Tax Glossary- Tax Terms T thru Z
Please use the "Tax Glossary" below to search out tax terms and their meanings
A|B|C|D|E|F|G|H|I|J|K|L|M|N|O|P|Q|R|S|T|U|V|W|X-Z
-----------------------------------------------------------------------------
Tangible Personal Property
Property, other than real property, that has a physical existence and
an intrinsic value. Examples are livestock, machinery, equipment, and
vehicles.
Taxable Income
Adjusted gross income less itemized deductions or the standard
deduction, less allowable personal and dependent exemption amounts.
Taxable U.S. Domestic Corporation
An organization incorporated in and doing business with the intent to
make a profit in the United States. Examples are H&R Block, General Motors,
and IBM.
Taxable Year
The calendar year or fiscal year for which the taxable income is
computed.
Tax Benefit Rule
A rule that limits the recognition of income from the recovery of an
expense or loss properly deducted in a prior tax year to the amount of the
deduction that reduced taxable income.
Tax Bracket
The rate at which income at a particular level is taxed.
Tax Court
The U.S. Tax Court is one of three trial courts of original
jurisdiction that decide litigation involving federal income, death, and
gift taxes.
Tax Credit for the Elderly or the Disabled
Eligible taxpayers 65 years old and older, and those under 65 retired
on a permanent and total disability, may claim the credit. The amount of
the credit, if any, is computed on Schedule R, Form 1040, or Schedule 3,
Form 1040A.
Tax-Exempt Income
Income that by law is not subject to income tax.
Tax-Free Exchanges
Transfers of property specifically exempt from federal income tax
consequences in the current year. Examples are a transfer of property to a
controlled corporation and a like-kind exchange.
Tax Home
The business location, post, or station of the taxpayer. If an employee
is temporarily reassigned to a new post for a period of one year or less,
the taxpayer's tax home is his personal residence and the travel expenses
are deductible.
Tax Liability
The amount of total tax due the IRS after any credits and before taking
into account any advance payments (withholding, estimated payments, etc.)
made by the taxpayer.
Taxpayer's Child
Includes the taxpayer's natural child, stepchild, or a child placed for
legal adoption regardless of when the child came to live with the taxpayer;
also, any other child whom the taxpayer cared for as his own child for the
entire year unless the child's natural or adoptive parents provided over
half of the child's support.
Tax Preference Items
Tax items that may result in the imposition of the alternative minimum
tax.
Tax Rate Schedules
Tax rate schedules are used by certain taxpayers. Separate rate
schedules are provided for married individuals filing jointly or qualifying
widow(er)s, unmarried heads of household, single taxpayers, and married
individuals filing separate returns.
Tax Table
The Tax Table is provided for taxpayers with taxable incomes of less
than $100,000. Separate columns are provided for single taxpayers, married
taxpayers filing jointly or qualifying widow(er)s, heads of household, and
married taxpayers filing separately.
Temporary Assignment
A work assignment away from the taxpayer's tax home, the termination of
which can be foreseen at the time the job begins, within a reasonably short
period. Deduction of temporary assignment expenses is allowed to provide
relief to those who have extra expenses because of their work. To have any
deductible expenses, the taxpayer must own or be renting or buying lodging
in the general area of the regular place of employment and intend to return
to that lodging at the end of the temporary assignment.
Tenancy by the Entirety
A tenancy in which parties jointly own property. After the death of
one, the survivor takes the whole estate. Tenancy by the entirety can be
terminated during their lifetime only by joint action of the parties.
Tenancy in Common
Two or more individuals jointly owning property. Each owns an undivided
share of the whole. The shares remain separate even if one party dies.
Threat of Condemnation
When a property owner is informed, either orally or in writing, by a
representative of a governmental body or by a public official authorized to
acquire property for public use, that a decision has been made to acquire
his property, and it is reasonable to believe that the property will be
taken, a threat of condemnation exists.
Tip Income
Gratuities received by the taxpayer for services rendered. Tips of $20 or
more from any one job during a calendar month must be reported to the
taxpayer's employer.
