Tax liability refers to the total amount of tax debt owed by an individual, organization, or corporation to a tax authority. It includes both current taxes due and any unpaid taxes from prior periods.
An encumbrance placed upon property as a claim for payment of a tax liability.
A tax loophole is an ambiguity or omission in the tax code that allows individuals or corporations to reduce their tax liabilities legally. These loopholes are often the result of complex tax laws and can be used to advantage through strategic financial planning.
A financial loss incurred by an organization that can be carried forward to subsequent periods to reduce the tax payable in those periods.
Tax loss carryback and carryover are tax benefits that allow taxpayers to use losses from one year to offset taxable income in other years, effectively reducing tax liability.
A tax map is a document that details the location, dimensions, and pertinent information about a parcel of land subject to property taxes. These maps are typically bound into books and maintained as public records at local tax offices.
Under the UK taxation system, a tax month runs from the 6th day of one month to the 5th day of the following month. This ensures that there are 12 complete tax months in the fiscal year.
The span of time covered by a value added tax (VAT) return, usually encompassing three calendar months. VAT returns must be completed and submitted to HM Revenue and Customs within one month following the end of this tax period.
Tax planning involves the strategic structuring of a taxpayer's financial activities and affairs in accordance with relevant tax legislation to minimize tax liability. It is a legal and ethical means of reducing the overall charge to tax.
Under the value added tax (VAT) rules, the tax point is the date on which goods are removed or made available to a customer or when services are completed. It determines the tax period for which the output tax must be accounted.
A tax preference item refers to a specific item of income, tax deduction, or tax credit that is considered to provide an extra benefit under federal tax law. These items are identified as potentially leading to excessively low tax liability for some taxpayers, which is why the Alternative Minimum Tax (AMT) is imposed to ensure a minimum tax is paid.
A tax rate is the percentage at which an individual or corporation is taxed. Tax liability is calculated by applying the appropriate tax rate to the tax base.
Tax Rate Schedules provide predefined percentages applicable to various income ranges, crucial for the taxation process of individuals and entities. These schedules must be utilized by taxpayers with taxable income of $100,000 or more, while others typically use detailed tax tables.
A tax rebate is a repayment of tax paid. A formal repayment claim must be made and approved by an Inspector of Taxes, and the refund due to the taxpayer will be made by the Collector of Taxes following the Inspector's instructions.
The Tax Reform Act of 1986 (TRA 1986) represents the most comprehensive tax legislation since the onset of World War II. It aimed to ensure that individuals with equal incomes paid equal taxes, minimized the role of tax incentives in addressing social and economic issues, and primarily used taxes to generate revenues.
A tax refund is the reimbursement issued by the government to a taxpayer when they have overpaid their taxes throughout the year. This typically occurs due to over-withholding, overestimating income, or underestimating deductions, exemptions, and credits.
Tax relief is a reduction in the amount of tax that an individual or corporation owes to the government, typically through various statutory provisions. In the UK, tax relief can be applied to income tax, capital gains tax, and inheritance tax through different mechanisms such as allowances, exemptions, and credits.
A tax return is an annual statement of income and personal circumstances filed by a taxpayer to calculate and report individual tax liabilities and claim personal allowances.
A professional who is compensated for preparing, assisting in preparing, or reviewing tax returns. They must sign the tax returns they handle.
A tax roll is a detailed listing and description of all taxable property within a tax district, including assessed values and amounts.
A tax sale is the sale of a property after the owner has failed to pay property taxes for an extended period. The grantee of such a sale receives a tax deed.
Tax selling involves selling securities, usually at year end, to realize losses in a portfolio, which can be used to offset capital gains and thereby lower an investor's tax liability.
A tax shelter, also known as a tax shield, is any financial arrangement made to legally lower an individual or a corporation's tax liabilities. These shelters can involve transactions or methods that result in deductions, credits, or reductions in taxable income.
