporation Income Tax Return Form 1120 is the standard federal tax return filed by C Corporations. These corporations generally must pay corporate income tax on net profits or earnings. Form 1120-S, Income Tax Return for S Corporation Form 1120-S is the standard federal tax return used by S corporations, as well as LLCs that elect to be taxed as S corporations. These companies file Form 1120-S to report income, expenses, deductions and credits. However, because S corporations are pass-through entities, they do not pay corporate income tax. Instead, the company allocates the amounts reported on Form 1120-S to owners, shareholders or members, who then pay individual income tax on their shares of net earnings. Each owner, member or shareholder's portion of income, deductions, credits, etc. is reported on a Form 1120-S Schedule K-1. Form 1120-S Schedule K-1, Shareholder's Share of Income, Deductions, Credits, etc. An S corporation uses this form to report each owner or shareholder's allocated portion of the income, expenses, deductions and credits reported on the corporation's tax return ( Form 1120-S). These allocations are based on percentages of ownership. Shareholders must report the figures shown on their Schedule K-1s on their personal tax returns, and pay any tax due. This process is known as pass-through taxation. Form 2120, Multiple Support Declaration (Qualifying Child or Qualifying Other Relative) In some cases, a person satisfies all the tests to be a qualifying child or qualifying other relative dependent, except that no one provides more than half of the person's support. Instead, the potential dependent's support comes from multiple different people. In these situations, the person who claims the dependent generally must file Form 2120. The form must list all other individuals who pay over 10% of the dependent's support, and include a statement certifying that they have waived their right to claim the dependent in writing. The IRS refers to these scenarios as multiple support agreements. Form 4137, Social Security and Medicare Tax on Unreported Tip Income Employees who receive tip income may need to use this form to report tips that they did not previously report to their employers. These tips may be subject to Social Security and Medicare ( FICA) taxes. Depending on the amount of tax due on the tips, a tax penalty may apply. Note also that only tips reported to an employer and shown on a year-end income statement like Form W-2 can qualify for the "No Tax on Tips" deduction. Form 4868, Application for Automatic Extension of Time to File Individual Income Tax Return You may use this form to request a six-month automatic filing extension to complete your tax return. Alternatively, you can submit your extension request electronically through the IRS website. It is important to remember that an automatic 6-month extension applies only to filing a tax return, not to paying any tax due. Payments made after the general filing deadline may be subject to tax penalties. Form 8379, Injured Spouse Claim and Allocation A person whose filing status is married filing jointly may use this form to request their share of a tax refund that was withheld by the IRS because of the other spouse's debts, such as past due child support. If the IRS accepts a claim made on Form 8379, up to half of the withheld refund will be issued to the injured spouse. Also see Form 8857. Form 8582, Passive Activity Loss Limitations The IRS limits the amount of losses from passive activities in business or real estate that a person may use to offset other income, and thus reduce their tax liability. If you have passive activity losses, use Form 8582 to calculate the limit on losses you can report for that particular year. Excess losses may generally be carried forward to future years. Form 8857, Request for Innocent Spouse Relief In most cases, couples whose filing status is married filing jointly share responsibility for their combined tax liability. In other words, the IRS holds both spouses responsible for paying any tax owed by the couple. However, in some situations, one spouse can legitimately claim that the other spouse should bear the sole responsibility for the couple's tax liability. A person with a sound basis for such a claim is called an innocent spouse. Innocent spouses may use Form 8857 to request relief from tax penalties and other consequences of the other spouse's actions. Residents of community property states whose filing status is married filing separately may also use this form to request relief from taxes or penalties related to community income or assets. Form 8829, Expenses for Business Use of Your Home Eligible people with business or other self-employment income may use this form to compute their home office deduction, which should then be reported on Schedule C. Form 8938, Statement of Specified Foreign Financial Assets Many people who are required to file an FBAR form must also include Form 8938 with their tax returns, providing detailed information about foreign bank accounts and assets. Note that the reporting thresholds for the FBAR and Form 8938 are different. The two forms also have different rules regarding which assets a person must report. Therefore, a person might need to file only an FBAR form, only Form 8938 or both forms. Also remember that Form 8938 should be filed with a person's federal tax return, whereas FBAR forms must be filed separately (and usually electronically) with FinCEN. Form 8949, Sales and Other Dispositions of Capital Assets Use this form to report transactions where you sold, donated or otherwise disposed of capital assets, including certain investments. For each transaction, you must state the selling price (if applicable), the amount realized, your basis or adjusted basis in the property, any other necessary adjustments, and any resulting capital gain or loss. Short-term gains and losses and long-term gains and losses must usually be reported separately. Report net gains and losses from this form on Schedule D. Form 8962, Premium Tax Credit People who purchase health insurance through the official Health Insurance Marketplace, and whose MAGI qualifies them for the Premium Tax Credit (PTC), use this form to compute the credit. If you receive the Advance Premium Tax Credit (APTC) during the year as a reduction in premiums, then you will use this form to reconcile those premium reductions with your actual credit amount. If your actual credit amount is more than the total APTC you received, you can claim the remaining credit on Form 1040, Schedule 3. However, if your total APTC was greater than your allowed PTC, then you may need to pay back a portion of your APTC, and may also have to pay a tax penalty. Form 9465, Installment Agreement Request If you are unable to pay the full amount of tax you owe to the IRS, you can request to make monthly payments over a period of up to 72 months (six years) to pay off the balance. You may request this installment agreement by filing Form 9465. Alternatively, you can submit your request online through the IRS website. Generally, people who enter into installment agreements must pay IRS interest charges with their monthly payments, so it is best to pay off a tax balance as quickly as possible. Form SS-4, Application for EIN You may use this form to apply for an Employer Identification Number (EIN). Alternatively, you can apply online through the IRS website. You will need an EIN if you pay any employees other than yourself, including household employees. Form W-2, Wages and Tax Statement This form reports the total wages or salary, along with any reported tips, that an employee received during a tax year. Form W-2 also shows all taxes that have been withheld from the employee's pay. Employees need the information on their W-2s to complete their tax returns. If you do not receive a W-2 from your workplace by mid-February, first contact your employer and request one. If the employer still does not send you the form, contact the IRS for assistance. Form W-2c, Corrected Wage and Tax Statement If you receive an inaccurate Form W-2 from your employer, you may request a new form. Your employer should use Form W-2c to correct the information from the original W-2. Similarly, if you own a business and mistakenly provide an inaccurate W-2 to an employee, then you can file form W-2c and give a copy to the employee to correct the error. People who receive a Form W-2c may need to file an amended tax return based on the updated information. Form W-4, Employee's Withholding Certificate Employees must give their employers information needed to compute how much tax to withhold from their paychecks. Generally, employees provide this information on Form W-4. In addition to giving basic information on the form like their filing status, employees can request withholding adjustments for situations like working multiple jobs or earning self-employment income. Employees should submit a new W-4 anytime their tax circumstances change. Form W-7A, Application for Taxpayer ID Number for Pending Adoptions Parents in the process of adopting a child may file this form to request an ATIN for the child. FSA \- see Flexible Spending Arrangement. FSA Carryover \- see Use It or Lose It Rule. FSA Grace Period \- see Use It or Lose It Rule. Fourteen-Day / 10% of Rental Time Rule for Rental Income and Expenses IRS rules for reporting rental income and expenses vary depending on whether you also use the rental property as a personal residence. The IRS 14-day / 10% Rule states that you have used a rental property as your residence during a given year if you used it for personal purposes for more than the greater of 14 days, or 10% of the total number of days you rented it out at a fair price. Note that renting the property to someone at a substantially reduced price, or letting them stay there for free, generally counts as personal use for you. Also see the Minimal Rental Use exception. Fourteen-Day Rental Exemption \- see Minimal Rental Use. FUTA Federal Unemployment Tax, or FUTA, must generally be paid by employers for all of their employees. Also see Unemployment Tax. Return to Top
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[ PracticeGrowth Tax Glossary (GitHub legacy) ]
Schedule E, Supplemental Income and Loss
People use this form to report rental income, real estate royalties, and some other types of income that are not accounted for on Form 1040 or other schedules. - Schedule EIC, Earned Income Credit If you are claiming the Earned Income Tax Credit (EITC), you must file this form if you have one or more qualifying children. - Schedule H, Household Employment Taxes People use this form to calculate the taxes they must remit on wages paid to household employees like nannies, housekeepers or gardeners. If you owe such household employment taxes, you will generally also report them on Schedule 2. - Schedule SE, Self-Employment Tax You typically must file this schedule if you earn more than $400 during a year through self-employment activities, such as operating a business, freelancing, or working as an independent contractor or gig economy worker. Use Schedule SE to calculate your self-employment tax, which you must also report on Schedule 2. Form 1040-SR, Tax Return for Seniors People of age 65 or older may use either the standard Form 1040 or the specialized Form 1040-SR to file their annual tax returns. Form 1040-SR uses larger fonts and emphasizes tax benefits available to many seniors, including a larger standard deduction. Form 1040-X, Amended Individual Income Tax Return Use Form 1040-X to make corrections or adjustments to a tax return that you have already filed. You may need to file an amended return if you made a significant error when completing your original return, such as miscalculating or failing to report income, or neglecting to claim a tax credit or tax deduction. In order to complete Form 1040-X, you will need a copy of your previously filed return. Form 1041, Income Tax Return for Estates and Trusts Many trusts and estates have annual tax return filing obligations, just like individuals and businesses. The responsibility for filing required returns typically falls to an authorized representative of the trust or estate (such as an executor, manager or primary trustee), often called the fiduciary. Generally, the fiduciary files Form 1041 to report the trust or estate's gross income, deductions, taxable income, tax credits and, if applicable, tax liability. Form 1041 Schedule K-1, Beneficiary's Share of Income, Deductions, Credits, etc. When Form 1041 must be filed for a trust or estate, the income, deductions, credits and other amounts reported on that return usually get allocated to beneficiaries. A Schedule K-1 (Form 1041) must then be filed for each beneficiary, showing that person's share of income, credits and deductions. The main advantage of allocating figures from Form 1041 to beneficiaries is that individuals can often claim more tax benefits than an entity like an estate or trust. Therefore, assigning trust or estate income to individual beneficiaries may result in lower overall tax liability. Form 1065, U.S. Return of Partnership Income Most businesses that operate as partnerships (including many limited liability partnerships and LLCs) must file Form 1065 as their annual tax return. Generally, the partnership itself does not pay tax. Rather, the income, deductions, credits and other amounts reported on Form 1065 are allocated to partners or LLC members on Form 1065 Schedule K-1. The partners or members then report their shares of these amounts on their individual tax returns. Form 1065 Schedule K-1, Partner's Share of Income, Deductions, Credits, etc. Businesses that operate as partnerships use Schedule K-1 (Form 1065) to report each partner or member's share of the income, deductions and other amounts shown on the partnership's tax return (usually Form 1065). Partners or members then report the figures shown on their Schedule K-1s on their individual tax returns. Form 1098-T, Tuition Statement This form shows tuition and related fees that a person has paid to an eligible college, university, trade school or other educational institution. You will need this form to claim certain education tax credits, such as the American Opportunity Tax Credit (AOTC) or Lifelong Learning Credit. Form 1099 Series IRS Forms with the number 1099 are used to report forms of income that do not appear on other information returns like Form W-2. The person or organization that made the payments completes the appropriate 1099 form, and sends copies to the IRS and the payment recipient. In most cases, people who receive 1099 forms must report the income shown on them on their tax returns, and may face tax penalties for failing to do so. Here are the most commonly used forms in the 1099 series: - Form 1099-DIV This form shows ordinary dividends, qualified dividends and certain other distributions of corporate earnings, capital gains or profits to shareholders. - Form 1099-G, Certain Government Payments This form shows potentially taxable payments that a person received through a government program (such as unemployment compensation). - Form 1099-INT This form shows various types of interest income. - Form 1099-K This form shows payments received for goods or services through a third-party payment processor. - Form 1099-MISC This form covers various payments and income types not accounted for on other 1099 forms, such as rental income. - Form 1099-NEC (Non-employee Compensation) This form is used to report payments made by a business or self-employed person to independent contractors and other non-employees. - Form 1099-R This form reports distributions from pensions, annuities, IRAs, other retirement plans, profit-sharing plans, insurance contracts and similar sources. - Form 1099-S This form shows proceeds from real estate transactions, such as home sales. You may need to report information from Form 1099-S when claiming the home sale capital gain exclusion. - Form 1099-SA This form shows distributions received from a health savings account (HSA), Archer MSA or Medicare Advantage MSA. - Forms RRB-1099 and RRB-1099-R These forms show various payments made by the Railroad Retirement Board, including annuity and pension payments. Form SSA-1099 This form shows Social Security benefit payments, which may or may not be taxable income, depending on the person's total income for the year. Form 1120, Corporation Income Tax Return Form 1120 is the standard federal tax return filed by C Corporations. These corporations generally must pay corporate income tax on net profits or earnings. Form 1120-S, Income Tax Return for S Corporation Form 1120-S is the standard federal tax return used by S corporations, as well as LLCs that elect to be taxed as S corporations. These companies file Form 1120-S to report income, expenses, deductions and credits. However, because S corporations are pass-through entities, they do not pay corporate income tax. Instead, the company allocates the amounts reported on Form 1120-S to owners, shareholders or members, who then pay individual income tax on their shares of net earnings. Each owner, member or shareholder's portion of income, deductions, credits, etc. is reported on a Form 1120-S Schedule K-1. Form 1120-S Schedule K-1, Shareholder's Share of Income, Deductions, Credits, etc. An S corporation uses this form to report each owner or shareholder's allocated portion of the income, expenses, deductions and credits reported on the corporation's tax return ( Form 1120-S). These allocations are based on percentages of ownership. Shareholders must report the figures shown on their Schedule K-1s on their personal tax returns, and pay any tax due. This process is known as pass-through taxation. Form 2120, Multiple Support Declaration (Qualifying Child or Qualifying Other Relative) In some cases, a person satisfies all the tests to be a qualifying child or qualifying other relative dependent, except that no one provides more than half of the person's support. Instead, the potential dependent's support comes from multiple different people. In these situations, the person who claims the dependent generally must file Form 2120. The form must list all other individuals who pay over 10% of the dependent's support, and include a statement certifying that they have waived their right to claim the dependent in writing. The IRS refers to these scenarios as multiple support agreements. Form 4137, Social Security and Medicare Tax on Unreported Tip Income Employees who receive tip income may need to use this form to report tips that they did not previously report to their employers. These tips may be subject to Social Security and Medicare ( FICA) taxes. Depending on the amount of tax due on the tips, a tax penalty may apply. Note also that only tips reported to an employer and shown on a year-end income statement like Form W-2 can qualify for the "No Tax on Tips" deduction. Form 4868, Application for Automatic Extension of Time to File Individual Income Tax Return You may use this form to request a six-month automatic filing extension to complete your tax return. Alternatively, you can submit your extension request electronically through the IRS website. It is important to remember that an automatic 6-month extension applies only to filing a tax return, not to paying any tax due. Payments made after the general filing deadline may be subject to tax penalties. Form 8379, Injured Spouse Claim and Allocation A person whose filing status is married filing jointly may use this form to request their share of a tax refund that was withheld by the IRS because of the other spouse's debts, such as past due child support. If the IRS accepts a claim made on Form 8379, up to half of the withheld refund will be issued to the injured spouse. Also see Form 8857. Form 8582, Passive Activity Loss Limitations The IRS limits the amount of losses from passive activities in business or real estate that a person may use to offset other income, and thus reduce their tax liability. If you have passive activity losses, use Form 8582 to calculate the limit on losses you can report for that particular year. Excess losses may generally be carried forward to future years. Form 8857, Request for Innocent Spouse Relief In most cases, couples whose filing status is married filing jointly share responsibility for their combined tax liability. In other words, the IRS holds both spouses responsible for paying any tax owed by the couple. However, in some situations, one spouse can legitimately claim that the other spouse should bear the sole responsibility for the couple's tax liability. A person with a sound basis for such a claim is called an innocent spouse. Innocent spouses may use Form 8857 to request relief from tax penalties and other consequences of the other spouse's actions. Residents of community property states whose filing status is married filing separately may also use this form to request relief from taxes or penalties related to community income or assets. Form 8829, Expenses for Business Use of Your Home Eligible people with business or other self-employment income may use this form to compute their home office deduction, which should then be reported on Schedule C. Form 8938, Statement of Specified Foreign Financial Assets Many people who are required to file an FBAR form must also include Form 8938 with their tax returns, providing detailed information about foreign bank accounts and assets. Note that the reporting thresholds for the FBAR and Form 8938 are different. The two forms also have different rules regarding which assets a person must report. Therefore, a person might need to file only an FBAR form, only Form 8938 or both forms. Also remember that Form 8938 should be filed with a person's federal tax return, whereas FBAR forms must be filed separately (and usually electronically) with FinCEN. Form 8949, Sales and Other Dispositions of Capital Assets Use this form to report transactions where you sold, donated or otherwise disposed of capital assets, including certain investments. For each transaction, you must state the selling price (if applicable), the amount realized, your basis or adjusted basis in the property, any other necessary adjustments, and any resulting capital gain or loss. Short-term gains and losses and long-term gains and losses must usually be reported separately. Report net gains and losses from this form on Schedule D. Form 8962, Premium Tax Credit People who purchase health insurance through the official Health Insurance Marketplace, and whose MAGI qualifies them for the Premium Tax Credit (PTC), use this form to compute the credit. If you receive the Advance Premium Tax Credit (APTC) during the year as a reduction in premiums, then you will use this form to reconcile those premium reductions with your actual credit amount. If your actual credit amount is more than the total APTC you received, you can claim the remaining credit on Form 1040, Schedule 3. However, if your total APTC was greater than your allowed PTC, then you may need to pay back a portion of your APTC, and may also have to pay a tax penalty. Form 9465, Installment Agreement Request If you are unable to pay the full amount of tax you owe to the IRS, you can request to make monthly payments over a period of up to 72 months (six years) to pay off the balance. You may request this installment agreement by filing Form 9465. Alternatively, you can submit your request online through the IRS website. Generally, people who enter into installment agreements must pay IRS interest charges with their monthly payments, so it is best to pay off a tax balance as quickly as possible. Form SS-4, Application for EIN You may use this form to apply for an Employer Identification Number (EIN). Alternatively, you can apply online through the IRS website. You will need an EIN if you pay any employees other than yourself, including household employees. Form W-2, Wages and Tax Statement This form reports the total wages or salary, along with any reported tips, that an employee received during a tax year. Form W-2 also shows all taxes that have been withheld from the employee's pay. Employees need the information on their W-2s to complete their tax returns. If you do not receive a W-2 from your workplace by mid-February, first contact your employer and request one. If the employer still does not send you the form, contact the IRS for assistance. Form W-2c, Corrected Wage and Tax Statement If you receive an inaccurate Form W-2 from your employer, you may request a new form. Your employer should use Form W-2c to correct the information from the original W-2. Similarly, if you own a business and mistakenly provide an inaccurate W-2 to an employee, then you can file form W-2c and give a copy to the employee to correct the error. People who receive a Form W-2c may need to file an amended tax return based on the updated information. Form W-4, Employee's Withholding Certificate Employees must give their employers information needed to compute how much tax to withhold from their paychecks. Generally, employees provide this information on Form W-4. In addition to giving basic information on the form like their filing status, employees can request withholding adjustments for situations like working multiple jobs or earning self-employment income. Employees should submit a new W-4 anytime their tax circumstances change. Form W-7A, Application for Taxpayer ID Number for Pending Adoptions Parents in the process of adopting a child may file this form to request an ATIN for the child. FSA \- see Flexible Spending Arrangement. FSA Carryover \- see Use It or Lose It Rule. FSA Grace Period \- see Use It or Lose It Rule. Fourteen-Day / 10% of Rental Time Rule for Rental Income and Expenses IRS rules for reporting rental income and expenses vary depending on whether you also use the rental property as a personal residence. The IRS 14-day / 10% Rule states that you have used a rental property as your residence during a given year if you used it for personal purposes for more than the greater of 14 days, or 10% of the total number of days you rented it out at a fair price. Note that renting the property to someone at a substantially reduced price, or letting them stay there for free, generally counts as personal use for you. Also see the Minimal Rental Use exception. Fourteen-Day Rental Exemption \- see Minimal Rental Use. FUTA Federal Unemployment Tax, or FUTA, must generally be paid by employers for all of their employees. Also see Unemployment Tax. Return to Top
