Tax Glossary

Property that can be seen or touched, such as buildings, machinery, vehicles, furniture, and equipment.

A term which is used to describe the arrangement of a taxpayer's affairs that is intended to reduce his tax liability and that although the arrangement could be strictly legal it is usually in contradiction with the intent of the law it purports to follow.

Term used in connection with graduated system of taxation to refer, for example, to the slabs or slices of taxable income subject to particular rates of income tax.

Allowance of deduction from or a direct offset against the amount of tax due as opposed to an offset against income.

The failure to pay or a deliberate underpayment of taxes. underground economy—Money-making activities that people don't report to the government, including both illegal and legal activities.

The entire city or general area of an individual's regular place of business, employment, or post of duty, regardless of where they maintain their family home.

The amount of total tax due to the IRS after claiming credits and before reporting payments such as withholding and estimated payments.

The annual period used for keeping tax records and reporting income and expenses. The most common tax year is a calendar year, which ends December 31.

Interest income that is not subject to federal income tax. Tax-exempt interest may or may not be exempt from state income taxes.

Gross income minus any adjustments to income, any allowable exemptions, and either itemized deductions or the standard deduction.

In some countries income taxes are levied on gross income (usually at lower rates) without deduction for expenses.

An individual subject to any internal revenue tax. All citizens of the U.S. and all individuals resident in the U.S. are subject to internal revenue tax.

Generally, a work assignment in a single location away from a taxpayer's tax home that the taxpayer realistically expects will last (and does last) for one year or less.

A form of property ownership in which a husband and wife own property jointly. If one owner dies, the survivor is automatically entitled to the decedent's share of the property.

A form of property ownership in which two or more individuals own property separately. If one owner dies, the survivors are not automatically entitled to the decedent's share of the property.

The amount of tax calculated under the alternative minimum tax rules.

Any individual who has been certified by a physician to have an illness that can be reasonably expected to result in death in 24 months or less.

Any activity primarily directed against the U.S. or its allies or any military action involving the U.S. Armed Forces resulting from violence or aggression against the U.S. or its allies.

The intentional taking and removing of money or other property from its rightful owner. The taking of property must be illegal under the laws of the state where it occurs and it must be done with criminal intent.

A method for calculating the taxable portion of benefits from a qualified plan for retirees whose annuity starting date was before July 2, 1986.

The method the IRS applies to determine who can claim the tax benefits when two or more tax returns are filed using the same individual as a qualifying child.

An interest-bearing savings account that restricts access to its funds for a defined time limit. Funds cannot be withdrawn before the limit without incurring a penalty.

A transfer of property for other property or services.

Generally, an activity carried on for a livelihood or in good faith to make a profit.

Any IRA that is not a Roth IRA, a Savings Incentive Match Plan for Employees (SIMPLE) IRA, or a Simplified Employee Pension IRA (SEP-IRA).

Someone who does not have a regular place of business or post of duty and does not have a place where they regularly live.

The ordinary and necessary expenses a person incurs while traveling away from home to meet the demands of their job.

The person who is responsible for managing the assets of a trust for the benefit of the beneficiaries and who is usually independent of the person who created the trust.

A transfer of funds in a traditional IRA from one trustee directly to another, either at the taxpayer's request or at the trustee's request. This is not a rollover.