A tax shield refers to allowable deductions that reduce a taxpayer's taxable income, thereby decreasing the amount of tax owed.
Software that helps taxpayers plan for and prepare their tax returns. Programs such as TurboTax and TaxCut help taxpayers analyze their tax situation and take actions to minimize tax liability.
Selection of filing status available for state and federal income taxes, including options for both individuals and businesses, significantly impacting tax obligations.
A clause in a lease agreement that limits the lessor's obligation to pay property taxes above a certain specified amount, ensuring that any tax increases above this threshold are the responsibility of the lessee.
A tax straddle is a technique that was once used to postpone tax liability by showing a short-term loss in the current tax year and realizing a long-term gain in the following tax year.
The means by which taxes are raised and collected in accordance with tax legislation.
Tax tables are guides issued by HM Revenue and Customs to assist employers in calculating the tax due from their employees under the pay-as-you-earn (PAYE) system.
Tax treaties are agreements negotiated between two or more countries to avoid double taxation of income earned in one country by residents of another and to prevent tax evasion.
An agreement between two countries that specifies how income, profits, or gains are taxed to prevent double taxation and provide tax relief.
A tax voucher is a document provided by an organization, typically to its shareholders, that outlines details of the dividend income and any associated tax credits. It assists in accurately reporting income for tax purposes.
A tax waiver is a document issued by the state specifically stating that the tax department consents to the transfer of stock or real estate ownership. It is often needed to settle an estate or transfer property legally.
The Tax Wedge represents the economic effect of taxes which can potentially inhibit specific results by creating a wedge between the economic activities of producers and consumers.
A tax year is a period used for calculating annual income tax returns. It is commonly a calendar year but can also be a fiscal year, which is any consecutive 12-month period that does not necessarily start on January 1st.
Denoting an amount that can be deducted from income or profits, in accordance with the tax legislation, before establishing the amount of income or profits that is subject to tax.
An investment option where accumulated earnings are not taxed until the investor takes possession of the assets.
A retirement vehicle permitted under Section 403(b) of the U.S. Internal Revenue Code for employees of a public school system or a qualified charitable organization.
A tax-deferred exchange, commonly known as a 1031 exchange, allows for the deferral of capital gains taxes on an exchange of like-kind properties.
A tax-effective procedure is one that aligns with tax legislation and leads to a reduction in the tax burden, offering financial benefits through strategic planning.
Tax-Equivalent Yield is a pretax yield that a taxable bond must offer to match the tax-free yield of a municipal bond, calibrated to an investor's specific tax bracket.
Tax-exempt income refers to specific types of income that are not subject to federal income tax. This includes certain Social Security benefits, welfare benefits, nontaxable life insurance proceeds, armed forces family allotments, nontaxable pensions, and tax-exempt interest.
A Tax-Exempt Organization is a non-profit entity primarily operated for a purpose other than making a profit and is exempt from federal and state income taxes.
Tax-Exempt Property refers to real property that is not subject to ad valorem property taxes. This commonly includes properties such as churches, homesteads, and government-owned land and buildings in many local communities.
A financial obligation whose interest is exempt from taxation by federal, state, and/or local authorities.
A tax-free designation refers to any payment, allowance, or benefit that is not subject to taxation, providing financial advantages to recipients without impacting their taxable income.
A tax-free exchange, often facilitated under Section 1031 of the Internal Revenue Code, allows for the exchange of one investment property for another while deferring capital gains taxes.
A Tax-Free Exchange, Delayed is a transaction where property is traded with the promise to provide a like-kind replacement in the near future, allowing deferral of tax on the gain under stringent conditions.
Taxable estate refers to the portion of a deceased person's estate that remains after deducting any allowable marital deductions, charitable contributions, and other adjustments from the adjusted gross estate. This amount is subject to estate taxes.
A detailed explanation of taxable income, along with examples, related terms, frequently asked questions, online resources, and further reading materials.