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[ PracticeGrowth Tax Glossary (GitHub legacy) ]
Schedule EIC, Earned Income Credit
If you are claiming the Earned Income Tax Credit (EITC), you must file this form if you have one or more qualifying children. - Schedule H, Household Employment Taxes People use this form to calculate the taxes they must remit on wages paid to household employees like nannies, housekeepers or gardeners. If you owe such household employment taxes, you will generally also report them on Schedule 2. - Schedule SE, Self-Employment Tax You typically must file this schedule if you earn more than $400 during a year through self-employment activities, such as operating a business, freelancing, or working as an independent contractor or gig economy worker. Use Schedule SE to calculate your self-employment tax, which you must also report on Schedule 2. Form 1040-SR, Tax Return for Seniors People of age 65 or older may use either the standard Form 1040 or the specialized Form 1040-SR to file their annual tax returns. Form 1040-SR uses larger fonts and emphasizes tax benefits available to many seniors, including a larger standard deduction. Form 1040-X, Amended Individual Income Tax Return Use Form 1040-X to make corrections or adjustments to a tax return that you have already filed. You may need to file an amended return if you made a significant error when completing your original return, such as miscalculating or failing to report income, or neglecting to claim a tax credit or tax deduction. In order to complete Form 1040-X, you will need a copy of your previously filed return. Form 1041, Income Tax Return for Estates and Trusts Many trusts and estates have annual tax return filing obligations, just like individuals and businesses. The responsibility for filing required returns typically falls to an authorized representative of the trust or estate (such as an executor, manager or primary trustee), often called the fiduciary. Generally, the fiduciary files Form 1041 to report the trust or estate's gross income, deductions, taxable income, tax credits and, if applicable, tax liability. Form 1041 Schedule K-1, Beneficiary's Share of Income, Deductions, Credits, etc. When Form 1041 must be filed for a trust or estate, the income, deductions, credits and other amounts reported on that return usually get allocated to beneficiaries. A Schedule K-1 (Form 1041) must then be filed for each beneficiary, showing that person's share of income, credits and deductions. The main advantage of allocating figures from Form 1041 to beneficiaries is that individuals can often claim more tax benefits than an entity like an estate or trust. Therefore, assigning trust or estate income to individual beneficiaries may result in lower overall tax liability. Form 1065, U.S. Return of Partnership Income Most businesses that operate as partnerships (including many limited liability partnerships and LLCs) must file Form 1065 as their annual tax return. Generally, the partnership itself does not pay tax. Rather, the income, deductions, credits and other amounts reported on Form 1065 are allocated to partners or LLC members on Form 1065 Schedule K-1. The partners or members then report their shares of these amounts on their individual tax returns. Form 1065 Schedule K-1, Partner's Share of Income, Deductions, Credits, etc. Businesses that operate as partnerships use Schedule K-1 (Form 1065) to report each partner or member's share of the income, deductions and other amounts shown on the partnership's tax return (usually Form 1065). Partners or members then report the figures shown on their Schedule K-1s on their individual tax returns. Form 1098-T, Tuition Statement This form shows tuition and related fees that a person has paid to an eligible college, university, trade school or other educational institution. You will need this form to claim certain education tax credits, such as the American Opportunity Tax Credit (AOTC) or Lifelong Learning Credit. Form 1099 Series IRS Forms with the number 1099 are used to report forms of income that do not appear on other information returns like Form W-2. The person or organization that made the payments completes the appropriate 1099 form, and sends copies to the IRS and the payment recipient. In most cases, people who receive 1099 forms must report the income shown on them on their tax returns, and may face tax penalties for failing to do so. Here are the most commonly used forms in the 1099 series: - Form 1099-DIV This form shows ordinary dividends, qualified dividends and certain other distributions of corporate earnings, capital gains or profits to shareholders. - Form 1099-G, Certain Government Payments This form shows potentially taxable payments that a person received through a government program (such as unemployment compensation). - Form 1099-INT This form shows various types of interest income. - Form 1099-K This form shows payments received for goods or services through a third-party payment processor. - Form 1099-MISC This form covers various payments and income types not accounted for on other 1099 forms, such as rental income. - Form 1099-NEC (Non-employee Compensation) This form is used to report payments made by a business or self-employed person to independent contractors and other non-employees. - Form 1099-R This form reports distributions from pensions, annuities, IRAs, other retirement plans, profit-sharing plans, insurance contracts and similar sources. - Form 1099-S This form shows proceeds from real estate transactions, such as home sales. You may need to report information from Form 1099-S when claiming the home sale capital gain exclusion. - Form 1099-SA This form shows distributions received from a health savings account (HSA), Archer MSA or Medicare Advantage MSA. - Forms RRB-1099 and RRB-1099-R These forms show various payments made by the Railroad Retirement Board, including annuity and pension payments. Form SSA-1099 This form shows Social Security benefit payments, which may or may not be taxable income, depending on the person's total income for the year. Form 1120, Corporation Income Tax Return Form 1120 is the standard federal tax return filed by C Corporations. These corporations generally must pay corporate income tax on net profits or earnings. Form 1120-S, Income Tax Return for S Corporation Form 1120-S is the standard federal tax return used by S corporations, as well as LLCs that elect to be taxed as S corporations. These companies file Form 1120-S to report income, expenses, deductions and credits. However, because S corporations are pass-through entities, they do not pay corporate income tax. Instead, the company allocates the amounts reported on Form 1120-S to owners, shareholders or members, who then pay individual income tax on their shares of net earnings. Each owner, member or shareholder's portion of income, deductions, credits, etc. is reported on a Form 1120-S Schedule K-1. Form 1120-S Schedule K-1, Shareholder's Share of Income, Deductions, Credits, etc. An S corporation uses this form to report each owner or shareholder's allocated portion of the income, expenses, deductions and credits reported on the corporation's tax return ( Form 1120-S). These allocations are based on percentages of ownership. Shareholders must report the figures shown on their Schedule K-1s on their personal tax returns, and pay any tax due. This process is known as pass-through taxation. Form 2120, Multiple Support Declaration (Qualifying Child or Qualifying Other Relative) In some cases, a person satisfies all the tests to be a qualifying child or qualifying other relative dependent, except that no one provides more than half of the person's support. Instead, the potential dependent's support comes from multiple different people. In these situations, the person who claims the dependent generally must file Form 2120. The form must list all other individuals who pay over 10% of the dependent's support, and include a statement certifying that they have waived their right to claim the dependent in writing. The IRS refers to these scenarios as multiple support agreements. Form 4137, Social Security and Medicare Tax on Unreported Tip Income Employees who receive tip income may need to use this form to report tips that they did not previously report to their employers. These tips may be subject to Social Security and Medicare ( FICA) taxes. Depending on the amount of tax due on the tips, a tax penalty may apply. Note also that only tips reported to an employer and shown on a year-end income statement like Form W-2 can qualify for the "No Tax on Tips" deduction. Form 4868, Application for Automatic Extension of Time to File Individual Income Tax Return You may use this form to request a six-month automatic filing extension to complete your tax return. Alternatively, you can submit your extension request electronically through the IRS website. It is important to remember that an automatic 6-month extension applies only to filing a tax return, not to paying any tax due. Payments made after the general filing deadline may be subject to tax penalties. Form 8379, Injured Spouse Claim and Allocation A person whose filing status is married filing jointly may use this form to request their share of a tax refund that was withheld by the IRS because of the other spouse's debts, such as past due child support. If the IRS accepts a claim made on Form 8379, up to half of the withheld refund will be issued to the injured spouse. Also see Form 8857. Form 8582, Passive Activity Loss Limitations The IRS limits the amount of losses from passive activities in business or real estate that a person may use to offset other income, and thus reduce their tax liability. If you have passive activity losses, use Form 8582 to calculate the limit on losses you can report for that particular year. Excess losses may generally be carried forward to future years. Form 8857, Request for Innocent Spouse Relief In most cases, couples whose filing status is married filing jointly share responsibility for their combined tax liability. In other words, the IRS holds both spouses responsible for paying any tax owed by the couple. However, in some situations, one spouse can legitimately claim that the other spouse should bear the sole responsibility for the couple's tax liability. A person with a sound basis for such a claim is called an innocent spouse. Innocent spouses may use Form 8857 to request relief from tax penalties and other consequences of the other spouse's actions. Residents of community property states whose filing status is married filing separately may also use this form to request relief from taxes or penalties related to community income or assets. Form 8829, Expenses for Business Use of Your Home Eligible people with business or other self-employment income may use this form to compute their home office deduction, which should then be reported on Schedule C. Form 8938, Statement of Specified Foreign Financial Assets Many people who are required to file an FBAR form must also include Form 8938 with their tax returns, providing detailed information about foreign bank accounts and assets. Note that the reporting thresholds for the FBAR and Form 8938 are different. The two forms also have different rules regarding which assets a person must report. Therefore, a person might need to file only an FBAR form, only Form 8938 or both forms. Also remember that Form 8938 should be filed with a person's federal tax return, whereas FBAR forms must be filed separately (and usually electronically) with FinCEN. Form 8949, Sales and Other Dispositions of Capital Assets Use this form to report transactions where you sold, donated or otherwise disposed of capital assets, including certain investments. For each transaction, you must state the selling price (if applicable), the amount realized, your basis or adjusted basis in the property, any other necessary adjustments, and any resulting capital gain or loss. Short-term gains and losses and long-term gains and losses must usually be reported separately. Report net gains and losses from this form on Schedule D. Form 8962, Premium Tax Credit People who purchase health insurance through the official Health Insurance Marketplace, and whose MAGI qualifies them for the Premium Tax Credit (PTC), use this form to compute the credit. If you receive the Advance Premium Tax Credit (APTC) during the year as a reduction in premiums, then you will use this form to reconcile those premium reductions with your actual credit amount. If your actual credit amount is more than the total APTC you received, you can claim the remaining credit on Form 1040, Schedule 3. However, if your total APTC was greater than your allowed PTC, then you may need to pay back a portion of your APTC, and may also have to pay a tax penalty. Form 9465, Installment Agreement Request If you are unable to pay the full amount of tax you owe to the IRS, you can request to make monthly payments over a period of up to 72 months (six years) to pay off the balance. You may request this installment agreement by filing Form 9465. Alternatively, you can submit your request online through the IRS website. Generally, people who enter into installment agreements must pay IRS interest charges with their monthly payments, so it is best to pay off a tax balance as quickly as possible. Form SS-4, Application for EIN You may use this form to apply for an Employer Identification Number (EIN). Alternatively, you can apply online through the IRS website. You will need an EIN if you pay any employees other than yourself, including household employees. Form W-2, Wages and Tax Statement This form reports the total wages or salary, along with any reported tips, that an employee received during a tax year. Form W-2 also shows all taxes that have been withheld from the employee's pay. Employees need the information on their W-2s to complete their tax returns. If you do not receive a W-2 from your workplace by mid-February, first contact your employer and request one. If the employer still does not send you the form, contact the IRS for assistance. Form W-2c, Corrected Wage and Tax Statement If you receive an inaccurate Form W-2 from your employer, you may request a new form. Your employer should use Form W-2c to correct the information from the original W-2. Similarly, if you own a business and mistakenly provide an inaccurate W-2 to an employee, then you can file form W-2c and give a copy to the employee to correct the error. People who receive a Form W-2c may need to file an amended tax return based on the updated information. Form W-4, Employee's Withholding Certificate Employees must give their employers information needed to compute how much tax to withhold from their paychecks. Generally, employees provide this information on Form W-4. In addition to giving basic information on the form like their filing status, employees can request withholding adjustments for situations like working multiple jobs or earning self-employment income. Employees should submit a new W-4 anytime their tax circumstances change. Form W-7A, Application for Taxpayer ID Number for Pending Adoptions Parents in the process of adopting a child may file this form to request an ATIN for the child. FSA \- see Flexible Spending Arrangement. FSA Carryover \- see Use It or Lose It Rule. FSA Grace Period \- see Use It or Lose It Rule. Fourteen-Day / 10% of Rental Time Rule for Rental Income and Expenses IRS rules for reporting rental income and expenses vary depending on whether you also use the rental property as a personal residence. The IRS 14-day / 10% Rule states that you have used a rental property as your residence during a given year if you used it for personal purposes for more than the greater of 14 days, or 10% of the total number of days you rented it out at a fair price. Note that renting the property to someone at a substantially reduced price, or letting them stay there for free, generally counts as personal use for you. Also see the Minimal Rental Use exception. Fourteen-Day Rental Exemption \- see Minimal Rental Use. FUTA Federal Unemployment Tax, or FUTA, must generally be paid by employers for all of their employees. Also see Unemployment Tax. Return to Top
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[ PracticeGrowth Tax Glossary (GitHub legacy) ]
Schedule H, Household Employment Taxes
People use this form to calculate the taxes they must remit on wages paid to household employees like nannies, housekeepers or gardeners. If you owe such household employment taxes, you will generally also report them on Schedule 2. - Schedule SE, Self-Employment Tax You typically must file this schedule if you earn more than $400 during a year through self-employment activities, such as operating a business, freelancing, or working as an independent contractor or gig economy worker. Use Schedule SE to calculate your self-employment tax, which you must also report on Schedule 2. Form 1040-SR, Tax Return for Seniors People of age 65 or older may use either the standard Form 1040 or the specialized Form 1040-SR to file their annual tax returns. Form 1040-SR uses larger fonts and emphasizes tax benefits available to many seniors, including a larger standard deduction. Form 1040-X, Amended Individual Income Tax Return Use Form 1040-X to make corrections or adjustments to a tax return that you have already filed. You may need to file an amended return if you made a significant error when completing your original return, such as miscalculating or failing to report income, or neglecting to claim a tax credit or tax deduction. In order to complete Form 1040-X, you will need a copy of your previously filed return. Form 1041, Income Tax Return for Estates and Trusts Many trusts and estates have annual tax return filing obligations, just like individuals and businesses. The responsibility for filing required returns typically falls to an authorized representative of the trust or estate (such as an executor, manager or primary trustee), often called the fiduciary. Generally, the fiduciary files Form 1041 to report the trust or estate's gross income, deductions, taxable income, tax credits and, if applicable, tax liability. Form 1041 Schedule K-1, Beneficiary's Share of Income, Deductions, Credits, etc. When Form 1041 must be filed for a trust or estate, the income, deductions, credits and other amounts reported on that return usually get allocated to beneficiaries. A Schedule K-1 (Form 1041) must then be filed for each beneficiary, showing that person's share of income, credits and deductions. The main advantage of allocating figures from Form 1041 to beneficiaries is that individuals can often claim more tax benefits than an entity like an estate or trust. Therefore, assigning trust or estate income to individual beneficiaries may result in lower overall tax liability. Form 1065, U.S. Return of Partnership Income Most businesses that operate as partnerships (including many limited liability partnerships and LLCs) must file Form 1065 as their annual tax return. Generally, the partnership itself does not pay tax. Rather, the income, deductions, credits and other amounts reported on Form 1065 are allocated to partners or LLC members on Form 1065 Schedule K-1. The partners or members then report their shares of these amounts on their individual tax returns. Form 1065 Schedule K-1, Partner's Share of Income, Deductions, Credits, etc. Businesses that operate as partnerships use Schedule K-1 (Form 1065) to report each partner or member's share of the income, deductions and other amounts shown on the partnership's tax return (usually Form 1065). Partners or members then report the figures shown on their Schedule K-1s on their individual tax returns. Form 1098-T, Tuition Statement This form shows tuition and related fees that a person has paid to an eligible college, university, trade school or other educational institution. You will need this form to claim certain education tax credits, such as the American Opportunity Tax Credit (AOTC) or Lifelong Learning Credit. Form 1099 Series IRS Forms with the number 1099 are used to report forms of income that do not appear on other information returns like Form W-2. The person or organization that made the payments completes the appropriate 1099 form, and sends copies to the IRS and the payment recipient. In most cases, people who receive 1099 forms must report the income shown on them on their tax returns, and may face tax penalties for failing to do so. Here are the most commonly used forms in the 1099 series: - Form 1099-DIV This form shows ordinary dividends, qualified dividends and certain other distributions of corporate earnings, capital gains or profits to shareholders. - Form 1099-G, Certain Government Payments This form shows potentially taxable payments that a person received through a government program (such as unemployment compensation). - Form 1099-INT This form shows various types of interest income. - Form 1099-K This form shows payments received for goods or services through a third-party payment processor. - Form 1099-MISC This form covers various payments and income types not accounted for on other 1099 forms, such as rental income. - Form 1099-NEC (Non-employee Compensation) This form is used to report payments made by a business or self-employed person to independent contractors and other non-employees. - Form 1099-R This form reports distributions from pensions, annuities, IRAs, other retirement plans, profit-sharing plans, insurance contracts and similar sources. - Form 1099-S This form shows proceeds from real estate transactions, such as home sales. You may need to report information from Form 1099-S when claiming the home sale capital gain exclusion. - Form 1099-SA This form shows distributions received from a health savings account (HSA), Archer MSA or Medicare Advantage MSA. - Forms RRB-1099 and RRB-1099-R These forms show various payments made by the Railroad Retirement Board, including annuity and pension payments. Form SSA-1099 This form shows Social Security benefit payments, which may or may not be taxable income, depending on the person's total income for the year. Form 1120, Corporation Income Tax Return Form 1120 is the standard federal tax return filed by C Corporations. These corporations generally must pay corporate income tax on net profits or earnings. Form 1120-S, Income Tax Return for S Corporation Form 1120-S is the standard federal tax return used by S corporations, as well as LLCs that elect to be taxed as S corporations. These companies file Form 1120-S to report income, expenses, deductions and credits. However, because S corporations are pass-through entities, they do not pay corporate income tax. Instead, the company allocates the amounts reported on Form 1120-S to owners, shareholders or members, who then pay individual income tax on their shares of net earnings. Each owner, member or shareholder's portion of income, deductions, credits, etc. is reported on a Form 1120-S Schedule K-1. Form 1120-S Schedule K-1, Shareholder's Share of Income, Deductions, Credits, etc. An S corporation uses this form to report each owner or shareholder's allocated portion of the income, expenses, deductions and credits reported on the corporation's tax return ( Form 1120-S). These allocations are based on percentages of ownership. Shareholders must report the figures shown on their Schedule K-1s on their personal tax returns, and pay any tax due. This process is known as pass-through taxation. Form 2120, Multiple Support Declaration (Qualifying Child or Qualifying Other Relative) In some cases, a person satisfies all the tests to be a qualifying child or qualifying other relative dependent, except that no one provides more than half of the person's support. Instead, the potential dependent's support comes from multiple different people. In these situations, the person who claims the dependent generally must file Form 2120. The form must list all other individuals who pay over 10% of the dependent's support, and include a statement certifying that they have waived their right to claim the dependent in writing. The IRS refers