Trade Date
Date on which a capital asset is actually bought or sold.
Trade-In Allowance
The amount by which the seller reduces the sale price of a property in
return for the property of the buyer. This does not affect the buyer's
basis in the property purchased.
Trade or Business Expenses
Deductions from gross income that are attributable to a taxpayer's
business or profession.
Traditional IRA
An individual retirement arrangement, contributions to which may or may not
be deductible depending on the taxpayer's modified AGI and whether he or
she is covered under an employer-sponsored retirement plan. Earnings within
a traditional IRA grow tax-deferred. Distributions from a traditional IRA
are taxable except to the extent they represent nondeductible
contributions.
Transfer Tax
A tax imposed when real estate is sold or transferred from one person
to another.
Transportation Expenses
Transportation expenses for an employee or self-employed taxpayer
include only the cost of transportation (taxi fares, auto expenses, etc.)
incurred in the course of business or employment when the taxpayer is not
away from home in a travel status.
Travel Expenses
Travel expenses include meals and lodging and transportation expenses while
away from home in the pursuit of a trade or business (including that of an
employee).
Trust
A tax entity created by a trust agreement. This entity distributes all
or part of its income to beneficiaries as instructed by the trust
agreement. This entity is required to pay taxes on undistributed income.
--------------------------------------------------------------------------
Unadjusted Basis
The basis of property for purposes of figuring depreciation under ACRS or
MACRS. The unadjusted basis is the original cost or other basis without
regard to salvage value.
Underpayment Penalty
If a taxpayer did not pay enough tax on a timely basis during the year, he
or she will have an underpayment of estimated tax, and may, depending on
circumstances, be required to pay a penalty. The penalty, if any, is
computed on Form 2210.
Unearned Income
Taxable income other than that received for services performed (earned
income). Unearned income includes money received for the investment of
money or other property, such as interest, dividends, and royalties. It
also includes pensions, alimony, unemployment compensation, and other
income that is not earned.
Unlike Properties
Properties that are used for different purposes and/or are of different
types.
Unstated Interest
Interest that must be calculated and the sale price reduced by this
amount when interest is not stated in an installment agreement or the
interest rate used is less than the applicable rate.
-------------------------------------------------------------------------
Vacation Home
The tax Code places restrictions upon taxpayers who rent their
residences or vacation homes to others for part of the tax year. The
restrictions may result in scaling down of expense deductions for such
taxpayers.
Vested Benefits
Pension benefits owned by the taxpayer.
-----------------------------------------------------------------------------
Warrant
A certificate authorizing the holder to buy a corporation's stock at a
specified price, either indefinitely or within a certain time. Warrants are
different from rights in that they generally last longer, and the price at
which the holder is entitled to buy the stock usually is more than the
stock's market price when the warrant was issued.
Wash Sale
The purchase of substantially similar stock or other securities within
30 days before or after the sale of the similar stock or security at a
loss. A taxpayer cannot claim a wash sale loss; instead, the loss is added
to the basis of the most recently purchased substantially similar
securities.
Welfare to Work Credit
A tax credit for employers who hire workers off welfare rolls.
Widow
A woman who has not remarried following the death of her husband.
Widower
A man who has not remarried following the death of his wife.
Withholding of Tax at Source
The withholding of tax by a payer prior to payment of various types of
income as required by the tax Code. The recipient of the income claims the
amount withheld as a tax payment on his or her tax return.
Work Opportunity Credit
A credit available to employers who hire employees from specified
disadvantaged groups.
Working Interest
An operating interest in oil and gas in place that is burdened with the
responsibility and cost of developing and operating the property.
Worksheet
A record of compiled information that is generally not sent to the IRS
with a tax return.
Worthless Securities
A loss is allowed for a security that becomes worthless during the
year. The loss is deemed to have occurred on the last day of the year.
Special rules apply to securities of affiliated companies and small
business stock.
-----------------------------------------------------------------------------
X - Z No terms