A taxable person includes individuals, partnerships, limited companies, clubs, associations, or charities as defined by value-added tax (VAT) legislation. These entities are responsible for charging VAT on taxable supplies made in the course of conducting their business.
A taxable supply refers to the provision of goods or services in the UK that is subject to Value Added Tax (VAT). It excludes any exempt supplies as defined by VAT legislation.
Taxable value refers to the assessed value of a property or other asset, which is used to determine the amount of a tax liability. It's often a percentage of the property's market value and is used by tax authorities to calculate the proper amount of tax due.
A taxable year is a period, usually 12 months, during which the tax liability of an individual or entity is calculated. In the case of certain nontaxable entities, it is the period for which tax information is provided.
A levy imposed on individuals and corporate bodies by central or local governments to finance government expenditures and implement fiscal policies, excluding payments for specific services rendered.
The UK legislation consolidating the law relating to the administration and collection of income tax, corporation tax, and capital gains tax.
An informal name for an Inspector of Taxes, who ensures compliance with tax laws and regulations.
A taxpayer is an individual or entity that is liable to pay taxes to a governmental authority, including but not limited to the Internal Revenue Service (IRS) in the United States.
A Taxpayer Identification Number (TIN) is an identifying number assigned to a taxpayer or entity for tax purposes in the United States.
A Taxpayer Identification Number (TIN) is a unique identifier used by the Internal Revenue Service (IRS) in the United States to track and manage taxpayers' various tax-related activities.
Team building is a technique for improving a work group's performance by clarifying its goals and members' expectations of each other. This organizational development strategy reinforces the cohesion and communication within a team.
Team management refers to the process of managing a prescribed set of activities by an organized work group in an organization. This involves setting goals and priorities, analyzing group work methods, and examining decision-making processes.
A brief advertisement designed to tease the public by offering only bits of information without revealing either the sponsor of the ad or the product being advertised. Teaser ads are the frontrunners of an advertising campaign, and their purpose is to arouse curiosity and get attention for the campaign that follows.
A teaser rate is an initially low interest rate applied to a mortgage loan for a limited period, which is designed as a marketing technique and is typically lower than the rate justified by the index determining the interest rate.
Technical analysis is a method of evaluating securities and commodities by analyzing statistics generated by market activity, such as past prices and trading volume. It uses charts and other tools to identify patterns and trends that may predict future price movements.
A technical rally refers to a short rise in securities or commodities futures prices within a general declining trend. This can occur due to bargain-hunting or traders identifying a support level where prices usually rebound.
Operational capabilities necessary to perform certain job specifications.
Technological obsolescence refers to a situation where technology becomes outdated due to the introduction of newer and more efficient technological advances. This phenomenon often leads to older technologies no longer being used or supported, such as traditional typewriters being replaced by word processing software.
Technological risk is the inherent risk in project financing schemes that the newly designed plant or equipment will not operate to spec, and the broader risk to a business from changing technology.
Technological Unemployment refers to the loss of jobs caused by technological changes, as new technologies either eliminate jobs or alter the nature of work such that workers' skills become obsolete.
Technology refers to the developed applications for industry and the industrial arts, used to enhance and streamline processes through the use of applied science. It encompasses advancements in various fields such as electronics, computer science, and engineering.
Teeming and lading, often seen as just 'teeming and lading,' is an accounting fraud method where receipts or payments are delayed in recording to cover up cash shortages caused by theft or employee fraud.
The transmission of messages by computers, telephone, telegram, or television. It involves the exchange of information over significant distances by electronic means and refers to all types of data transmission. It is fundamental in modern communication systems, supporting conversations, internet browsing, video conferencing, and broadcast TV.
Telecommuting involves performing job-related tasks using telecommunications to transmit data and textual messages to a central organizational office without being physically present.
A telegram is a message transmitted by telegraphic equipment, which uses coded signals sent over electronic wires. The message is usually delivered within hours via phone or direct delivery. While outdated for general information transfer, telegrams are still used for certain money transfer services.