to these scenarios as multiple support agreements. Form 4137, Social Security and Medicare Tax on Unreported Tip Income Employees who receive tip income may need to use this form to report tips that they did not previously report to their employers. These tips may be subject to Social Security and Medicare ( FICA) taxes. Depending on the amount of tax due on the tips, a tax penalty may apply. Note also that only tips reported to an employer and shown on a year-end income statement like Form W-2 can qualify for the "No Tax on Tips" deduction. Form 4868, Application for Automatic Extension of Time to File Individual Income Tax Return You may use this form to request a six-month automatic filing extension to complete your tax return. Alternatively, you can submit your extension request electronically through the IRS website. It is important to remember that an automatic 6-month extension applies only to filing a tax return, not to paying any tax due. Payments made after the general filing deadline may be subject to tax penalties. Form 8379, Injured Spouse Claim and Allocation A person whose filing status is married filing jointly may use this form to request their share of a tax refund that was withheld by the IRS because of the other spouse's debts, such as past due child support. If the IRS accepts a claim made on Form 8379, up to half of the withheld refund will be issued to the injured spouse. Also see Form 8857. Form 8582, Passive Activity Loss Limitations The IRS limits the amount of losses from passive activities in business or real estate that a person may use to offset other income, and thus reduce their tax liability. If you have passive activity losses, use Form 8582 to calculate the limit on losses you can report for that particular year. Excess losses may generally be carried forward to future years. Form 8857, Request for Innocent Spouse Relief In most cases, couples whose filing status is married filing jointly share responsibility for their combined tax liability. In other words, the IRS holds both spouses responsible for paying any tax owed by the couple. However, in some situations, one spouse can legitimately claim that the other spouse should bear the sole responsibility for the couple's tax liability. A person with a sound basis for such a claim is called an innocent spouse. Innocent spouses may use Form 8857 to request relief from tax penalties and other consequences of the other spouse's actions. Residents of community property states whose filing status is married filing separately may also use this form to request relief from taxes or penalties related to community income or assets. Form 8829, Expenses for Business Use of Your Home Eligible people with business or other self-employment income may use this form to compute their home office deduction, which should then be reported on Schedule C. Form 8938, Statement of Specified Foreign Financial Assets Many people who are required to file an FBAR form must also include Form 8938 with their tax returns, providing detailed information about foreign bank accounts and assets. Note that the reporting thresholds for the FBAR and Form 8938 are different. The two forms also have different rules regarding which assets a person must report. Therefore, a person might need to file only an FBAR form, only Form 8938 or both forms. Also remember that Form 8938 should be filed with a person's federal tax return, whereas FBAR forms must be filed separately (and usually electronically) with FinCEN. Form 8949, Sales and Other Dispositions of Capital Assets Use this form to report transactions where you sold, donated or otherwise disposed of capital assets, including certain investments. For each transaction, you must state the selling price (if applicable), the amount realized, your basis or adjusted basis in the property, any other necessary adjustments, and any resulting capital gain or loss. Short-term gains and losses and long-term gains and losses must usually be reported separately. Report net gains and losses from this form on Schedule D. Form 8962, Premium Tax Credit People who purchase health insurance through the official Health Insurance Marketplace, and whose MAGI qualifies them for the Premium Tax Credit (PTC), use this form to compute the credit. If you receive the Advance Premium Tax Credit (APTC) during the year as a reduction in premiums, then you will use this form to reconcile those premium reductions with your actual credit amount. If your actual credit amount is more than the total APTC you received, you can claim the remaining credit on Form 1040, Schedule 3. However, if your total APTC was greater than your allowed PTC, then you may need to pay back a portion of your APTC, and may also have to pay a tax penalty. Form 9465, Installment Agreement Request If you are unable to pay the full amount of tax you owe to the IRS, you can request to make monthly payments over a period of up to 72 months (six years) to pay off the balance. You may request this installment agreement by filing Form 9465. Alternatively, you can submit your request online through the IRS website. Generally, people who enter into installment agreements must pay IRS interest charges with their monthly payments, so it is best to pay off a tax balance as quickly as possible. Form SS-4, Application for EIN You may use this form to apply for an Employer Identification Number (EIN). Alternatively, you can apply online through the IRS website. You will need an EIN if you pay any employees other than yourself, including household employees. Form W-2, Wages and Tax Statement This form reports the total wages or salary, along with any reported tips, that an employee received during a tax year. Form W-2 also shows all taxes that have been withheld from the employee's pay. Employees need the information on their W-2s to complete their tax returns. If you do not receive a W-2 from your workplace by mid-February, first contact your employer and request one. If the employer still does not send you the form, contact the IRS for assistance. Form W-2c, Corrected Wage and Tax Statement If you receive an inaccurate Form W-2 from your employer, you may request a new form. Your employer should use Form W-2c to correct the information from the original W-2. Similarly, if you own a business and mistakenly provide an inaccurate W-2 to an employee, then you can file form W-2c and give a copy to the employee to correct the error. People who receive a Form W-2c may need to file an amended tax return based on the updated information. Form W-4, Employee's Withholding Certificate Employees must give their employers information needed to compute how much tax to withhold from their paychecks. Generally, employees provide this information on Form W-4. In addition to giving basic information on the form like their filing status, employees can request withholding adjustments for situations like working multiple jobs or earning self-employment income. Employees should submit a new W-4 anytime their tax circumstances change. Form W-7A, Application for Taxpayer ID Number for Pending Adoptions Parents in the process of adopting a child may file this form to request an ATIN for the child. FSA \- see Flexible Spending Arrangement. FSA Carryover \- see Use It or Lose It Rule. FSA Grace Period \- see Use It or Lose It Rule. Fourteen-Day / 10% of Rental Time Rule for Rental Income and Expenses IRS rules for reporting rental income and expenses vary depending on whether you also use the rental property as a personal residence. The IRS 14-day / 10% Rule states that you have used a rental property as your residence during a given year if you used it for personal purposes for more than the greater of 14 days, or 10% of the total number of days you rented it out at a fair price. Note that renting the property to someone at a substantially reduced price, or letting them stay there for free, generally counts as personal use for you. Also see the Minimal Rental Use exception. Fourteen-Day Rental Exemption \- see Minimal Rental Use. FUTA Federal Unemployment Tax, or FUTA, must generally be paid by employers for all of their employees. Also see Unemployment Tax. Return to Top
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[ Tax1099.com Glossary ]
Schedule K-1
See Tax1099.com Glossary for 'Schedule K-1'.
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[ PracticeGrowth Tax Glossary (GitHub legacy) ]
Schedule SE, Self-Employment Tax
You typically must file this schedule if you earn more than $400 during a year through self-employment activities, such as operating a business, freelancing, or working as an independent contractor or gig economy worker. Use Schedule SE to calculate your self-employment tax, which you must also report on Schedule 2. Form 1040-SR, Tax Return for Seniors People of age 65 or older may use either the standard Form 1040 or the specialized Form 1040-SR to file their annual tax returns. Form 1040-SR uses larger fonts and emphasizes tax benefits available to many seniors, including a larger standard deduction. Form 1040-X, Amended Individual Income Tax Return Use Form 1040-X to make corrections or adjustments to a tax return that you have already filed. You may need to file an amended return if you made a significant error when completing your original return, such as miscalculating or failing to report income, or neglecting to claim a tax credit or tax deduction. In order to complete Form 1040-X, you will need a copy of your previously filed return. Form 1041, Income Tax Return for Estates and Trusts Many trusts and estates have annual tax return filing obligations, just like individuals and businesses. The responsibility for filing required returns typically falls to an authorized representative of the trust or estate (such as an executor, manager or primary trustee), often called the fiduciary. Generally, the fiduciary files Form 1041 to report the trust or estate's gross income, deductions, taxable income, tax credits and, if applicable, tax liability. Form 1041 Schedule K-1, Beneficiary's Share of Income, Deductions, Credits, etc. When Form 1041 must be filed for a trust or estate, the income, deductions, credits and other amounts reported on that return usually get allocated to beneficiaries. A Schedule K-1 (Form 1041) must then be filed for each beneficiary, showing that person's share of income, credits and deductions. The main advantage of allocating figures from Form 1041 to beneficiaries is that individuals can often claim more tax benefits than an entity like an estate or trust. Therefore, assigning trust or estate income to individual beneficiaries may result in lower overall tax liability. Form 1065, U.S. Return of Partnership Income Most businesses that operate as partnerships (including many limited liability partnerships and LLCs) must file Form 1065 as their annual tax return. Generally, the partnership itself does not pay tax. Rather, the income, deductions, credits and other amounts reported on Form 1065 are allocated to partners or LLC members on Form 1065 Schedule K-1. The partners or members then report their shares of these amounts on their individual tax returns. Form 1065 Schedule K-1, Partner's Share of Income, Deductions, Credits, etc. Businesses that operate as partnerships use Schedule K-1 (Form 1065) to report each partner or member's share of the income, deductions and other amounts shown on the partnership's tax return (usually Form 1065). Partners or members then report the figures shown on their Schedule K-1s on their individual tax returns. Form 1098-T, Tuition Statement This form shows tuition and related fees that a person has paid to an eligible college, university, trade school or other educational institution. You will need this form to claim certain education tax credits, such as the American Opportunity Tax Credit (AOTC) or Lifelong Learning Credit. Form 1099 Series IRS Forms with the number 1099 are used to report forms of income that do not appear on other information returns like Form W-2. The person or organization that made the payments completes the appropriate 1099 form, and sends copies to the IRS and the payment recipient. In most cases, people who receive 1099 forms must report the income shown on them on their tax returns, and may face tax penalties for failing to do so. Here are the most commonly used forms in the 1099 series: - Form 1099-DIV This form shows ordinary dividends, qualified dividends and certain other distributions of corporate earnings, capital gains or profits to shareholders. - Form 1099-G, Certain Government Payments This form shows potentially taxable payments that a person received through a government program (such as unemployment compensation). - Form 1099-INT This form shows various types of interest income. - Form 1099-K This form shows payments received for goods or services through a third-party payment processor. - Form 1099-MISC This form covers various payments and income types not accounted for on other 1099 forms, such as rental income. - Form 1099-NEC (Non-employee Compensation) This form is used to report payments made by a business or self-employed person to independent contractors and other non-employees. - Form 1099-R This form reports distributions from pensions, annuities, IRAs, other retirement plans, profit-sharing plans, insurance contracts and similar sources. - Form 1099-S This form shows proceeds from real estate transactions, such as home sales. You may need to report information from Form 1099-S when claiming the home sale capital gain exclusion. - Form 1099-SA This form shows distributions received from a health savings account (HSA), Archer MSA or Medicare Advantage MSA. - Forms RRB-1099 and RRB-1099-R These forms show various payments made by the Railroad Retirement Board, including annuity and pension payments. Form SSA-1099 This form shows Social Security benefit payments, which may or may not be taxable income, depending on the person's total income for the year. Form 1120, Corporation Income Tax Return Form 1120 is the standard federal tax return filed by C Corporations. These corporations generally must pay corporate income tax on net profits or earnings. Form 1120-S, Income Tax Return for S Corporation Form 1120-S is the standard federal tax return used by S corporations, as well as LLCs that elect to be taxed as S corporations. These companies file Form 1120-S to report income, expenses, deductions and credits. However, because S corporations are pass-through entities, they do not pay corporate income tax. Instead, the company allocates the amounts reported on Form 1120-S to owners, shareholders or members, who then pay individual income tax on their shares of net earnings. Each owner, member or shareholder's portion of income, deductions, credits, etc. is reported on a Form 1120-S Schedule K-1. Form 1120-S Schedule K-1, Shareholder's Share of Income, Deductions, Credits, etc. An S corporation uses this form to report each owner or shareholder's allocated portion of the income, expenses, deductions and credits reported on the corporation's tax return ( Form 1120-S). These allocations are based on percentages of ownership. Shareholders must report the figures shown on their Schedule K-1s on their personal tax returns, and pay any tax due. This process is known as pass-through taxation. Form 2120, Multiple Support Declaration (Qualifying Child or Qualifying Other Relative) In some cases, a person satisfies all the tests to be a qualifying child or qualifying other relative dependent, except that no one provides more than half of the person's support. Instead, the potential dependent's support comes from multiple different people. In these situations, the person who claims the dependent generally must file Form 2120. The form must list all other individuals who pay over 10% of the dependent's support, and include a statement certifying that they have waived their right to claim the dependent in writing. The IRS refers to these scenarios as multiple support agreements. Form 4137, Social Security and Medicare Tax on Unreported Tip Income Employees who receive tip income may need to use this form to report tips that they did not previously report to their employers. These tips may be subject to Social Security and Medicare ( FICA) taxes. Depending on the amount of tax due on the tips, a tax penalty may apply. Note also that only tips reported to an employer and shown on a year-end income statement like Form W-2 can qualify for the "No Tax on Tips" deduction. Form 4868, Application for Automatic Extension of Time to File Individual Income Tax Return You may use this form to request a six-month automatic filing extension to complete your tax return. Alternatively, you can submit your extension request electronically through the IRS website. It is important to remember that an automatic 6-month extension applies only to filing a tax return, not to paying any tax due. Payments made after the general filing deadline may be subject to tax penalties. Form 8379, Injured Spouse Claim and Allocation A person whose filing status is married filing jointly may use this form to request their share of a tax refund that was withheld by the IRS because of the other spouse's debts, such as past due child support. If the IRS accepts a claim made on Form 8379, up to half of the withheld refund will be issued to the injured spouse. Also see Form 8857. Form 8582, Passive Activity Loss Limitations The IRS limits the amount of losses from passive activities in business or real estate that a person may use to offset other income, and thus reduce their tax liability. If you have passive activity losses, use Form 8582 to calculate the limit on losses you can report for that particular year. Excess losses may generally be carried forward to future years. Form 8857, Request for Innocent Spouse Relief In most cases, couples whose filing status is married filing jointly share responsibility for their combined tax liability. In other words, the IRS holds both spouses responsible for paying any tax owed by the couple. However, in some situations, one spouse can legitimately claim that the other spouse should bear the sole responsibility for the couple's tax liability. A person with a sound basis for such a claim is called an innocent spouse. Innocent spouses may use Form 8857 to request relief from tax penalties and other consequences of the other spouse's actions. Residents of community property states whose filing status is married filing separately may also use this form to request relief from taxes or penalties related to community income or assets. Form 8829, Expenses for Business Use of Your Home Eligible people with business or other self-employment income may use this form to compute their home office deduction, which should then be reported on Schedule C. Form 8938, Statement of Specified Foreign Financial Assets Many people who are required to file an FBAR form must also include Form 8938 with their tax returns, providing detailed information about foreign bank accounts and assets. Note that the reporting thresholds for the FBAR and Form 8938 are different. The two forms also have different rules regarding which assets a person must report. Therefore, a person might need to file only an FBAR form, only Form 8938 or both forms. Also remember that Form 8938 should be filed with a person's federal tax return, whereas FBAR forms must be filed separately (and usually electronically) with FinCEN. Form 8949, Sales and Other Dispositions of Capital Assets Use this form to report transactions where you sold, donated or otherwise disposed of capital assets, including certain investments. For each transaction, you must state the selling price (if applicable), the amount realized, your basis or adjusted basis in the property, any other necessary adjustments, and any resulting capital gain or loss. Short-term gains and losses and long-term gains and losses must usually be reported separately. Report net gains and losses from this form on Schedule D. Form 8962, Premium Tax Credit People who purchase health insurance through the official Health Insurance Marketplace, and whose MAGI qualifies them for the Premium Tax Credit (PTC), use this form to compute the credit. If you receive the Advance Premium Tax Credit (APTC) during the year as a reduction in premiums, then you will use this form to reconcile those premium reductions with your actual credit amount. If your actual credit amount is more than the total APTC you received, you can claim the remaining credit on Form 1040, Schedule 3. However, if your total APTC was greater than your allowed PTC, then you may need to pay back a portion of your APTC, and may also have to pay a tax penalty. Form 9465, Installment Agreement Request If you are unable to pay the full amount of tax you owe to the IRS, you can request to make monthly payments over a period of up to 72 months (six years) to pay off the balance. You may request this installment agreement by filing Form 9465. Alternatively, you can submit your request online through the IRS website. Generally, people who enter into installment agreements must pay IRS interest charges with their monthly payments, so it is best to pay off a tax balance as quickly as possible. Form SS-4, Application for EIN You may use this form to apply for an Employer Identification Number (EIN). Alternatively, you can apply online through the IRS website. You will need an EIN if you pay any employees other than yourself, including household employees. Form W-2, Wages and Tax Statement This form reports the total wages or salary, along with any reported tips, that an employee received during a tax year. Form W-2 also shows all taxes that have been withheld from the employee's pay. Employees need the information on their W-2s to complete their tax returns. If you do not receive a W-2 from your workplace by mid-February, first contact your employer and request one. If the employer still does not send you the form, contact the IRS for assistance. Form W-2c, Corrected Wage and Tax Statement If you receive an inaccurate Form W-2 from your employer, you may request a new form. Your employer should use Form W-2c to correct the information from the original W-2. Similarly, if you own a business and mistakenly provide an inaccurate W-2 to an employee, then you can file form W-2c and give a copy to the employee to correct the error. People who receive a Form W-2c may need to file an amended tax return based on the updated information. Form W-4, Employee's Withholding Certificate Employees must give their employers information needed to compute how much tax to withhold from their paychecks. Generally, employees provide this information on Form W-4. In addition to giving basic information on the form like their filing status, employees can request withholding adjustments for situations like working multiple jobs or earning self-employment income. Employees should submit a new W-4 anytime their tax circumstances change. Form W-7A, Application for Taxpayer ID Number for Pending Adoptions Parents in the process of adopting a child may file this form to request an ATIN for the child. FSA \- see Flexible Spending Arrangement. FSA Carryover \- see Use It or Lose It Rule. FSA Grace Period \- see Use It or Lose It Rule. Fourteen-Day / 10% of Rental Time Rule for Rental Income and Expenses IRS rules for reporting rental income and expenses vary depending on whether you also use the rental property as a personal residence. The IRS 14-day / 10% Rule states that you have used a rental property as your residence during a given year if you used it for personal purposes for more than the greater of 14 days, or 10% of the total number of days you rented it out at a fair price. Note that renting the property to someone at a substantially reduced price, or letting them stay there for free, generally counts as personal use for you. Also see the Minimal Rental Use exception. Fourteen-Day Rental Exemption \- see Minimal Rental Use. FUTA Federal Unemployment Tax, or FUTA, must generally be paid by employers for all of their employees. Also see Unemployment Tax. Return to Top
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[ Tax1099.com Glossary ]
Scheduled Filing
See Tax1099.com Glossary for 'Scheduled Filing'.
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[ Vermont Department of Taxes Glossary ]
Schedules
for purposes of income tax, Vermont Department of Taxes and IRS forms used to report various kinds of income, deductions, and credits
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[ Tax Defense Network Tax Definitions ][ MyTaxRights.org Tax Glossary ]
Scholarship
Money awarded to a recipient for educational purposes. Scholarship funds are generally nontaxable if used to pay for qualified expenses such as tuition, required fees, books, and supplies.
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[ TurboTax/Intuit Tax Terms Glossary ][ TaxGPT Tax Glossary ]
Scholarships and fellowships
If you're a degree-seeking student, you may be eligible for tax-free scholarships and fellowships that cover certain educational expenses. Specifically, awards used to pay for tuition, fees, books, and supplies are typically exempt from taxation. However, if your scholarship or fellowship also provides funds for room and board, those amounts are considered taxable income and must be reported on your tax return.
