All terms in this list:

Withholding tax: Federal and state income tax and FICA contributions deducted by an employer from the pay of employees and remitted by the employer to the IRS.

W-4 form: A document where taxpayers state the number of exemptions claimed for employer’s payroll purposes per IRS regulations.

W-2 wage and tax statement: A form issued to a taxpayer annually showing earnings summary as well as withholding taxes.

Taxpayer: A person who is under a legal obligation to pay a tax; a person who has paid a tax.

Taxing: The act or process of levying, assessing, and collecting a tax; taxation.

Taxation: The act or process of levying, assessing, and collecting a tax; taxation.

Taxable income: With respect to liability for federal income tax; in the case of an individual, adjusted gross income, less itemized deductions, or the standard deduction plus personal exemptions; in the case of a corporation, gross income less deductions.

Taxable: Subject to tax; liable to taxation.

Tax return: 1. A formal accounting that every person who has income is required to make to the government every tax year; the form on which a taxpayer reports his taxable income annually and on the basis of which he pays his income tax. 2. Independent of income, any

Tax exemption: 1. Freedom from the obligation to pay taxes. 2. A personal exemption under the Internal Revenue Code.

Tax evasion: Willfully avoiding payment of taxes legally due, for example, fraudulently concealing or understating one’s income.

Tax credit: A credit that reduces the amount of income tax owed by a taxpayer, as opposed to a deduction, which merely reduces a taxpayer’s taxable income.

Tax audit: An examination by the IRS of a taxpayer’s books and records to determine the accuracy of his income tax return.

Tax: An involuntary charge imposed by the government upon individuals, corporations, or trusts, or their income or property, to provide revenue for the support of the government.

Straight-line depreciation: In income tax law, a method of depreciating an asset at an even pace by subtracting its estimated salvage value from its cost and dividing the remainder by the number of years of its estimated useful life.

Return: A formal accounting of a person’s income, for example, a tax return.

Penalty: An additional charge because of a delinquency in making payment.

Net income: Gross income less ordinary and necessary expenses; taxable income.

Loss: The term is also applied extensively in tax law, where it is used in contradistinction to gain, and refers to transactions involving an excess of expense over revenue.

Joint return: A single income tax return filed by a husband and wife reporting their combined incomes.

Internal Revenue Service: Popularly known as the IRS, the organization that administers and enforces the Internal Revenue Code.

IRS: Abbreviation for Internal Revenue Service.

Internal Revenue Code: A compilation of all federal statutes that impose taxes or provide for the administration of such laws.

Individual retirement account: Under the Internal Revenue Code, individuals who are not included in an employer-maintained retirement plan may deposit money in an account for the purchase of retirement annuities.

Income tax return: See tax return.

Income tax: A tax based on income, personal or corporate.

Income: The gain derived from capital or from labor, including profit gained through a sale or conversion of capital assets.

Head of household: In tax law, a single person, other than a surviving spouse, who provides a home for certain persons, generally dependents.

Gross income: 1. Total income. 2. The whole or entire profit from a business. 3. Under the Internal Revenue Code, “all income from whatever source derived,” before allowance for deductions or exemptions.

Gross estate: 1. The value of all property left by a decedent, before payment of taxes and expenses. 2. The value of all taxable property in a decedent’s estate.

Gross: Without deduction; as a whole; entire; total.

Gift tax: A tax on the transfer by gift, by a living person, of money or other property.

Gain: 1. Earnings; profits; proceeds; return; yield; interest; increase; addition. 2. In tax law, excess of revenue over expense.

Fiscal year: An accounting period of 12 consecutive months.

Extension of time: 1. Modification of an obligation by giving additional time for performance. 2. An enlargement of time. 3. Any lengthening of a previously set period of time.

Exemption: 1. An allowance granted by way of a deduction when computing one’s taxable income. 2. The person for whom an exemption may be claimed in an income tax return.

Estate tax: A tax imposed by the federal government and most states upon the transmission of property by a deceased person.

Equalization of taxes: Carried out by boards of equalization; the process of adjusting the total assessments on all real estate in a tax district to equalize them with the total assessments in other tax districts in the state, the goal being equality and uniformity in taxation.

Earned income credit: A tax credit on earned income for low income workers with dependent children, as defined by the Internal Revenue Code.

Earned income: Income received for work or for the performance of some service.

Earned: 1. Received as a result of labor or service. 2. Merited; deserved. 3. Gained; acquired.

Earn: Gain, draw, win, acquire.

Direct tax: A tax levied directly on real or personal property based upon value, or directly upon income.

Depreciation: 1. The lessening in worth of any property caused by wear, use, time, or obsolescence. 2. In computing income tax, a deduction allowed for the gradual loss of usefulness of a capital asset used in business or in the production of income.

Dependent: In tax law, a person whose relationship to the taxpayer is such that the taxpayer is entitled to claim her as an exemption when filing his income tax return.

Deferred income: A tax law term for payments received before they are earned.

Deferred: Put off to a future time; postponed.

Deduction: 1. The amount allowed a taxpayer in reduction of gross income for the purpose of determining adjusted gross income. 2. That which may be taken away or subtracted, particularly money.

Deductible: In tax law, expenses that a taxpayer is permitted to subtract, in whole or in part, in computing her taxable income.

Declaration of estimated tax: A formed estimate of income anticipated during the forthcoming tax year, required under federal and state tax codes from corporations, trusts, and estates, and individuals who receive income that is not subject to withholding.

Death taxes: Another term for inheritance taxes or estate taxes.

Capital gains tax: Income tax upon financial gain resulting from the sale or exchange of capital assets.

Capital gain: Financial gain resulting from the sale or exchange of capital assets.

Capital assets: All assets except those excluded from that category by the Internal Revenue Code.

Capital: Relating to wealth. 1. Broadly, the total assets of a business. 2. Money or property used for the production of wealth. 3. An owner’s equity in a business.

Basis: In tax law, the cost of property as of a certain date, upon which depreciation can be computed and gain or loss can be calculated when the property is sold or exchanged.

Back taxes: 1. Taxes that are owed from a prior date. 2. Taxes on which the ordinary processes for collection have been exhausted.

Auditor: 1. A person who conducts an audit. 2. A civil servant whose duty is to examine the accounts of state officials to determine whether they have spent public funds in accordance with the law.

Audit: 1. A formal or official examination and verification of accounts, vouchers, and other financial records as, for example, a tax audit or an independent audit of a company’s books and records. 2. Any verification of figures by an accountant.

Assessor: A public official who makes an assessment of property, usually for purposes of taxation.

Assessment: 1. Imposing of tax on the basis of a listing and valuation of the property to be taxed. 2. Requiring a payment above and beyond that which is normal.

Appreciation: 1. An increase in the value of something. 2. Recognition of value.

Amortize: 1. To gradually pay off a debt by regular payments in a fixed amount over a fixed period of time. 2. To depreciate an intangible asset.

Amortization: The act of amortizing.

Amended return: Within the limitations prescribed by law, amended tax returns may be filed to correct inaccuracies and omissions in the original return.

Adjusted gross income: An income tax term for gross income less the deductions permitted by law.

Adjusted basis: For the purpose of calculating the amount of income tax due, the original cost of property offset for such things as casualty losses and depreciation.

Adjusted: 1. Corrected; balanced. 2. Brought into line.

Ad valorem tax: A tax established in proportion to the value of the property to be taxed.

Accrued interest: Interest that has been earned but has not yet been paid.

Accrued income: Income that a person has earned but has not yet claimed.

Accelerated depreciation: Rapid depreciation of the value of a capital asset in order to produce larger tax deductions during the early years of the life of the asset.