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[ Vermont Department of Taxes Glossary ]
School Property Account Number (SPAN)
used in property taxation, a unique 11-digit identification number assigned by a municipality to each property. The property tax credit is credited to the property tax bill linked to this number.
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[ Vermont Department of Taxes Glossary ]
Seasonal Dwelling
for purposes of real estate transfer taxes and property tax programs, properties that are for seasonal occupancy, including hunting camps, camps and cottages on lakes and ponds, etc., which cannot be occupied year-round
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[ TurboTax/Intuit Tax Terms Glossary ][ TaxGPT Tax Glossary ]
SECA
As a self-employed individual, you're responsible for paying your own Social Security and Medicare taxes through the Self-Employment Contributions Act (SECA). For the 2023 tax year, you'll pay a total of 15.3% in self-employment taxes on your first $160,200 of net earnings from self-employment. Any amounts above this threshold are subject to a 2.9% Medicare tax. Looking ahead to 2024, the Social Security wage limit is increasing to $168,600, which means you'll pay a higher rate on earnings above this new threshold.
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[ IRS VITA Glossary ]
Second Lowest Cost Silver Plan (SLCSP)
The second lowest cost silver plan offered through the Marketplace for the rating area in which the taxpayer resides. A taxpayer who enrolled in a qualified health plan through the Marketplace will receive Form 1095-A from the Marketplace which will include the SLCSP amount. This figure is used on Form 8962 to calculate the amount of the premium tax credit that the taxpayer is allowed.
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[ Vermont Department of Taxes Glossary ]
Secondary residence
for real estate transfers, any residence that is not the primary residence of the buyer or seller nor will be used as a primary residence by anyone else (such as a tenant). Any seasonal dwelling would fall under secondary residence, as would time-shares. Any vacation property would be a secondary residence.
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[ TaxGPT Tax Glossary ]
Section 179 Deduction
Section 179 deduction allows businesses to immediately expense the cost of qualifying property, such as equipment and machinery, rather than depreciating it over time. The deduction has an annual limit, and the property must be used more than 50% for business.
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[ Vermont Department of Taxes Glossary ]
Self-employed (SE)
a person who individually decides when and where to work, pays his or her own expenses and must pay self-employment taxes
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Self-employed health insurance premiums
As a self-employed individual, you may be eligible to deduct the cost of health insurance premiums for yourself, your spouse, and your dependents. The good news is that you don't need to itemize your deductions to claim this benefit. You can deduct these premiums directly, which can help reduce your taxable income and lower your tax bill.
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[ IRS VITA Glossary ][ NPBC Tax Glossary ]
Self-employment Income
Earned income from a trade, business, farming or profession that is not paid by an employer. For example, hair stylists and lawncare workers who work for themselves (and not for someone else) are considered self-employed.
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[ IRS Understanding Taxes Student Glossary ][ Tax Defense Network Tax Definitions ]
self-employment loss
Self-employment income minus self-employment expenses, when self-employment income is less than self-employment expenses.
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self-employment profit
Self-employment income minus self-employment expenses, when self-employment income is greater than self-employment expenses.
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Self-employment Tax
Similar to Social Security and Medicare taxes. The self-employment tax rate is 15.3 percent of self-employment profit. The self-employment tax is calculated on Schedule SE—Self-Employment Tax. The self-employment tax is reported on Form 1040, U.S. Individual Income Tax Return.
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SEP
A Simplified Employee Pension (SEP) is a tax-favored retirement plan mainly for self-employed taxpayers. Contributions to the plan are tax deductible. The maximum contribution for 2026 is the smaller of 20% of net earnings from self-employment or $72,000. The 2025 limit was $70,000. Contributions for the tax year are due by the filing deadline, but you can extend the contribution deadline to October if you extend the due date of your tax return.
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[ TaxGPT Tax Glossary ]
SEP (Simplified Employee Pension)
A Simplified Employee Pension (SEP) is a retirement plan designed specifically for self-employed individuals, offering tax benefits to help you save for your golden years. One of the key advantages of a SEP is that contributions are tax-deductible, which can help reduce your taxable income. For the 2023 tax year, you can contribute up to 20% of your net earnings from self-employment, capped at $66,000. In 2024, the contribution limit increases to $69,000. Keep in mind that you have until the filing deadline to make contributions for the tax year, but you can extend this deadline to October if you file for an extension on your tax return.
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Severance Pay
The money and/or benefits provided to an employee upon his or her termination or separation of employment. Severance is generally considered taxable income.
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[ IRS VITA Glossary ]
Shared responsibility payment (SRP)
If the taxpayer or any other member of the tax household has neither minimum essential coverage nor an exemption for any month during the tax year, the taxpayer must compute and pay the shared responsibility payment. An individual filing a return but not claiming their own exemption (because they can be claimed by another taxpayer) is not responsible for SRP.
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Short Sale
A short sale is a financial strategy where an investor sells the stock they don't own, typically with the expectation that the stock's value will decline. To execute a short sale, the investor borrows the stock from a lender, sells it at the current market price, and then hopes to buy it back at a lower price to repay the loan. If the stock price does fall, the investor profits from the difference. However, if the stock price rises, the investor incurs a loss and must purchase the stock at a higher price to repay the loan. From a tax perspective, the IRS doesn't consider a short sale complete until the investor returns the borrowed stock to the lender, at which point the transaction is subject to taxation.
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[ TurboTax/Intuit Tax Terms Glossary ]
Short sale of stock
The sale of borrowed stock, usually with the hope that the stock price will fall. If it does, the investor profits by repaying the loan with shares purchased at the lower price. If the stock price increases, the investor loses and has to repay the loan with shares that cost more than those sold. As far as the IRS is concerned, the transaction doesn't count for tax purposes until the investor delivers stock to the lender to close the sale.
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[ TurboTax/Intuit Tax Terms Glossary ][ TaxGPT Tax Glossary ]
Short-term gains and losses
Short-term gains and losses result from the sale or exchange of capital assets held for one year or less. These gains are taxed at ordinary income tax rates, which are generally higher than long-term capital gains rates.
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Similar to Social Security and Medicare taxes. The self
employment tax rate is 15.3 percent of self-employment profit. The self-employment tax is calculated on Schedule SE—Self-Employment Tax. The self-employment tax is reported on Form 1040, U.S. Individual Income Tax Return.
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SIMPLE
The Savings Incentive Match Plan for Employees (SIMPLE) is a retirement plan that can be offered by companies with 100 or fewer employees. A key consideration is that the employer generally must match employee contributions up to 3% or contribute 2% of pay for each employee, whether or not they contribute on their own. The rules are simpler than for other tax-qualified retirement plans. The hope is that this will encourage smaller employers to establish plans. For 2026, a self-employed person with no employees could open a SIMPLE and contribute up to $17,000 of self-employment earnings ($16,500 for 2025), plus a $4,000 catch-up contribution if age 50 through 59 or 64 or older ($3,500 for 2025). Those age 60 through 63 have an increased catch-up amount of $5,250 (same amount for 2025).
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[ TaxGPT Tax Glossary ]
SIMPLE (Savings Incentive Match Plan for Employees)
The Savings Incentive Match Plan for Employees (SIMPLE) is a type of retirement plan designed for small businesses with 100 or fewer employees. One of the key benefits of a SIMPLE plan is that it's relatively easy to administer, with fewer rules and regulations compared to other tax-qualified retirement plans. Employers who offer a SIMPLE plan are required to make contributions on behalf of their employees, either by matching their contributions up to 3% of their salary or by contributing 2% of each employee's pay, regardless of whether the employee contributes themselves. This encourages smaller employers to establish retirement plans for their employees. Self-employed individuals with no employees can also take advantage of a SIMPLE plan, allowing them to contribute up to $15,500 of their self-employment earnings in 2023 (plus an additional $3,500 if they're 50 or older by the end of the year). In 2024, the contribution limit increases to $16,000, with the catch-up amount remaining at $3,500.
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[ IRS VITA Glossary ][ NPBC Tax Glossary ]
Simplified Method
This method is used to calculate the tax-free portion of each pension or annuity payment.
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sin tax
A tax on certain goods, like tobacco and alcohol, which is meant to discourage their use.
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Single
a filing status for taxpayers who are unmarried, divorced, or legally separated under a divorce or separate maintenance decree governed by state law
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[ Vermont Department of Taxes Glossary ]
Single Family Dwelling
for purposes of real estate transfers, an existing structure that is already on the property prior to purchase, including properties that were rentals and modular homes, but not mobile homes
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Single Filing Status
If on the last day of the year, you are unmarried or legally separated from your spouse under a divorce or separate maintenance decree and you do not qualify for another filing status.
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[ Tax1099.com Glossary ]
Social Security Administration (SSA)
See Tax1099.com Glossary for 'Social Security Administration (SSA)'.
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[ IRS VITA Glossary ][ NPBC Tax Glossary ]
Social Security Benefits
Social security benefits are payments made under Title II of the Social Security Act. They include old-age, survivor, and disability insurance (OASDI) benefits. Social security benefits include monthly retirement, survivor, and disability benefits. They do not include supplemental security income (SSI). Certain government retirees who receive a pension from work are not covered by social security. Some portion of the social security benefits received may be taxable. Generally, if social security benefits are the only source of income, the benefits are not taxable. In this instance, taxpayers may not be required to file a return. However, if the taxpayers are filing Married Filing Separately and lived with their spouse at any time during the tax year, 85% of the benefits will be taxable.
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[ Tax1099.com Glossary ]
Social Security Number (SSN)
See Tax1099.com Glossary for 'Social Security Number (SSN)'.
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Social Security tax
A tax levied on both employers and employees to fund the Social Security program. It is collected in the form of a payroll tax or through self-employment taxes. For 2023, the social security tax rate is 12.4% (6.2% paid by employees and 6.2% contributed by employers).
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[ TurboTax/Intuit Tax Terms Glossary ][ TaxGPT Tax Glossary ]
Social Security Tax, excess withheld
If you have multiple jobs throughout the year, either simultaneously or consecutively, you may end up paying too much in Social Security taxes. This is because each employer withholds Social Security taxes from your paycheck without knowing how much you've already paid through other jobs. Fortunately, you're eligible for a refund of the excess Social Security taxes withheld.
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[ IRS Understanding Taxes Student Glossary ]
Software Developer
Develops software for the purposes of (1) formatting electronic tax return information according to IRS specifications, and/or (2) transmitting electronic tax return information directly to the IRS.
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[ Vermont Department of Taxes Glossary ]
Sole Proprietor (Sole Prop)
a person who is the exclusive owner of a business, entitled to keep all profits after tax has been paid but liable for all losses
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[ Tax Defense Network Tax Definitions ]
Sole Proprietorship
A sole proprietorship is an unincorporated business owned and operated by one person. It is one of the most common business entities. Business income, losses, and expenses are reported on Schedule C and filed with Form 1040.
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Spousal IRA
Typically, you need to have earned income to contribute to a traditional or Roth Individual Retirement Account (IRA). However, there's an exception for married couples. If one spouse is working and the other isn't, the working spouse can contribute to an IRA on behalf of the nonworking spouse. In 2023, the working spouse can contribute up to $6,500 of their earned income to the spousal IRA. If the nonworking spouse is 50 or older by the end of the year, the contribution limit increases to $7,500. For 2024, the contribution limit rises to $7,000, and the catch-up amount remains $1,000, allowing a total contribution of $8,000 for those 50 or older.
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SSB
Special separation benefits, a type of military severance payment that affects the amount of VA compensation paid.
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SSN
Social Security Number
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Standard Deduction
The standard deduction is a fixed amount that you can subtract from your taxable income without needing to keep any records or receipts. The amount of the standard deduction varies depending on your filing status, and it's higher for taxpayers who are 65 or older or blind. One of the benefits of the standard deduction is that you don't need to have any actual expenses to claim it - even if you didn't incur any deductible expenses throughout the year, you can still claim the full standard deduction. In fact, about two-thirds of taxpayers choose to take the standard deduction rather than itemize their deductions. However, there are some special rules that can reduce the standard deduction for children who are claimed as dependents on their parent's tax returns.
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Standard Deduction for a dependent
If you claim your child as a dependent on your tax return, they are not eligible to claim a personal exemption on their own tax return. This means that as the parent, you get to claim the exemption for your child, but they cannot claim it for themselves.
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Standard Mileage Method
One of two methods for calculating business automobile expenses. For the standard mileage method, the taxpayer multiplies the business miles by the mileage rate for that tax year. (The other method is the actual expense method).
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Standard mileage rate
The deductible amount you can claim for each mile you use your car for business, charitable, job-related moving or medical purposes without having to keep track of the actual costs of operating your vehicle. You can also deduct the actual cost of parking and tolls when driving for any of these purposes. The standard mile rates for 2025 and 2026 are as follows. | | | | | | --- | --- | --- | --- | | **Vehicle used for:** | **2025 (Full Year)** | **First Half of 2026 (Jan. - June)** | **Second Half of 2026 (July - Dec.)** | | Business | 70¢ per mile | 72.5¢ per mile | 76¢ per mile | | Medical or Moving | 21¢ per mile | 20.5¢ per mile | 23.5¢ per mile | | Charitable | 14¢ per mile | 14¢ per mile | 14¢ per mile |
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[ Tax1099.com Glossary ]
State Income Tax
See Tax1099.com Glossary for 'State Income Tax'.
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[ PracticeGrowth Tax Glossary (GitHub legacy) ][ Vermont Department of Taxes Glossary ]
Statewide Adjustment
The statewide adjustment can be thought of as the average level of appraisal of the entire state. For example, if a town has a CLA of 60%, but the statewide adjustment is 75%, then the adjustment factor applied to education property tax rates in that town will be 0.60 / 0.75 = 0.80 or 80%.
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Statutory employee
Statutory employees are independent contractors under common law, but they are treated as employees for certain tax withholding purposes. Employers are not required to withhold a statutory employee’s federal income taxes; however, they are required to withhold Social Security and Medicare taxes if certain conditions apply.
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[ TurboTax/Intuit Tax Terms Glossary ][ TaxGPT Tax Glossary ]
Stepped-up basis
When you inherit property, its tax basis is "stepped up" to its value on the date of the original owner's death or a later date chosen by the estate's executor. This means that any appreciation in value that occurred during the original owner's lifetime is essentially forgiven, and you won't have to pay taxes on it. When you eventually sell the property, you'll use this higher basis to calculate your gain. On the other hand, if the property's value decreased while it was owned by the original owner, the basis is "stepped down" to its value on the date of death.
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Stock dividends
Stock dividends merely increase the taxpayer’s number of shares in the company and generally are not taxable.
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Stock split
A stock split is a method used by corporations to lower the market price of stock. A two-for-one stock split will decrease the basis per share by half. The original basis of $200 for 100 shares becomes $200 for 200 shares.
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Student Loan Interest
The interest paid during the year on a loan for qualified higher education expenses that were for the taxpayer, the taxpayer’s spouse, or a person who was the taxpayer’s dependent when the loan was obtained.
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Student loan interest deduction
If you're paying off student loans used to finance your own education or that of your spouse or dependents, you may be eligible to deduct a portion of the interest you pay on those loans. This tax deduction is available to help offset the cost of higher education expenses. The good news is that you don't need to itemize your deductions to claim this benefit. However, the deduction is subject to income limits, meaning that it's gradually reduced as your income increases.
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Substantial Presence Test
The criteria that an individual without a green card must meet in order to be considered a resident alien; the criteria relate to specific numbers of days physically present in the United States.
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[ IRS VITA Glossary ]
Substitute for Form W
2, Wage and Tax Statement, or Form 1099-R, Distributions from Pensions, Annuities, Retirement or Profit-Sharing Plans, IRA's, Insurance Contracts, Etc., used by taxpayers who have been unable to obtain (or have received incorrect) wage or distribution statements.
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[ IRS Understanding Taxes Student Glossary ][ Tax Defense Network Tax Definitions ]
support
Per the IRS, for dependency purposes, support may include the following: food, clothing, shelter, education, medical and dental care, recreation, and transportation. It may also include welfare, food stamps, and housing provided by the state. Support includes both taxable and nontaxable income.
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Support Test
One of the tests for identifying a qualifying child or a qualifying relative as a dependent: Did the taxpayer provide over half of the potential dependent's total support for the year? top * * * ## T
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[ Tax1099.com Glossary ]
SUTA
See Tax1099.com Glossary for 'SUTA'.
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[ IRS VITA Glossary ][ HTJ Tax American Tax Glossary ][ NPBC Tax Glossary ]
TAD
Temporary additional duty for military service members. (See TDY)
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TANF
Temporary Assistance for Needy Families (previously known as AFDC), a state benefit also known as welfare.
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[ Vermont Department of Taxes Glossary ][ Instead.com Tax Glossary ]
Tangible personal property
for purposes of Vermont sales tax, personal property that may be seen, weighed, measured, felt, touched, or in any other manner perceived by the senses and can be moved (including furniture, clothing, jewelry, art, writings, or household goods, but not including real property or land). "Tangible personal property" includes electricity, water, gas, steam, and prewritten computer software, regardless of the method in which the prewritten software is paid for, delivered, or accessed. 32 V.S.A. § 9701(7), H.887 of 2024.
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tariff
A tax levied on certain goods imported from foreign countries.
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[ Tax Defense Network Tax Definitions ]
Tax Abatement
Tax abatement refers to the temporary reduction or elimination of the amount of property tax a homeowner is required to pay on new construction, rehabilitation, and/or major improvements.
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[ Tax Defense Network Tax Definitions ]
Tax Audit Representation
A legal or tax professional who stands in on behalf of a taxpayer during a tax audit (federal or state). Also known as audit defense.
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tax avoidance
Tax avoidance is the legal methods used to minimize a taxpayer’s tax liability and maximize their after-tax income.
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Tax bracket
A tax bracket is a range of income that is taxed at a specific rate. In the US, there are several tax brackets, with rates ranging from 10% to 37% for the 2023 and 2024 tax years. Your tax bracket is determined by the amount of your highest dollar of income, but that doesn't mean all of your income is taxed at that rate. In reality, your income is taxed at multiple rates, with the lowest rates applying to the first dollars you earn and the highest rates applying to the last dollars you earn. Additionally, some of your income may not be taxed at all, thanks to exemptions and deductions that reduce your taxable income. Tax Treaties Tax treaties are agreements between the U.S. and foreign countries that prevent double taxation and encourage international trade and investment. They often reduce or eliminate withholding taxes on income such as dividends, interest, royalties, and pensions. Most treaties include a “saving clause” ensuring U.S. citizens and residents remain taxed on worldwide income. Eligible taxpayers may claim treaty benefits by filing the appropriate IRS forms, and the IRS publishes a complete list of current treaties and their provisions. Tax Preference Item A tax preference item is an income or deduction that receives favorable tax treatment under the regular tax system but is added back to income when calculating the Alternative Minimum Tax (AMT). Examples include tax-exempt interest from private activity bonds. Tax Rebate A tax rebate is a refund of taxes paid, often resulting from overpayment or the application of tax credits. It can also refer to government programs that return money to taxpayers as a form of economic stimulus or relief. Tax-Exempt Interest Tax-exempt interest refers to the interest earned on bonds issued by states, cities, or other local governments that are not subject to federal income tax. While you're required to report this interest on your tax return, you won't have to pay federal income tax on it. However, it's important to note that some tax-exempt interests may still be subject to the Alternative Minimum Tax (AMT), which is a separate tax calculation designed to ensure that individuals and corporations pay a minimum amount of tax. Tax-Free Income Tax-free income refers to earnings that are not subject to federal income tax. Examples include certain municipal bond interest, Roth IRA withdrawals, and some Social Security benefits, depending on the taxpayer's income level. Taxable Income The term "taxable income" can have different meanings. In general, it refers to income that is subject to taxation, such as wages, interest, and dividends, as opposed to income that is exempt from taxation, like the interest earned on municipal bonds. On a tax return, "taxable income" specifically refers to the amount of income that remains after all adjustments, deductions, and exemptions have been subtracted. This is the final amount that is used to calculate your tax liability. Taxpayer Advocate The Taxpayer Advocate is a high-ranking official within the Internal Revenue Service (IRS) who is responsible for assisting individuals in resolving their issues with the agency. This advocate also identifies areas where the IRS can improve its procedures to better serve taxpayers. The Taxpayer Advocate oversees a network of Problem Resolution Officers (PROs) located throughout the country. If you're experiencing difficulties or frustration when dealing with the IRS, such as being given the runaround or facing unfair treatment, you can reach out to a PRO or, ultimately, the Taxpayer Advocate for help. They can provide guidance and support to resolve your issues and ensure that your rights as a taxpayer are protected.
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[ Tax Defense Network Tax Definitions ]
Tax Break
A tax break is anything that can legally reduce taxes, such as deductions, credits, and exemptions.
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tax code
The official body of federal tax laws, including tax rules and regulations.
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[ Vermont Department of Taxes Glossary ]
Tax Compliance Officer (TCO)
employees of the Vermont Department of Taxes who perform audits and collection work on outstanding tax liabilities
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Tax Credit
A reduction in tax liability for specific attributes or expenses, such as having a qualifying child or incurring expenses for paid dependent care. Unlike deductions, which reduce taxable income, a tax credit reduces tax liability dollar for dollar. Nonrefundable credits may only offset positive tax liability; in contrast, if a refundable credit exceeds the taxpayer’s tax liability, the taxpayer receives the excess as a refund. (See also **Refundable tax credit**.)
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tax cut
A reduction in the amount of taxes taken by the government.
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Tax Deduction
An amount (often a personal or business expense) that reduces the income subject to tax.
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Tax Deferred
Tax deferred typically refers to investment earnings (interest, dividends, or capital gains) that accumulate tax-free until the taxpayer takes constructive receipt of the profits, such as IRA contributions. A delay in paying taxes.
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tax evasion
Tax evasion is the illegal action of an individual or business entity to deliberately underpay or refuse to pay their taxes. Those who evade paying their taxes are subject to criminal charges and substantial penalties.
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[ Vermont Department of Taxes Glossary ]
Tax Examiner (TE)
employees of the Vermont Department of Taxes who review, validate, and resolve issues related to tax filing obligations
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tax exemption
The portion of a taxpayer’s income in which no tax is imposed.
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Tax Forgiveness
For U.S. military personnel who died while serving in a combat zone or as a result of wounds, disease, or injury incurred while so serving, any unpaid tax liability is waived and any forgiven tax liability that has already been paid is refunded.
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Tax Fraud
Tax fraud is the intentional action of a taxpayer to fail to file a tax return or pay taxes, or to provide false information on a tax return, such as using another person’s Social Security number. It is a federal crime and can result in fines up to $250,000 for individuals and $500,000 for corporations. Tax evasion is a subset of tax fraud.
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Tax Holiday
A tax holiday is the temporary reduction or elimination of a tax. For example, many states offer tax holidays for back-to-school shopping, eliminating sales tax on certain items during a specific period of time.
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Tax Home
The country in which the taxpayer is permanently or indefinitely engaged to work as an employee or self-employed individual, regardless of where the taxpayer maintains his or her family home. For taxpayers who work abroad, but do not have a regular place of business because of the nature of the work, their tax home is the place where they regularly live.
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[ Vermont Department of Taxes Glossary ]
Tax Implementation Group for E-Commerce Requirements Standardization (TIGERS)
an organization that standardizes and adopts what is referred to as Fed/State Modernized e-File for personal income tax
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[ Vermont Department of Taxes Glossary ]
Tax Increment Financing (TIF)
used for property taxation, some Vermont municipalities have state-approved TIF districts, which can use property tax revenue created by new projects to fund those projects. The education grand list figure used in the determination of the CLA includes the value of the “increment” for those towns and cities with active tax increment financing districts. However, the education grand list figure for those municipalities that will be reported to the Department of Education and used to determine the education tax liability will not include the value of the increment.
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Tax Liability (or total tax bill)
The amount of tax after nonrefundable credits have been subtracted. Taxpayers meet (pay) their federal income tax liability through withholding, estimated tax payments, and payments made with the income tax return.
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Tax Negotiation
Tax negotiation is a tactic used to reduce a taxpayer’s tax debt by getting the IRS to agree to accept a lower amount. This is typically done through Offer in Compromise.
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tax preparation software
Computer software designed to assist taxpayers with completing their tax returns. The software works with the IRS electronic filing system.
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Tax rebate
The percentage rate at which an individual taxpayer or business is taxed.
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Tax Relief
Tax relief refers to the various programs available to help taxpayers deal with their tax debt.
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Tax Settlement
The approved reduction or elimination of a taxpayer’s tax debt.
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Tax Shelter
A tax shelter is the legal strategy employed to reduce the amount of income taxes owed by a taxpayer.
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tax shift
Tax shift refers to the process where a tax that is levied on an individual or entity is in fact paid by a different person or entity.
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Tax Year
An annual accounting period for keeping records and reporting income and expenses. Taxpayers may choose between a calendar tax year (the 12 consecutive month period beginning January 1st and ending December 31st) or a fiscal tax year (a 12 consecutive month period ending on the last day of any month except December).
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Tax-exempt Interest
Interest income paid on bonds issued by states or municipalities that is tax-free for federal income tax purposes. Although you are required to report this income on your return, it is not taxed. Note that some interest income that is exempt from the regular tax is taxed by the Alternative Minimum Tax.
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tax-exempt interest income
Interest income that is not subject to income tax. Tax-exempt interest income is earned from bonds issued by states, cities, or counties and the District of Columbia.
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[ TurboTax/Intuit Tax Terms Glossary ]
Tax-free income
All sorts of income can potentially be tax-free, including: child-support payments; combat pay; damages in lawsuits for physical injury; disability payments, if you paid the premiums for the policy; dividends on a life insurance policy, up to the total of premiums paid; Education Savings Account withdrawals used for qualifying expenses; gifts; Health Savings Account withdrawals used for qualifying payments; most inheritances; life insurance proceeds; municipal bond interest; policy officer survivor payments; profits from the sale of a home, up to $250,000 if you're filing as Single or Married Filing Separately and up to $500,000 if you're Married Filing Jointly or Qualifying Surviving Spouse; qualified Roth IRA and Roth 401(k) withdrawals; most scholarships and fellowship grants; Social Security benefits (between 15% and 100% are tax-free depending on your other income); veterans benefits; and workers' compensation.
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[ Tax1099.com Glossary ]
Taxable Event
See Tax1099.com Glossary for 'Taxable Event'.
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Taxable Income
This can mean different things. It can refer to income that is taxable (such as wages, interest and dividends) as opposed to tax-exempt (such as the interest on municipal bonds). On tax returns, "taxable income" is your income after subtracting all adjustments and deductions—that is, the amount on which your tax is computed before credits are applied.
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[ Vermont Department of Taxes Glossary ]
Taxable income (TI)
adjusted gross income minus deductions and exemptions
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taxable interest income
Interest income that is subject to income tax. All interest income is taxable unless specifically excluded.
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[ PracticeGrowth Tax Glossary (GitHub legacy) ][ Vermont Department of Taxes Glossary ]
Taxable Meal Facilitator
A meal facilitator is an entity that facilitates the same and collects the charge for a taxable meal or alcoholic beverage through an internet transaction or other means
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[ IRS Understanding Taxes Student Glossary ]
taxes
Required payments of money to governments that are used to provide public goods and services for the benefit of the community as a whole.
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[ MyTaxRights.org Tax Glossary ]
Taxlete
A term we use to signify one's proficiency in self-preparing his or her personal income tax return.
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[ TurboTax/Intuit Tax Terms Glossary ]
Taxpayer advocate
The official inside the IRS who is charged with helping individuals resolve their problems with the IRS, as well as identifying changes in IRS procedures that could make the agency more taxpayer-friendly. This official oversees IRS Problem Resolution Officers (PRO) around the country. You should go to a PRO, or ultimately the Advocate, if you think that you are not being properly served by regular IRS channels.
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[ MyTaxRights.org Tax Glossary ]
Taxpayer Advocate Service
An independent unit within the Internal Revenue Service (IRS) whose mission is to help taxpayers resolve problems with the IRS and to recommend changes to prevent future problems.
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[ Vermont Department of Taxes Glossary ]
Taxpayer Identification (TI)
as used in tax administration, the functions that manage the creation and editing of taxpayer data
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[ IRS VITA Glossary ]
Taxpayers can choose to have the five
year test period for ownership and use suspended during any period the homeowner (either spouse if married) served on qualified official extended duty as a member of the uniformed services or Foreign Service of the United States, as an employee of the intelligence community, or as an employee or volunteer of the Peace Corps. This means that the taxpayer may be able to meet the two-year use test even if the taxpayer and/or spouse did not actually live in the home during the normal five-year period required of other taxpayers.
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[ IRS VITA Glossary ][ HTJ Tax American Tax Glossary ][ NPBC Tax Glossary ]
TDY
Temporary duty for military service members. (See TAD.)
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[ IRS Understanding Taxes Student Glossary ]
telephone tax refund
Taxpayers are eligible to file for refunds of all excise tax they have paid on long-distance service billed to them after Feb. 28, 2003.
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[ IRS VITA Glossary ][ HTJ Tax American Tax Glossary ][ NPBC Tax Glossary ]
Temporary Work Location
A work location is considered temporary if the service member’s employment is realistically expected to last (and in fact does last) for one year or less. Service members assigned to temporary work locations can deduct travel expenses.
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[ TurboTax/Intuit Tax Terms Glossary ][ TaxGPT Tax Glossary ]
Ten-year averaging
If you were born before January 2, 1936, you may be eligible for a special tax calculation method called ten-year averaging. This method applies to lump-sum distributions from pension and profit-sharing plans, and it could result in significant tax savings. If you qualify, it's worth exploring this option to minimize your tax liability.
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[ TaxGPT Tax Glossary ]
Ten-Year Forward Averaging
Ten-year forward averaging was a method that allowed individuals receiving a lump-sum distribution from a qualified retirement plan to calculate the tax as if the distribution were received over ten years. This method is no longer available.
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[ IRS VITA Glossary ][ HTJ Tax American Tax Glossary ][ NPBC Tax Glossary ]
Third-Party Designee
A person authorized by a taxpayer to discuss the taxpayer’s return with the IRS, give the IRS information missing from the return, request copies of notices or transcripts related to the return, and respond to certain IRS notices. The taxpayer designates a third party by checking the Yes box and entering the person’s name, phone number, and personal identification number (PIN) in the “Third-party designee” section of the return.
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[ IRS VITA Glossary ]
This method is used to calculate the tax
free portion of each pension or annuity payment.
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[ Vermont Department of Taxes Glossary ]
Timberland
as used in property taxation, land that has marketable timber and no buildings
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[ T ]
[ Tax1099.com Glossary ]
TIN Matching
See Tax1099.com Glossary for 'TIN Matching'.
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[ IRS VITA Glossary ][ HTJ Tax American Tax Glossary ][ NPBC Tax Glossary ]
TIN see ITIN
Taxpayer Identification Number, same as Individual Taxpayer Identification Number
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[ IRS VITA Glossary ][ IRS Understanding Taxes Student Glossary ][ HTJ Tax American Tax Glossary ][ NPBC Tax Glossary ][ Tax Defense Network Tax Definitions ]
Tip Income
Money and/or goods received for services performed by certain workers, such as bartenders, servers, and beauty technicians. Tips are given voluntarily and are in excess of any amount billed for services rendered. Tip income is taxable income.
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[ TaxGPT Tax Glossary ]
Total blindness, with no vision at all.
A corrected vision of 20/200 or worse in their better eye, even with glasses or contact lenses. A severely limited field of vision, with a visual field of 20 degrees or less. Bond Premium When you purchase a bond that offers a higher interest rate than the current market rate, you may pay a premium above the bond's face value. With taxable bonds, you can deduct a portion of this premium from your taxable income each year you hold the bond. This can provide a tax benefit to help offset the extra cost of buying the bond at a premium.
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[ Vermont Department of Taxes Glossary ]
Town Officers Education Conference (TOEC)
held in the spring at three different locations around the state and organized by UVM Extension to provide training in the governmental operations of municipalities
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[ Vermont Department of Taxes Glossary ]
TPS
the Vermont Department of Taxes’ Division of Taxpayer Services
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[ Blue Water Tax Glossary ]
Trade or Business
The IRS uses the phrase "trade or business" to describe a wide range of activities that people engage in to earn income or a profit. For example, IRS publications refer to earnings from **self-employment** endeavors like freelancing, **independent contract** work, **sole proprietorship** or **gig economy** activities as income from "pursuing a trade or business." In everyday use, the word "trade" often refers specifically to pursuits requiring specialized training, such as carpentry or plumbing. However, for tax purposes, there is no meaningful distinction between what constitutes a trade and what constitutes a business.
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[ IRS VITA Glossary ][ TaxGPT Tax Glossary ][ Blue Water Tax Glossary ][ HTJ Tax American Tax Glossary ][ NPBC Tax Glossary ]
Traditional IRA
A traditional **IRA** is a **tax-advantaged** personal retirement account that may generally be funded with **pre-tax contributions**. (Note that if a person or their spouse participates in a workplace-sponsored retirement plan, then their contributions to a traditional IRA may not be **tax-deductible**.) Distributions from a traditional IRA are typically taxed as **ordinary income**, so the account's primary advantage usually lies in **tax deferral**. However, withdrawals from a traditional IRA taken before the age of 59 1/2 may be subject to an **early withdrawal penalty**. Traditional IRA owners generally must withdraw a certain amount from their accounts each year once they reach a specified age. These mandatory withdrawals are known as **required minimum distributions (RMDs)**. Also see **Roth IRA**.
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[ T ]
[ IRS Understanding Taxes Student Glossary ]
transaction taxes
Taxes on economic transactions, such as the sale of goods and services. These can be based on a set of percentages of the sales value (ad valorem-sales taxes), or they can be a set amount on physical quantities ("per unit"-gasoline taxes).
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[ IRS Understanding Taxes Student Glossary ]
transmit
To send a tax return to the IRS electronically. Tax returns prepared on paper can be sent through the mail.
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[ IRS Understanding Taxes Student Glossary ]
Transmitter
Sends the electronic return data directly to the IRS.
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[ T ]
[ Blue Water Tax Glossary ]
Transportation and Travel Expenses (Military Service)
In certain cases, members of the U.S. military service, including National Guard members and reservists, may claim **tax deductions** for transportation or travel expenses related to their service. They may also receive travel and transportation allowances that qualify as **excludable income**. The specific rules for these deductions and exclusions depend on the nature of duty, the travel distance, and other factors.
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[ IRS VITA Glossary ][ HTJ Tax American Tax Glossary ][ NPBC Tax Glossary ]
Transportation Expenses
Expenses service members incur when travelling to locations within their city or general area that is their tax home or post of duty (versus travel expenses).
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[ IRS VITA Glossary ][ HTJ Tax American Tax Glossary ][ NPBC Tax Glossary ]
Travel Expenses
Expenses service members incur when travelling away from their tax home or post of duty (versus transportation expenses).
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[ Blue Water Tax Glossary ]
TRICARE
The U.S. Department of Defense offers health insurance called TRICARE to active and retired members of the military and other uniformed services, and to their families. As with private health insurance, enrolling in TRICARE generally requires paying monthly premiums. However, enrollees who also qualify for **Medicare** may receive coverage premium-free. TRICARE plans may be purchased through the **Health Insurance Marketplace**, and so may qualify for the **Premium Tax Credit (PTC)**.
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[ MyTaxRights.org Tax Glossary ]
Trust
A type of entity that manages a person's assets during their life or after their death. A trust is a separate entity from an individual and is managed by an appointed trustee or trustees.
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[ IRS VITA Glossary ][ HTJ Tax American Tax Glossary ][ NPBC Tax Glossary ]
TSP
Thrift Savings Account, a retirement savings and investment plan that has been available to civilian employees of the federal government since 1987, and was made available to U.S. service personnel in 2002.
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[ IRS VITA Glossary ][ HTJ Tax American Tax Glossary ][ NPBC Tax Glossary ]
Tuition and fees
Qualified higher education expenses for which taxpayers can deduct up to $4,000 in qualified tuition and related expenses paid during the tax year. The amount of the deduction is determined by filing status, modified AGI (MAGI), and other factors. Form 8917, Tuition and Fees Deduction, will help compute the MAGI for this deduction. top * * * ## U
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[ TurboTax/Intuit Tax Terms Glossary ]
Tuition and fees deduction
For tax years prior to 2021, qualifying taxpayers could deduct a portion of college expenses if their adjusted gross income was under certain limits. This break was available whether or not you itemized deductions, but it was not available to students who were claimed as dependents on their parents' return. It was available to their parents, though, if they paid the tuition. You couldn't claim the deduction in the same year you claimed the American Opportunity or Lifetime Learning credit for the same student. But because the income phase-out ranges for this deduction were higher than for the Lifetime Learning credit, some taxpayers whose income was too high to claim the Lifetime Learning credit could benefit from this write-off.
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[ TaxGPT Tax Glossary ]
Tuition Credit
Tuition credit refers to tax credits available for qualified education expenses, such as the American Opportunity Credit and the Lifetime Learning Credit. These credits can reduce the cost of higher education by reducing tax liability.
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[ TaxGPT Tax Glossary ]
Tuition Deduction
If you're paying for college expenses, you may be eligible for a tuition deduction on your taxes. This deduction is available to taxpayers with an adjusted gross income below certain limits, and it can be claimed regardless of whether you itemize your deductions. However, students who are claimed as dependents on their parents' tax return are not eligible for this deduction. On the other hand, parents who pay tuition for their dependent children can claim the deduction. It's worth noting that you can't claim the tuition deduction in the same year you claim an American Opportunity or Lifetime Learning credit for the same student. However, because the income limits for this deduction are higher than for the Lifetime Learning credit, some taxpayers may find that they can benefit from this write-off even if they're not eligible for the credit.
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[ Blue Water Tax Glossary ]
Twelve
Month Rule for Cash Accounting / 12-Month Advance Payment Rule In general, businesses and self-employed people who use **cash accounting** report expenses whenever those expenses are paid. However, the IRS limits how far in advance business taxpayers may pay expenses and still deduct the full cost. The 12-month rule states that in order for an entire advance payment to be deductible, the benefit received must not extend for more than 12 months after it begins, or beyond the end of the next tax year, whichever comes first. If the benefit (such as insurance coverage) does not satisfy the 12-month rule, then portions of the expense must be allocated to different tax years. This dividing up of an expense over multiple years is an example of **capitalization of an expense**. Return to Top * * *
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[ T ]
[ Tax1099.com Glossary ]
Two-Factor Authentication
See Tax1099.com Glossary for 'Two-Factor Authentication'.
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[ U ]
[ Tax1099.com Glossary ]
U.S. Source Income
See Tax1099.com Glossary for 'U.S. Source Income'.
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[ Tax1099.com Glossary ]
U.S. Withholding Agent
See Tax1099.com Glossary for 'U.S. Withholding Agent'.
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[ IRS VITA Glossary ]
Unaffordable coverage (ACA term)
(For purpose of health coverage exemption) – Health coverage is unaffordable if the individual's required contribution is more than 8.05% of household income.
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[ IRS VITA Glossary ]
Under common
law rules, anyone who performs services for you is your employee if you can control what will be done and how it will be done. This is so even when you give the employee freedom of action. What matters is that you have the right to control the details of how the services are performed.
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[ U ]
[ IRS Understanding Taxes Student Glossary ]
underground economy
Money-making activities that people don't report to the government, including both illegal and legal activities.
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[ U ]
[ TurboTax/Intuit Tax Terms Glossary ][ TaxGPT Tax Glossary ]
Underpayment penalty
The underpayment penalty is a fee imposed by the IRS for not paying enough taxes throughout the year. It's a reminder that taxes are due as income is earned, not just on the annual tax deadline. The penalty works like interest on a loan, where the penalty rate is applied to the amount of estimated tax owed but not paid by each of the four quarterly payment deadlines. The penalty rate is set by the IRS and can change each quarter. However, there are some exceptions to the penalty, which are outlined in the estimated tax rules.
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[ U ]
[ Vermont Department of Taxes Glossary ]
Undivided ½ interest
for purposes of income tax, income that is not earned from services performed, such as interest, dividends, and royalties
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[ IRS VITA Glossary ][ IRS Understanding Taxes Student Glossary ][ TurboTax/Intuit Tax Terms Glossary ][ TaxGPT Tax Glossary ][ Blue Water Tax Glossary ][ HTJ Tax American Tax Glossary ][ NPBC Tax Glossary ][ Tax Defense Network Tax Definitions ][ MyTaxRights.org Tax Glossary ][ Vermont Department of Taxes Glossary ]
Unearned Income
Earned income includes wages, salaries, tips, and other taxable employee pay. Earned income does not include interest and dividends, social security and railroad retirement benefits, workfare payments, alimony and child support, or anything else of value received from someone for services performed, if it is not currently taxable. Earned income also includes net earnings from self-employment and other income received for personal services.
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[ Blue Water Tax Glossary ]
Unemployment Benefits / Unemployment Compensation (Tax Treatment)
In most cases, unemployment benefits received from a state, local or federal government agency are **taxable income** that must be reported on the recipient's **tax return**. Recipients of taxable payments will generally receive **Form 1099-G** in late January or early February, summarizing their benefit payments from the previous year. Unemployment compensation is considered **unearned income** for purposes like determining a person's eligibility for the **Earned Income Tax Credit**, or to make **pre-tax contributions** to a **traditional IRA**.
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[ IRS VITA Glossary ][ HTJ Tax American Tax Glossary ][ NPBC Tax Glossary ]
Unemployment Compensation
Unemployment compensation generally includes any amount received under an unemployment compensation law of the United States or of a state. In most cases, it is taxable. Unemployment income is not considered earned income for the purposes of calculating EITC.
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[ Blue Water Tax Glossary ][ Tax Defense Network Tax Definitions ][ MyTaxRights.org Tax Glossary ]
Unemployment Tax
In general, employers must pay unemployment taxes for their employees, including many **household employees**. These taxes typically consist of both **Federal Unemployment Tax (FUTA)** and state unemployment taxes. Note that it is often possible to claim a federal **tax credit** for state unemployment taxes paid, reducing the total amount of unemployment tax that a business must pay. Unlike **FICA taxes**, unemployment taxes do not have an employee share; only employers pay them. However, because these taxes are subject to a **wage base limit**, employers only have to pay them on a portion of each employee's earnings (typically, the first $7,000 that the employee earns each year).
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[ U ]
[ Tax Defense Network Tax Definitions ]
Unfiled Taxes
A tax return that has not been filed, including those for previous years.
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[ U ]
[ Blue Water Tax Glossary ]
Units of Production Method (for Depreciation)
For certain assets, businesses may use this depreciation technique instead of the more common **MACRS** or **straight-line method**. With the units of production method, **depreciation deductions** are based on how much an asset is used, with larger deductions for years of heavy use and smaller deductions for other years. Therefore, this method makes the most sense for equipment that loses value primarily due to wear and tear rather than age. If you wish to use the units of production method, first check IRS guidelines to make sure alternative depreciation methods are allowed for the asset in question. If so, include a statement with your **tax return** explaining the method used and your justification for using it. "Use It or Lose It" Rule For some workplace **cafeteria benefit plans** that allow **pre-tax contributions**, employees must use up all of their account funds on qualifying expenses by the end of the calendar year. Any funds left in the account after the year ends get forfeited to the employer. This sort of use-it-or-lose-it rule commonly applies to **Flexible Spending Arrangements (FSAs)**. However, health FSA plans may allow a limited carryover of funds from one year to the next, or have a 2 1/2 month "grace period" during which employees can use up account funds from the previous year.
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[ Vermont Department of Taxes Glossary ]
Use Value Appraisal (UVA)
more frequently referred to as “Current Use” or the Current Use program, UVA is a system under which the value of a property is determined for a specific agricultural or forestry use, as opposed to the broader “highest and best use.” Qualifying farm and forest land and farm buildings may enroll. 32 V.S.A. § 3752(12)
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[ Vermont Department of Taxes Glossary ]
Use Value Appraisal Program
also known as “Current Use,” it enables eligible private lands where owners practice long-term forestry or agriculture to be appraised based on the property’s value of production of wood or food rather than its residential or commercial development value. The Current Use Advisory Board sets the use values for farm and forest land annually. 32 V.S.A. § 3752(12)
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[ Blue Water Tax Glossary ]
Useful Life / Useful Lifetime
Calculations for **depreciation deductions** are typically based on an asset's useful life. Theoretically, this time period represents how long the property will retain substantial value and continue to serve its intended purpose. The declared value of the property at the end of its useful life may be either $0 or some other **salvage value**. Note that many **tangible assets** hold value and remain productive long after the useful lifetimes specified for them in IRS guidelines. For example, a kitchen appliance may have a useful life of five years for depreciation purposes, but may actually last for decades. Selling an asset after its useful life ends for more than its salvage value may create the need to report a **depreciation recapture**. Return to Top * * *
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[ IRS Understanding Taxes Student Glossary ][ Tax Defense Network Tax Definitions ]
user fees
Excise taxes levied to fund a public service, such as a fee to visit a national park or a toll on a highway.
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[ IRS Understanding Taxes Student Glossary ][ Tax Defense Network Tax Definitions ][ MyTaxRights.org Tax Glossary ]
user tax
A tax on the storage, use, or consumption of a taxable goods and/or services brought in from another state where no sales tax was paid in the state where the goods or services were purchased.
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[ IRS VITA Glossary ][ Blue Water Tax Glossary ][ HTJ Tax American Tax Glossary ][ NPBC Tax Glossary ]
VA Disability Compensation
Many veterans who are disabled because of an injury or disease incurred or aggravated during active military service receive VA disability compensation. These payments from the **Department of Veterans Affairs (VA)** are generally **excludable income**, and therefore are not taxed. They also do not typically count as **earned income** for purposes like determining eligibility for the **Earned Income Tax Credit**.
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[ TurboTax/Intuit Tax Terms Glossary ][ TaxGPT Tax Glossary ]
Vacation home
If you rent out a vacation home, there are specific tax rules you need to follow. The rules vary depending on how much you use the home for personal purposes. While you'll need to report all rental income, the amount of expenses you can deduct may be limited if you use the home too much for personal reasons. Generally, "too much" personal use is defined as using the home for more than 14 days in a year or for more than 10% of the total days it's rented out at a fair market rate.
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[ V ]
[ Vermont Department of Taxes Glossary ]
VALA
Vermont Assessors and Listers Association
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[ V ]
[ Thomson Reuters Tax Glossary ]
Value-added tax
Value-added tax (VAT) is an indirect consumption tax charged on goods and services throughout the supply chain, from production to final sale. Businesses collect VAT on taxable sales.
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[ V ]
[ Vermont Department of Taxes Glossary ]
VEDA
Vermont Economic Development Authority
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[ V ]
[ Vermont Department of Taxes Glossary ]
Vermont Employment Growth Incentive Program (VEGI)
a payroll-based growth incentive program that became law on Jan. 1, 2007
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[ V ]
[ Vermont Department of Taxes Glossary ]
Vermont Income of a Nonresident Estate or Trust
the adjusted gross income of a resident estate or trust less income exempted from state taxation under the laws of the United States. 32 V.S.A. § 5823
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[ IRS Understanding Taxes Student Glossary ][ Tax Policy Center Briefing Book ][ Tax Defense Network Tax Definitions ]
vertical equity
The concept that net tax burden should be higher on people with higher levels of well-being. The degree to which the tax burden should increase for people with increased well-being is a value judgment (See also **Horizontal equity**.)
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[ TurboTax/Intuit Tax Terms Glossary ][ TaxGPT Tax Glossary ]
Vested benefits
When you participate in a company retirement plan, you may have vested benefits, which are benefits that you're entitled to keep even if you leave your job. Any contributions you make to the plan, such as to a 401(k), are fully vested and belong to you from the start. However, employer contributions to your plan may be vested gradually over time, meaning you'll only have full access to them if you stay with the employer for a certain period. If you leave your job before you're fully vested, you may forfeit some or all of the employer contributions. For example, if you're only 50% vested when you quit, you'll lose half of the employer contributions made on your behalf.
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[ V ]
[ Vermont Department of Taxes Glossary ]
VHEIP
Vermont Higher Education Investment Plan
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[ V ]
[ Blue Water Tax Glossary ]
Virtual Currency Tax Rules
The IRS uses the term virtual currency to describe all traded currencies that exist only in digital forms. In other words, virtual currencies are a type of **digital asset**. The most widely used virtual currencies are cryptocurrencies ("crypto" for short). The IRS treats virtual currencies as property, not as money. As a result, many virtual currency transactions are **taxable events**, including some that would have no tax impacts if they were conducted in cash. Most commonly, crypto transactions may result in taxable **capital gains**. The IRS requires people to disclose a wide range of virtual currency activities on their **tax returns**. Return to Top * * *
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[ HTJ Tax American Tax Glossary ][ NPBC Tax Glossary ][ Vermont Department of Taxes Glossary ]
VITA
Volunteer Income Tax Assistance
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[ V ]
[ Vermont Department of Taxes Glossary ]
VITA/TCE
Vermont Income Tax Assistance and Tax Counseling for the Elderly
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[ V ]
[ Vermont Department of Taxes Glossary ]
VLCT
Vermont League of Cities and Towns
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[ V ]
[ IRS Understanding Taxes Student Glossary ][ Tax Defense Network Tax Definitions ][ MyTaxRights.org Tax Glossary ]
voluntary compliance
The concept that applies to the U.S. tax system that relies on individual citizens to report their income freely and voluntarily, calculate their tax liability correctly, and file a tax return on time.
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[ TurboTax/Intuit Tax Terms Glossary ][ TaxGPT Tax Glossary ][ Tax1099.com Glossary ]
Voluntary withholding
If you're receiving Social Security benefits, you have the option to request that the Social Security Administration withhold taxes from your payments. This can be a convenient way to avoid making quarterly estimated tax payments. To take advantage of voluntary withholding, simply file Form W-4V with the Social Security Administration. Additionally, if you're receiving distributions from an Individual Retirement Account (IRA) or a retirement plan, you can also ask the plan sponsor to withhold taxes from these payouts.
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[ V ]
[ IRS Understanding Taxes Student Glossary ]
Volunteer Income Tax Assistance (VITA)
This provides free income tax return preparation for certain taxpayers. The VITA program assists taxpayers who have limited or moderate incomes, have limited English skills, or are elderly or disabled. Many VITA sites offer electronic preparation and transmission of income tax returns.
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[ V ]
[ Vermont Department of Taxes Glossary ]
VOVA
Vermont Office of Veterans Affairs
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[ V ]
[ Vermont Department of Taxes Glossary ]
VPACP
Vermont Property Appraiser Certification Program
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[ V ]
[ Vermont Department of Taxes Glossary ]
VSAC
Vermont Student Assistant Corporation
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[ V ]
[ Vermont Department of Taxes Glossary ]
VTax
Vermont’s version of software known as GenTax, an integrated tax system used to administer all Vermont taxes
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[ W ]
[ TaxGPT Tax Glossary ][ Vermont Department of Taxes Glossary ]
W-2
Form W-2, also known as the Wage and Tax Statement, is a document that employers must provide to employees and the IRS at the end of each year. It details an employee's annual wages and the amount of taxes withheld from their paycheck, including federal, state, and other taxes.
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[ TaxGPT Tax Glossary ][ Vermont Department of Taxes Glossary ]
W-4
Form W-4, also known as the Employee's Withholding Certificate, is a form that employees complete to inform their employer of their tax situation, including marital status and number of allowances. This information helps the employer determine the amount of federal income tax to withhold from the employee's paycheck.
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[ Tax1099.com Glossary ]
W-4 Form
See Tax1099.com Glossary for 'W-4 Form'.
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[ TurboTax/Intuit Tax Terms Glossary ][ TaxGPT Tax Glossary ]
Wage base
The wage base refers to the maximum amount of earnings that are subject to the full Social Security tax rate. In 2023, the full 15.3% tax rate applies to the first $160,200 of wages or self-employment income. This means that both employees and employers pay a combined 15.3% tax on earnings up to this amount. For earnings above $160,200, only the 2.9% Medicare portion of the tax applies. In 2024, the Social Security wage base limit increases to $168,600. It's worth noting that employees pay half of the total tax rate, which is 7.65% up to the wage base limit and 1.45% after that, while their employers pay the other half. Self-employed individuals, on the other hand, are responsible for paying both halves of the tax.
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[ Blue Water Tax Glossary ]
Wage Base Limit
A wage base limit is an earnings threshold that makes a worker (or the worker's employer) exempt from paying a tax. Once a worker's earnings for a particular year exceed the wage base limit, then the tax in question does not apply to the worker's pay for the remainder of that year. The two most common examples of taxes with a wage base limit are **Social Security Tax** and federal **Unemployment Tax (FUTA)**. People with multiple jobs may be at risk of overpaying in Social Security tax, because each employer must withhold the tax until the person's earnings from that specific job rise above the wage base limit. If you find yourself in that situation, you can apply for a refund of excess Social Security tax withheld when you file your **tax return**.
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[ Tax Defense Network Tax Definitions ]
Wage Garnishment
Money legally withheld from a person’s wages to satisfy a debt, such as delinquent child support payments, defaulted student loans, or unpaid taxes.
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[ IRS Understanding Taxes Student Glossary ][ Tax Defense Network Tax Definitions ][ MyTaxRights.org Tax Glossary ]
wages
Compensation received by employees for services performed. Usually, wages are computed by multiplying an hourly pay rate by the number of hours worked.
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[ IRS VITA Glossary ][ TurboTax/Intuit Tax Terms Glossary ][ TaxGPT Tax Glossary ][ HTJ Tax American Tax Glossary ][ NPBC Tax Glossary ]
Wash sale
A wash sale occurs when you sell an investment, such as stocks, bonds, or mutual fund shares, at a loss and then buy the same or very similar investments within a 30-day period before or after the sale. This is considered a wash sale because you're essentially selling and then rebuying the same investment, which can be seen as a way to manipulate the tax system. As a result, the IRS does not allow you to deduct the loss from your taxable income.
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[ Tax Defense Network Tax Definitions ][ MyTaxRights.org Tax Glossary ]
Wealth Tax
Another name for the Alternative Minimum Tax. The concept that applies to the U.S. tax system that relies on individual citizens to report their income freely and voluntarily, calculate their tax liability correctly, and file a tax return on time.
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[ Blue Water Tax Glossary ]
Weighted Average Cost (WAC) Method
One of four common methods used in **inventory accounting** to determine the **cost of goods sold**, the WAC method assumes that items sold represent a blend of old and new stock, in proportion to existing inventory quantities. Alternatively, a business may track inventory using the **FIFO**, **LIFO**, or **specific identification** method.
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[ Vermont Department of Taxes Glossary ]
Weighted mean
see aggregate ratio
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[ Instead.com Tax Glossary ]
What are ABLE accounts for people with disabilities?
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[ Instead.com Tax Glossary ]
What are Above-the-line deductions?
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What are Accounts-receivable?
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What are Allocated tips?
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What are Assets?
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What are Business Meals deductions?
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What are Business startup and organizational costs?
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[ Instead.com Tax Glossary ]
What are Cash contributions?
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What are Closing entries?
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What are Credit terms?
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[ TaxDome Glossary ]
What are debit and credit in accounting?
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What are Deductible travel costs for property investors?
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What are Disguised payments to partners under Section 707?
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What are Dividends declared?
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What are Domestic research or experimental expenditures?
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What are Educator expenses under OBBBA Section 70110?
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What are Elective deferrals?
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What are Employee achievement awards?
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What are Employer retirement plan contributions?
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What are Enhanced HSA contribution limits?
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What are Equipment write-offs?
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What are Estimated tax payments?
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What are Expenses?
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What are financial liabilities?
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What are Fringe benefits?
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What are Gross receipts?
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What are Guaranteed payments?
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What are Home office expenses?
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What are Installment sale rules for business owners?
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What are Intangible drilling costs (IDCs)?
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What are Itemized deductions?
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What are Liabilities?
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What are Miscellaneous itemized deductions?
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What are Operating expenses?
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What are Passive activity losses?
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What are Postsecondary credentialing expenses?
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What are Proceeds?
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What are QSBS disqualification triggers?
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What are QSBS small business stock sales?
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What are Qualified education expenses?
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What are Qualified educational expenses under Section 127?
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What are Qualified research expenses?
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What are Qualified tips under OBBBA?
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What are Qualified transportation fringe benefits?
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What are Qualifying tips?
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What are quick assets?
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What are Research tax credits?
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What are Roth catch-up contributions for high earners?
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What are Shareholder basis limitation records for S Corporations?
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What are Specified service trades or businesses?
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What are Tax credits?
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What are the At-risk limitation records for entity owner losses?
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What are the Business bad debt deduction documentation records?
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What are the DPC fee limits?
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What are the ICHRA contribution limits for business owners?
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What are the Rental property deductions for landlords?
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What are Trump accounts?
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What are Wages Payable?
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What are Withdrawals by owner?
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What are Withholding allowances?
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What are Work-related care expenses?
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What are Write-offs for small business tax preparation?
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What is a 1031 exchange?
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What is a 1099-MISC?
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What is a 180-day reinvestment window?
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What is a 403(b) plan?
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What is a 529 plan?
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What is a Backdoor roth conversion?
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[ TaxDome Glossary ]
What is a balance sheet?
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What is a Beneficiary?
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What is a Bona fide employment relationship?
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What is a Business energy-efficient property deduction?
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What is a Business entity?
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What is a Business expense reimbursement plan?
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What is a Business use percentage?
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What is a C Corporation?
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What is a Cafeteria plan?
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What is a Capital improvement?
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What is a Capital loss carry-forward?
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What is a Capital loss?
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What is a Captive insurance company?
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What is a Car loan interest deduction timing strategy?
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What is a Car loan interest deduction?
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What is a Cash balance plan?
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What is a Casualty loss deduction for disasters?
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What is a Charitable contribution bunching strategy?
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What is a Charitable contribution?
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What is a Charitable limited partnership (CLP)?
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What is a Charitable remainder trust?
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What is a Chart of accounts?
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What is a Child roth IRA?
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What is a Child tax credit?
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What is a Child traditional IRA?
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What is a Clean vehicle credit?
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What is a Community development entity?
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What is a Conservation easement?
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What is a Corporate charitable deduction floor?
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What is a Cost object?
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What is a Cost segregation study?
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What is a Cost-of-living adjustment?
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What is a Coverdell education savings account?
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What is a COVID-ERTC promoter?
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What is a CPA exam?
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What is a CPA license?
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What is a CPA?
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What is a Custodial account?
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What is a Custodial IRA?
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What is a Deferral?
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What is a Deferred compensation plan (nonqualified)?
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[ Instead.com Tax Glossary ]
What is a Defined benefit plan?
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[ Instead.com Tax Glossary ]
What is a FOB destination?
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[ TaxDome Glossary ]
What is a hedge fund?
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[ Instead.com Tax Glossary ]
What is a Journal entry?
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[ TaxDome Glossary ]
What is a ledger balance?
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[ Instead.com Tax Glossary ][ TaxDome Glossary ]
What is a Lender?
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[ Instead.com Tax Glossary ]
What is a Principal payment?
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[ Instead.com Tax Glossary ]
What is a Solo 401k?
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[ Instead.com Tax Glossary ]
What is a Spousal partnership?
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[ Instead.com Tax Glossary ]
What is a Stepped-up basis?
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[ TaxDome Glossary ]
What is a tangible asset?
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[ TaxDome Glossary ]
What is a tax deduction?
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[ Instead.com Tax Glossary ]
What is a Traditional 401k?
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[ Instead.com Tax Glossary ]
What is a Trustee?
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[ Instead.com Tax Glossary ]
What is a Value-added tax (VAT)?
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[ TaxDome Glossary ]
What is a variable cost?
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[ Instead.com Tax Glossary ]
What is a W-2?
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[ Instead.com Tax Glossary ]
What is a Wash sale?
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[ Instead.com Tax Glossary ]
What is a Write-off?
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[ Instead.com Tax Glossary ]
What is a Zero-cost strategy?
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[ Instead.com Tax Glossary ]
What is Accelerated depreciation?
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[ Instead.com Tax Glossary ]
What is Accountable plan substantiation?
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[ TaxDome Glossary ]
What is accounts payable in accounting?
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[ Instead.com Tax Glossary ]
What is Accrual?
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[ Instead.com Tax Glossary ]
What is Allocation?
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[ TaxDome Glossary ]
What Is an accounting journal?
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[ TaxDome Glossary ]
What is an accounting period?
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[ Instead.com Tax Glossary ]
What is an Allowance for doubtful accounts?
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[ TaxDome Glossary ]
What is an enrolled agent?
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[ TaxDome Glossary ]
What is balance sheet reconciliation?
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[ TaxDome Glossary ]
What is FASB in accounting?
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[ Instead.com Tax Glossary ]
What is FUTA?
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[ TaxDome Glossary ]
What is general ledger reconciliation?
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[ Instead.com Tax Glossary ]
What is Historical cost?
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[ Instead.com Tax Glossary ]
What is Incurred?
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[ Instead.com Tax Glossary ]
What is Jurisdiction?
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[ Instead.com Tax Glossary ]
What is Legal capital?
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[ TaxDome Glossary ]
What is markup?
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[ Instead.com Tax Glossary ]
What is Month-Over-Month (MoM)?
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[ TaxDome Glossary ]
What is net profit?
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[ TaxDome Glossary ]
What is payroll?
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[ Instead.com Tax Glossary ]
What is Prorate?
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[ Instead.com Tax Glossary ]
What is Reasonable compensation?
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[ Instead.com Tax Glossary ]
What is Replenish?
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[ TaxDome Glossary ]
What is revenue in accounting?
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What is Revenue?
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[ TaxDome Glossary ]
What Is shareholder equity (SE)?
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[ Instead.com Tax Glossary ]
What is Tax loss harvesting?
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What is Tax planning?
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What is Taxable income?
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[ TaxDome Glossary ]
What is the accounting cycle?
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What is the difference between bookkeeping and accounting?
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What is the difference between fiscal year and calendar year?
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What is the fiscal year?
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What is the gross profit margin?
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[ Instead.com Tax Glossary ]
What is the IMA?
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[ Instead.com Tax Glossary ]
What is the Market interest rate?
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[ Instead.com Tax Glossary ]
What is the Standard deduction?
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What is Unearned income?
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[ Instead.com Tax Glossary ]
What is Useful life?
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[ TaxDome Glossary ]
What is working capital?
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[ Instead.com Tax Glossary ]
What is Year-over-year (YoY)?
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[ Instead.com Tax Glossary ]
What is Year-to-date (YTD)?
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[ TaxDome Glossary ]
What is zero-based budgeting (ZBB)?
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[ TurboTax/Intuit Tax Terms Glossary ][ TaxGPT Tax Glossary ][ Tax Defense Network Tax Definitions ][ MyTaxRights.org Tax Glossary ][ Vermont Department of Taxes Glossary ]
Withholding
Withholding refers to the process of deducting a portion of your paycheck each pay period to cover your income and Social Security taxes for the year. The amount withheld is determined by your salary level and the information you provide on your W-4 form, which you submit to your employer. This way, you're paying your taxes gradually throughout the year rather than having to pay a large amount all at once when you file your tax return.
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[ IRS Understanding Taxes Student Glossary ]
withholding ("pay-as-you-earn" taxation)
Money, for example, that employers withhold from employees paychecks. This money is deposited for the government. (It will be credited against the employees' tax liability when they file their returns.) Employers withhold money for federal income taxes, Social Security taxes and state and local income taxes in some states and localities.
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[ Blue Water Tax Glossary ]
Withholding / Withheld Taxes / Tax Withholding
Withholding refers to the process of reducing a payment amount to cover taxes that must be remitted to the IRS or another taxing authority. The most common type of withholding is employee paycheck withholding. For example, if an employee earns $100, but $7.65 in federal taxes apply to those wages, then the employer would reduce the employee's pay to $100 - $7.65 = $92.35. The employer would then remit the withheld $7.65 to the IRS. Taxes may also be withheld from other payments like **gambling winnings**, **pensions**, **annuities**, and **unemployment compensation**.
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[ IRS VITA Glossary ][ HTJ Tax American Tax Glossary ][ NPBC Tax Glossary ][ Tax Defense Network Tax Definitions ]
Withholding Allowance
Claimed by an employee on Form W-4. An employer uses the number of allowances claimed, together with income earned and marital status, to determine how much income tax to withhold from wages.
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[ Blue Water Tax Glossary ]
Withholding Estimator Tool
The IRS online Withholding Estimator tool helps people check whether the proper amount of federal tax is being **withheld** from their pay. To use the tool, you will need to enter information about your income, as well as circumstances that may influence your eligibility for **tax benefits**. Based on the information you provide, the tool will estimate the amount of **federal income tax** that should be withheld from each of your paychecks. If your current withholding amount appears to be incorrect, you can submit a new **Form W-4** to your employer to request an adjustment. Note that the Withholding Estimator only calculates federal income tax withholding, not withholding for state, local or **FICA taxes**.
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[ IRS VITA Glossary ][ HTJ Tax American Tax Glossary ][ NPBC Tax Glossary ][ Tax1099.com Glossary ]
Withholding Tax
Income tax is withheld from the pay of most employees. Income tax may also be withheld from gambling winnings, pensions/annuities, unemployment compensation, and certain federal payments, such as social security. In some cases income tax may be withheld on other types of income such as interest or dividend income.
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[ Thomson Reuters Tax Glossary ]
Work opportunity tax credit
The Work Opportunity Tax Credit (WOTC) is a federal tax credit available to employers who hire members of certain targeted groups that have consistently experienced barriers to employment.
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[ Vermont Department of Taxes Glossary ]
Worksheet
a Vermont Department of Taxes or IRS document provided to the taxpayer to compile information but not usually filed with the associated return
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[ IRS VITA Glossary ][ Blue Water Tax Glossary ][ HTJ Tax American Tax Glossary ][ NPBC Tax Glossary ]
Worldwide Income
S. citizens and U.S. resident aliens are required to report worldwide income on a U.S. tax return regardless of where they live and even if the income is taxed by the country in which it was earned. Filing requirements are the same as for U.S. citizens and U.S. resident aliens living in the United States and apply whether income is from within or outside the U.S. Whether you’re an individual, a small business, or a thriving corporation, NPBC Accounting & Tax, PC is equipped to guide you toward optimal financial outcomes. Berwick, PA 18603 Connect with us on our social platforms. Facebook-fLinkedin-inGoogle The information provided on the NPBC Accounting & Tax, PC website is for general informational purposes only and should not be considered professional advice or a substitute for consultation with one of our qualified tax professionals. While we strive to keep the information accurate and up-to-date, we make no warranties or representations of any kind, express or implied, about the completeness, accuracy, reliability, suitability, or availability of the information, products, services, or related graphics presented on this website. Member of the Columbia-Montour Chamber of Commerce Get A Quote Get A Quote
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[ TurboTax/Intuit Tax Terms Glossary ][ TaxGPT Tax Glossary ]
Worthless security
If a stock you own becomes completely worthless during the year, you can claim a capital loss as though you sold the stock for $0 on December 31 of the year the stock became worthless. Read more Let's get you in to TurboTax Phone number, email or user ID Remember me Sign in By signing in to your Intuit Account, you agree to our Terms and acknowledge our Privacy Statement. New to Intuit? Create an account appfabric-preload.app.intuit.com # This site can’t be reached The webpage at **https://appfabric-preload.app.intuit.com/preload?preloadAppURL=iux-authn.app.intuit.com/app/identity-authn-core-ui/sign-in&custom\_manifest=signin-signup&client=none** might be temporarily down or it may have moved permanently to a new web address. ERR\_TUNNEL\_CONNECTION\_FAILED The webpage at **https://appfabric-preload.app.intuit.com/preload?preloadAppURL=iux-authn.app.intuit.com/app/identity-authn-core-ui/sign-in&custom\_manifest=signin-signup&client=none** might be temporarily down or it may have moved permanently to a new web address. ## Let a tax expert do your taxes for you Get every dollar you deserve, guaranteed with **TurboTax Full Service**. A local expert matched to your unique situation will get your taxes done 100% right, guaranteed, with TurboTax Live Full Service. Your expert will find every dollar you deserve & file for you as soon as today.\* Start for free\\ Pay only when we file ## 100% free tax filing Answer simple questions and TurboTax Free Edition will guide you from there. ~37% of filers qualify. Simple Form 1040 returns only (no schedules, except for EITC, CTC, student loan interest, and Schedule 1-A). Start for $0 ### Looking for more information? ###### Related Articles Tax Terms You Should Know Tax Tips for Employees who Work at Home Tax Tips for Investors Tax Exemptions and Deductions for Families Video: What Are Tax Credits? ###### More in General “One Big Beautiful Bill” Tax Changes for the 2026 Tax Year How Are Federal Taxes Spent? How to Calculate Net Worth and Why Net Worth Matters What Happens If I Don’t File Taxes? What Are Federal Taxes? The above article is intended to provide generalized financial information designed to educate a broad segment of the public; it does not give personalized tax, investment, legal, or other business and professional advice. 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Certain discount offers may not be valid for mobile in-app purchases and may be available only for a limited period of time. - Start for Free/Pay When You File: TurboTax Online and mobile pricing is based on your tax situation and varies by product. For most paid TurboTax Online and mobile offerings, you may start using the tax preparation features without paying upfront, and pay only when you are ready to e-file, print, file by mail, or purchase add-on products or services. Actual prices for paid versions are determined based on the version you use and the date and/or time you print or e-file, and are subject to change without notice. Unless otherwise specified, strikethrough prices reflect anticipated final, undiscounted prices for tax year 2025. - TurboTax Free Edition: TurboTax Free Edition ($0 Federal + $0 State + $0 To File) is available for those filing simple Form 1040 returns only (no forms or schedules except as needed to claim the Earned Income Tax Credit, Child Tax Credit, student loan interest, and Schedule 1-A). More details are available here. Roughly 37% of taxpayers qualify. Offer may change or end at any time without notice. - TurboTax Free Mobile App Offer: File for free when you start your own taxes in the TurboTax or Credit Karma mobile app by February 28, 2026, 11:59PM ET. You are not eligible for this offer if you used TurboTax to file your 2024 taxes. Offer applies only to individual taxes filed with TurboTax Do It Yourself products and excludes TurboTax Experts products. If you need to amend your return after filing in the app, you'll need to use the TurboTax website to do so, but you will keep your free filing status as long as you are otherwise eligible for the offer. - Expert Full Service Offer: Offer available only to customers who did not file with TurboTax Live Full Service in tax year 2024. Offer applies to the cost of federal and state returns filed using TurboTax Expert Full Service. Excludes S-corp, partnership and multi-member LLC returns and TurboTax Canada products. Offer does not apply to add-ons or other services. Intuit reserves the right to modify or terminate this offer at any time for any reason in its sole discretion. Must file by March 31, 2026, 11:59pm ET. - TurboTax Expert Full Service - Forms-Based Pricing: “Starting at” pricing represents the base price for one federal return (includes one W-2 and one Form 1040). Final price may vary based on your actual tax situation and forms used or included with your return. Price estimates are provided prior to a tax expert starting work on your taxes. Estimates are based on initial information you provide about your tax situation, including forms you upload to assist your expert in preparing your tax return and forms or schedules we think you’ll need to file based on what you tell us about your tax situation. Final price is determined at the time of print or electronic filing and may vary based on your actual tax situation, forms used to prepare your return, and forms or schedules included in your individual return. Prices are subject to change without notice and may impact your final price. ### TurboTax Online/MOBILE: - Anytime, anywhere: Internet access required; standard data rates apply to download and use mobile app. - Fastest refund possible: Get your tax refund from the IRS as fast as possible by e-filing and choosing to receive your refund by direct deposit. Tax refund time frames will vary. Last tax year, the IRS issued more than 9 out of 10 refunds in less than 21 days. - Get your tax refund up to 5 days early in your bank account: If you choose this paid add-on feature, your federal tax refund will be deposited to your selected bank account up to 5 days before the refund settlement date provided by the IRS (the date your refund would have arrived if sent from the IRS directly). The receipt of your refund Up to 5 Days Early is subject to IRS submitting refund information to us at least 5 days before the refund settlement date. IRS does not always provide refund settlement information 5 days early. You will not be eligible to receive your refund Up to 5 Days Early if (1) you take a Refund Advance loan, (2) IRS delays payment of your refund, or (3) your bank’s policies do not allow for same-day payment processing. Up to 5 Days Early fee will be deducted directly from your refund prior to being deposited to your bank account. If your refund cannot be delivered at least 1 day early, you will not be charged the Up to 5 Days Early fee. Excludes business tax returns. Up to 5 Days Early program may change or be discontinued at any time without notice. Money movement services are provided by Intuit Payments Inc., licensed as a Money Transmitter by the New York State Department of Financial Services. For details about our money transmission licenses, or for Texas customers with complaints about our service, please visit https://www.intuit.com/legal/licenses/payment-licenses/. - Get your tax refund up to 5 days early in a Credit Karma Money™ Account: When it’s time to file, have your tax refund direct deposited to a Credit Karma Money™ checking account, and you could receive your funds up to 5 days early. If you choose to pay your tax preparation fee with TurboTax using your federal tax refund or if you choose to take the TurboTax Refund Advance loan, you will not be eligible to receive your refund up to 5 days early with Credit Karma. 5-day early program may change or discontinue at any time. Up to 5 days early access to your federal tax refund is compared to standard tax refund electronic deposit and is dependent on and subject to IRS submitting refund information to the bank before release date. IRS may not submit refund information early. Excludes business tax returns. Credit Karma is not a bank. Banking services for Credit Karma Money accounts are provided by MVB Bank, Inc., Member FDIC. Maximum balance and transfer limits apply per account. For more information, please visit https://turbotax.intuit.com/credit-karma-money/. - Loan details and disclosures for the TurboTax Refund Advance program: If you expect to receive a federal refund of $500 or more, you could be eligible for a TurboTax Refund Advance loan. TurboTax Refund Advance loans are issued by WebBank, which is not affiliated with MVB Bank, Inc., Member FDIC. TurboTax Refund Advance is a loan based upon your anticipated refund and is not the refund itself. 0% APR and $0 loan fees. Availability of the TurboTax Refund Advance is subject to satisfaction of identity verification, certain security requirements, eligibility criteria, and underwriting standards. This TurboTax Refund Advance offer expires on April 15, 2026, or the date that available funds have been exhausted, whichever comes first. Offer, eligibility, and availability subject to change without further notice. TurboTax Refund Advance loans issued by WebBank are facilitated by Intuit Financing Inc. (NMLS # 1136148), a subsidiary of Intuit Inc. Although there are no loan fees associated with the TurboTax Refund Advance loan, separate fees may apply if you choose to pay for TurboTax with your federal refund. Paying with your federal refund is not required for the TurboTax Refund Advance loan. Additional fees may apply for other products and services that you choose. You will not be eligible for the loan if: (1) your physical address is not included on your federal tax return, (2) your physical address is located outside of the United States or a US territory, is a PO box or is a prison address, (3) your physical address is in one of the following states: IL, CT, or NC, (4) you are less than 18 years old, (5) the tax return filed is on behalf of a deceased person, (6) you are filing certain IRS Forms (1310, 4852, 4684, 4868, 1040SS, 1040PR, 1040X, 8888, or 8862), (7) your expected refund amount is less than $500, or (8) you did not receive Forms W-2 or 1099-R or you are not reporting income on Sched C. Additional requirements: You must (a) e-file your federal tax return with TurboTax and (b) currently have or open a Credit Karma Money™ Spend (checking) account with MVB Bank, Inc., Member FDIC. Maximum balance and transfer limits apply. Opening a Credit Karma Money™ Spend (checking) account is subject to eligibility. Please see Credit Karma Money Spend Account Terms and Disclosures for details. Not all consumers will qualify for a loan or for the maximum loan amount. If approved, your loan will be for one of ten amounts: $250, $500, $750, $1,000, $1,500, $2,000, $2,500, $3,000, $3,500, or $4,000. Your loan amount will be based on your anticipated federal refund to a maximum of 50% of that refund amount. Those filing with TurboTax Expert Full Service may be eligible for a loan, issued by WebBank, in an amount that is based on the full amount of their anticipated federal refund with a maximum loan amount of $10,000, and such loans are available in amounts that are multiples of $250. Full Refund Amount calculation based upon the estimated amount of your refund less any fees associated with additional refund products. You will not receive a final decision of whether you are approved for the loan until after the IRS accepts your e-filed federal tax return. Loan repayment is deducted from your federal tax refund and reduces the subsequent refund amount paid directly to you. If approved, your TurboTax Refund Advance will be deposited into your Credit Karma Money™ Spend (checking) account typically within 15 minutes after the IRS accepts your e-filed federal tax return and you may access your funds online through a virtual card. Your physical Credit Karma Visa® Debit Card\* should arrive in 7 - 14 days. \*Card issued by MVB Bank, Inc., Member FDIC pursuant to a license from Visa U.S.A. Inc.; Visa terms and conditions apply. Other fees may apply. For more information, please visit: https://support.creditkarma.com/s/article/Are-there-fees-with-a-Credit-Karma-Money-Spend-account. If you are approved for a loan, your tax refund after deducting the amount of your loan and agreed-upon fees (if applicable) will be placed in your Credit Karma Money™ Spend (checking) account. Tax refund funds are disbursed by the IRS typically within 21 days of e-file acceptance. If you apply for a loan and are not approved after the IRS accepts your e-filed federal tax return, your tax refund minus any agreed-upon fees (if applicable) will be placed in your Credit Karma Money™ Spend (checking) account. If your tax refund amounts are insufficient to pay what you owe on your loan, you will not be required to repay any remaining balance. However, you may be contacted to remind you of the remaining balance and provide payment instructions to you if you choose to repay that balance. If your loan is not paid in full, you will not be eligible to receive a TurboTax Refund Advance loan in the future. - Loan details and disclosures for the File Now, Pay Later program: If your expected federal tax balance owed is between $200 and $6,000, you could be eligible for a File Now, Pay Later loan. File Now, Pay Later loans are issued by WebBank, not affiliated with Cross River Bank, Member FDIC. File Now, Pay Later is a loan based upon your federal tax balance due and can only be used to make your federal tax payment directly to the IRS. You must be eligible to receive a loan in the amount of your full federal tax balance due in order to be approved. Availability of the File Now, Pay Later is subject to credit approval, satisfaction of identity verification, certain security requirements, eligibility criteria, and underwriting standards. This File Now, Pay Later offer expires on October 16, 2026, or the date that available funds have been exhausted, whichever comes first. Offer, eligibility, and availability subject to change without further notice. File Now, Pay Later is available with a 3, 6, or 9 month loan term. Variable APR ranging from 15%-33%. For example, a 6-month $2,000 loan with an APR of 19% has a finance charge of $112.28 and 6 monthly installments of $352.05 each. Payments may change if you have missed payments, overpayments, or payments made outside of your normal payment schedule. File Now, Pay Later loans issued by WebBank are facilitated by Intuit Financing Inc. (NMLS # 1136148), a subsidiary of Intuit Inc. Although there are no loan fees associated with the File Now, Pay Later loan, separate fees may apply if you choose to pay for TurboTax with your state refund. Paying for TurboTax with your state refund is not required to be eligible for a File Now, Pay Later loan. Additional fees may apply for other products and services that you choose. You will not be eligible for the loan if: (1) your physical address is not included on your federal tax return, (2) your physical address is located outside of the United States or a US territory, is a PO box or is a prison address, (3) you are less than 18 years old, (4) the tax return filed is on behalf of a deceased person, (5) your federal tax balance owed is less than $200 or greater than $6,000, or (6) you do not have a social security number. Additional requirements: You must (a) e-file your federal tax return with TurboTax and (b) authorize Intuit Financing Inc. to open a Router Account in your name with an FDIC insured bank. Opening a Router Account is subject to identity verification. If approved, your File Now, Pay Later will be deposited into a temporary router account established for you at an FDIC insured bank ("Router Account"), shortly after the IRS accepts your e-filed federal tax return. You will have no access to the funds and the funds will only be accessed by the IRS via an authorized debit of the Router Account. Authorized tax payments are debited by the IRS, typically within 5 days of e-file acceptance. Not all consumers will qualify for a loan or for the maximum loan amount. If approved, your loan will be issued in the exact amount of your federal taxes owed. You will not receive a final decision of whether you are approved for the loan until after the IRS accepts your e-filed federal tax return. Your loan repayment period begins once the IRS has received your tax payment. If your loan is not paid in full, you will not be eligible to receive a File Now, Pay Later loan in the future. - Pay for TurboTax out of your federal refund or state refund: Individual taxes only. Subject to eligibility requirements. Additional terms apply. A $40 service fee may apply to this payment method. Prices are subject to change without notice. - TurboTax Help and Support: Access to a TurboTax product specialist is included with TurboTax Do It Yourself Deluxe, TurboTax Do It Yourself Premium, TurboTax Expert Assist and TurboTax Expert Full Service; not included with TurboTax Free Edition (but is available as a paid upgrade). TurboTax specialists are available to provide general customer help and support using the TurboTax product. Services, areas of expertise, experience levels, wait times, hours of operation and availability vary, and are subject to restriction and change without notice. Limitations apply. See Terms of Service for details. - TurboTax Experts - Tax Advice and Expert Review: Access to an expert for tax questions and Expert Review (the ability to have a tax expert review) is included with TurboTax Expert Assist or as an upgrade from another TurboTax product, and available through December 31, 2026. Access to an expert for tax questions is also included with TurboTax Expert Full Service and available through December 31, 2026. If you use TurboTax Experts, Intuit will assign you a tax expert based on availability. Tax expert availability may be limited. Some tax topics or situations may not be included as part of this service, which shall be determined at the tax expert’s sole discretion. The ability to retain the same expert preparer in subsequent years will be based on an expert’s choice to continue employment with Intuit and their availability at the times you decide to prepare your return(s). Administrative services may be provided by assistants to the tax expert. On-screen help is available on a desktop, laptop or the TurboTax mobile app. For the TurboTax Expert Assist product: If your return requires a significant level of tax advice or actual preparation, the tax expert may be required to sign as the preparer at which point they will assume primary responsibility for the preparation of your return. For the TurboTax Expert Full Service product: Hand off tax preparation by uploading your tax documents, getting matched with an expert, and meeting with an expert in real time. The tax expert will sign your return as a preparer. - TurboTax Experts - Unlimited Expert Support: Unlimited access to TurboTax experts refers to an unlimited quantity of contacts available to each customer, but does not refer to hours of operation or service coverage. Service, area of expertise, experience levels, wait times, hours of operation and availability vary, and are subject to restriction and change without notice. - TurboTax Experts - Years of Experience: Based on experts’ self-reported years of tax experience. - TurboTax Experts - Expert Availability: During tax season, TurboTax experts online are available 7 days a week from 5 AM to 9 PM PT from January 5 to April 20, 2026, and 5 AM to 12 AM PT on April 15, 2026. Outside of tax season, regular hours for our online TurboTax experts are Monday through Friday, 5am to 5pm PT. Near the September and October extension deadlines, we will resume extended hours of operations including evening and weekend hours. Service, area of expertise, experience levels, and wait times vary, and are subject to restriction and change without notice. Unlimited access to TurboTax experts online is included with all Expert Assist and Expert Full Service products. TurboTax experts hours at TurboTax stores and Expert offices vary by location. - TurboTax Expert Full Service - File your taxes as soon as today: TurboTax Full Service experts are available to prepare 2025 tax returns starting January 5, 2026. One-day preparation and filing availability depends on start time, the complexity of your return, is based on completion time for the majority of customers, and may vary based on expert availability. A tax preparation assistant will validate the customer’s tax situation during the welcome call and review uploaded documents to assess readiness and ability to file same-day. All tax forms and documents must be ready and uploaded by the customer for the tax preparation assistant to refer the customer to an available expert for live tax preparation. - TurboTax Expert Full Service - “Local”: Not all feature combinations are available for all locations. In-person meetings with a local tax pro are available in some locations, but not available in all states or locations. "Local" tax pro is defined as being located within the same state as the client for virtual meetings. "Local" tax pro, for the purpose of in-person meetings, is defined as being located within 50 miles of the consumer's zip code. - Smart Insights: Individual taxes only. Included with TurboTax Do It Yourself Deluxe, Premium, TurboTax Expert Assist, TurboTax Expert Full Service, or with PLUS benefits, and is available through October 31, 2026. Terms and conditions may vary and are subject to change without notice. - My Docs: Included with TurboTax Do It Yourself, TurboTax Expert Assist, and TurboTax Expert Full Service and is available through December 31, 2026. Terms and conditions may vary and are subject to change without notice. - Tax Return Access: Included with all TurboTax Do It Yourself, TurboTax Expert Assist, and TurboTax Expert Full Service products. Access to up to seven years of tax returns we have on file for you is available through December 31, 2026. Terms and conditions may vary and are subject to change without notice. - Easy Online Amend: Individual taxes only. With TurboTax Do It Yourself Deluxe, TurboTax Do It Yourself Premium, TurboTax Expert Assist, TurboTax Expert Full Service, or with PLUS benefits, you can make changes to your 2025 tax return online through October 31, 2028. For TurboTax Expert Full Service, your tax expert will amend your 2025 tax return for you through November 15, 2026; after that date, TurboTax Expert Full Service customers will be able to amend their 2025 tax return themselves using the Easy Online Amend process described above. TurboTax Free Edition customers may amend 2025 tax returns online through October 31, 2026. Terms and conditions may vary and are subject to change without notice. - #1 best-selling tax software: Based on aggregated sales data for all tax year 2024 TurboTax products. - #1 online tax filing solution for self-employed: Based upon IRS Sole Proprietor data as of calendar year 2025, for tax year 2024. Self-Employed defined as a return with a Schedule C/C-EZ tax form. Online competitor data is extrapolated from press releases and SEC filings. “Online” is defined as an individual income tax DIY return (non-preparer signed) that was prepared online and either e-filed or printed, not including returns prepared through desktop software. - 1099-Ks: Those filing in TurboTax Free Edition or TurboTax Expert Assist Basic will be able to file a limited IRS Schedule 1 if they have hobby income or personal property rental income reported on a Form 1099-K, and/or a limited IRS Schedule D if they have personal item sales with no gain reported on Form 1099-K. Those filing in TurboTax Do It Yourself Deluxe or TurboTax Expert Assist Deluxe will be able to file a limited IRS Schedule D if they have personal item sales income reported on Form 1099-K. If you add other schedules or forms, or need to report other types of income on Schedules 1, D, E, F, or Form 4835 you may be required to upgrade to another TurboTax product. Intuit reserves the right to terminate this offer at any time for any reason in its sole and absolute discretion. - 1099-K Snap and Autofill: Available in mobile app and mobile web only. - 1099-NEC Snap and Autofill: Available in TurboTax Do It Yourself Premium (formerly Self-Employed) and TurboTax Expert Assist Premium (formerly Self-Employed). Available in mobile app only. Feature available within Schedule C tax form for TurboTax filers with 1099-NEC income. - Year-Round Tax Estimator: Available in TurboTax Do It Yourself Premium (formerly Self-Employed) and TurboTax Expert Assist Premium (formerly Self-Employed). This product feature is only available after you finish and file in a self-employed TurboTax product. - Refer a Friend: Maximum of $500 in total rewards for 20 referrals. See official terms and conditions for more details. - Refer your Expert (TurboTax Customer referring Intuit’s own experts): Maximum of $500 in total rewards for 10 referrals. See official terms and conditions for more details. - Average Refund Amount: $3,453 is the average refund amount American taxpayers received in the 2024 filing season based upon IRS data as of February 21, 2025 and may not reflect actual refund amount received. Each taxpayer’s refund will vary based on their tax situation. - More self-employed deductions: based on the median amount of expenses found by TurboTax Do It Yourself Premium (formerly Self Employed) customers who synced accounts, imported and categorized transactions compared to manual entry. Individual results may vary. - TurboTax Online Business Products: For TurboTax Expert Assist Business and TurboTax Expert Full Service Business, we currently don’t support the following tax situations: C-Corps (Form 1120) and entities electing to be treated as a C-Corp, Trust/Estates (Form 1041), Tax Exempt Entities/Non-Profits, returns that require more than 5 state filings, and other issues unrelated to the preparation of a tax return or unrelated to business income/franchise taxes. - Audit Defense: Audit Defense is a third-party add-on service provided, for an additional fee, by TaxResources, Inc., dba Tax Audit. Audit Defense is included at no added cost with business returns filed with TurboTax Experts for Business (excluding Sole Proprietor). See Membership Agreements at https://www.intuit.com/legal/terms/ for service terms and conditions. ### TURBOTAX EXPERT 365 BUSINESS Subscription Terms: Who’s Eligible for Expert 365 Business: - Expert 365 Business is available to new QuickBooks customers with the following entity and business tax situations: sole proprietorships and single-member LLCs. - At this time, the following entity types and business tax situations are not eligible for Expert 365 Business: C-Corps, S-Corps, partnerships. Your Expert 365 Business subscription includes access to the following services and features: - Tax-Ready Bookkeeping: You must connect your business accounts to QuickBooks in order for your Expert to be able to review and reconcile your books on a quarterly basis. The expert will update bookkeeping to be tax-ready on a quarterly basis, so the expert can calculate your quarterly tax payments and develop personalized tax advice. All advice and information made available by Expert 365 Business in connection with the bookkeeping service is based on the information you provide to Intuit or authorize Intuit to obtain from your banks and other third party platforms that sync data into our bookkeeping services, so it is important for you to make sure that information is complete and accurate. The bookkeeping service cannot be relied upon to discover errors, fraud deflections or other irregularities, should any exist. - Business Tax Advisory Sessions: You can meet with your Expert on a quarterly basis to obtain personalized tax planning recommendations based on your information provided. - Quarterly Expert Reviews: Your Expert will be available to meet with you at least once per calendar quarter to deliver quarterly tax estimates, and review and reconcile your books. - TurboTax Expert Full Service: TurboTax Experts are available to prepare 2026 tax returns starting January 5, 2027. One-day preparation and filing availability depends on start time, the complexity of your return, is based on completion time for the majority of customers, and may vary based on Expert availability. A tax preparation assistant will validate the customer’s tax situation during the welcome call and review uploaded documents to assess readiness and ability to file same-day. All tax forms and documents must be ready and uploaded by the customer for the tax preparation assistant to refer the customer to an available Expert for live tax preparation. The TurboTax Terms of Service apply to your use of TurboTax Expert Full Service and Expert 365 Business. As described more in those Terms, the following Guarantees apply to your use of TurboTax Expert Full Service: TurboTax Accurate Calculations Guarantee - Business Tax Returns, TurboTax Maximum Savings Guarantee - Business Tax Returns, and TurboTax Audit Support Guarantee - Business Tax Returns. In addition to the above Expert 365 Business subscription features, you have access for 1 user license to the QuickBooks Simple Start product. QuickBooks Simple Start offers features such as receipt capture, tracking income and expense, tracking miles and running financial reports on any device (mobile and web). The cost of QuickBooks Simple Start is included in the displayed pricing, but this subscription is sold separately from Expert 365 Business. The QuickBooks Terms of Service apply to your use of QuickBooks Simple Start. Cancelation: Expert 365 Business is billed on a monthly basis of $61, and QuickBooks Simple Start is billed on a monthly basis of $38, your subscription will automatically renew each month on your account’s billing date until you cancel. You may cancel your subscription at any time by navigating to the Account & Settings section of your Expert 365 Business account and selecting “Cancel.” You will not receive a pro-rated refund; your access and subscription benefits will continue for the remainder of the billing period. Cancelation of your Expert 365 Business subscription will not impact your QuickBooks subscription. You will continue to receive all QuickBooks benefits and incur ongoing monthly charges until you separately cancel your QuickBooks subscription. Your Expert 365 Business subscription is dependent upon maintaining an active QuickBooks subscription. As a result, cancelation of your QuickBooks subscription will result in a concurrent cancelation of your Expert 365 Business subscription. ### TURBOTAX DESKTOP GUARANTEES TurboTax Desktop Individual Returns: - 100% Accurate Calculations Guarantee - Individual Returns: If you pay an IRS or state penalty or interest because of a TurboTax calculation error, we'll pay you the penalty and interest. You are responsible for paying any additional tax liability you may owe. Excludes payment plans. This guarantee is good for the lifetime of your personal, individual tax return, which Intuit defines as seven years from the date you filed it with TurboTax Desktop. Excludes TurboTax Desktop Business returns. Additional terms and limitations apply. See License Agreement for details. - Maximum Refund Guarantee / Maximum Tax Savings Guarantee - or Your Money Back - Individual Returns: If you get a larger refund or smaller tax due from another tax preparation method by filing an amended return, we'll refund the applicable TurboTax federal and/or state software license purchase price you paid. You are responsible for paying any additional tax liability you may owe. This guarantee is good for the lifetime of your personal, individual tax return, which Intuit defines as seven years from the date you filed it with TurboTax Desktop. Excludes TurboTax Desktop Business returns. Additional terms and limitations apply. See License Agreement for details. - Audit Support Guarantee - Individual Returns: If you receive an audit letter from the IRS or State Department of Revenue based on your 2025 TurboTax individual tax return, we will provide one-on-one question-and-answer support with a tax professional, if requested through our Audit Support Center, for audited individual returns filed with TurboTax Desktop for the current 2025 tax year and, for individual, non-business returns, for the past two tax years (2023, 2024). Audit support is informational only. We will not represent you before the IRS or state tax authority or provide legal advice. If we are not able to connect you to one of our tax professionals, we will refund the applicable TurboTax federal and/or state license purchase price you paid. This guarantee is good for the lifetime of your personal, individual tax return, which Intuit defines as seven years from the date you filed it with TurboTax Desktop. Excludes TurboTax Desktop Business returns. Additional terms and limitations apply. See License Agreement for details. - Satisfaction Guarantee/ 60-Day Money Back Guarantee: If you're not completely satisfied with TurboTax Desktop software, go to refundrequest.intuit.com within 60 days of purchase and follow the process listed to submit a refund request. You must return this product using your license code or order number and dated receipt. Desktop add-on products and services purchased are non-refundable. TurboTax Desktop Business Returns: - 100% Accurate Calculations Guarantee - Business Returns: If you pay an IRS or state penalty or interest because of a TurboTax calculation error, we'll pay you the penalty and interest. You are responsible for paying any additional tax liability you may owe. Excludes payment plans. Additional terms and limitations apply. See License Agreement for details. - Maximum Tax Savings Guarantee - Business Returns: If you get a smaller tax due (or larger business tax refund) from another tax preparation method using the same data, TurboTax will refund the applicable TurboTax Desktop Business license purchase price you paid. Additional terms and limitations apply. See License Agreement for details. - Satisfaction Guarantee/ 60-Day Money Back Guarantee: If you're not completely satisfied with TurboTax Desktop software, go to refundrequest.intuit.com within 60 days of purchase and follow the process listed to submit a refund request. You must return this product using your license code or order number and dated receipt. Desktop add-on products and services purchased are non-refundable. ### TURBOTAX DESKTOP DISCLAIMERS - Installation Requirements: Product download, installation and activation requires an Intuit Account and internet connection. Product limited to one account per license code. You must accept the TurboTax License Agreement to use this product. Not for use by paid preparers. - TurboTax Desktop Products: Price includes tax preparation and printing of federal tax returns and free federal e-file of up to 5 federal tax returns. Additional fees may apply for e-filing state returns. E-file fees may not apply in certain states, check here for details. Savings and price comparison based on anticipated price increase. Software updates and optional online features require internet connection. Desktop add-on products and services purchased are non-refundable. - Fastest Refund Possible: Get your tax refund from the IRS as fast as possible by e-filing and choosing to receive your refund by direct deposit. Tax refund time frames will vary. The IRS issues more than 9 out of 10 refunds in less than 21 days. - Average Refund Amount: $3,453 is the average refund amount American taxpayers received in the 2024 filing season based upon IRS data as of February 21, 2025 and may not reflect actual refund amount received. Each taxpayer's refund will vary based on their tax situation. - TurboTax Technical Support: Customer service and technical support hours and options vary by time of year. - Deduct From Your Federal or State Refund: Individual taxes only. Subject to eligibility requirements. Additional terms apply. A $40 Refund Processing Service fee applies to this payment method. Prices are subject to change without notice. - Data Import: Imports financial data from participating companies; Requires Intuit Account. Quicken and QuickBooks import not available with TurboTax installed on a Mac. Imports from Quicken (2023 and higher) and QuickBooks Desktop (2024); both Windows only. Quicken import not available for TurboTax Desktop Business. Quicken products provided by Quicken Inc., Quicken import subject to change. - Live Tax Advice: Access to tax experts to obtain answers to tax questions and to assist with tax year 2025 return(s) prepared with TurboTax Desktop software. Additional fees may apply. Must be purchased and used by October 31, 2026. Excludes TurboTax Desktop Business. See License Agreement for details. - Audit Defense: Audit Defense is a third-party add-on service provided, for a fee, by TaxResources, Inc., dba Tax Audit. See Membership Agreements at https://turbotax.intuit.com/corp/softwarelicense/ for service terms and conditions. All features, services, support, prices, offers, terms and conditions are subject to change without notice. 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[ Tax1099.com Glossary ]
Zero-Percent Tax Bracket
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per year, walking out the door