A method of sending money to someone in urgent need of cash via telegraph offices.
Telegraphic Transfers (TT) are methods of transmitting money overseas by means of electronic transfer between banks. The transfer is usually made in the currency of the payee and may be credited to their account at a specified bank or paid in cash to the payee upon application and identification.
A Telegraphic Transfer, abbreviated as TT, is an electronic method of transferring funds utilized mainly in banking to move money quickly between bank accounts worldwide. This method became standard before today's more modern and efficient electronic transfer systems.
Telemarketing refers to the use of the telephone as an interactive medium for promotional purposes. It encompasses both outbound calls, where the telemarketer initiates contact with potential customers, and inbound calls, where customers call to place orders, inquire about products or services, or voice complaints. Telemarketing is also known as teleselling and serves as a response vehicle to support print, broadcast, catalog, and direct-mail promotions.
Telephone banking is a form of home banking that enables customers to conduct various banking transactions over the phone, providing convenience and accessibility without needing to visit a bank branch.
Telephone switching in the context of finance refers to the process of shifting assets from one mutual fund to another via a phone call. This can take place within the various types of funds (stock, bond, money market) of a single family of funds or across different families of funds.
Teleselling, a subset of telemarketing, involves the use of telephone communication to sell products or services directly to potential customers.
Television support refers to the use of television advertising broadcasts as a complementary component of a larger multimedia marketing campaign. This strategy is often employed to direct the audience to additional, more detailed information presented in another medium, such as a newspaper insert.
Telex is a system of national and international telecommunication whereby messages can be sent from one typewriter to another, provided both users subscribe to the electronic service.
A template is a predefined format used to structure and design documents, presentations, spreadsheets, and other applications. It typically contains styles, images, boilerplate text, and other formatting elements, making it suitable for creating a particular type of document such as letters, reports, résumés, presentations, and more.
A method of translating foreign currency transactions by utilizing the exchange rate on the transaction date. Generally used for items not classified as foreign currency monetary items or those not measured at fair value.
A fall in the value of an asset that is expected to be temporary. Under historical-cost accounting, no adjustments are made for temporary diminutions unless they become permanent.
Ten-year averaging is a method used to calculate income tax on a lump-sum distribution from a qualified benefit plan. This method was designed to reduce the tax liability of the beneficiary on large, one-time distributions. The ten-year averaging rule applies to individuals who were participants in a qualified benefit plan, were at least 50 years of age before January 1, 1986, and had been participants in the plan for at least five years before the year they receive the distribution.
A periodic inheritance tax charge on most forms of discretionary trusts, structured to balance the lack of generational transfer taxes.
Tenancy refers to the right of possession or occupancy of real property, either through lease or title. It encompasses various forms of holding property, including landlord-tenant relationships and co-ownership arrangements.
Tenancy at sufferance is a type of tenancy that arises when a tenant lawfully takes possession of a property but continues to occupy the premises without the landlord's consent after the lease expires.
Tenancy at will is a flexible rental arrangement where the tenant is allowed to occupy property without a formal lease and can vacate or be asked to vacate at any time, reflecting an agreement that can be either written or oral.
Tenancy by the entirety is a form of joint property ownership available only to married couples, featuring equal rights of possession and enjoyment along with the right of survivorship, meaning the property automatically passes to the surviving spouse upon the death of the other.
A lease agreement where the duration is fixed and agreed upon by both parties, running for a specific term such as two months, three years, ten years, and so on.
Tenancy in Common (TIC) involves the ownership of real property by two or more individuals where each has an undivided interest in the property, and unlike other forms of co-ownership, it does not include the right of survivorship.
Tenancy in Common (TIC) is a form of ownership arrangement in which two or more individuals hold an undivided interest in property. TICs can also facilitate tax-free exchanges under Section 1031, although some investors feel the value received may not always be adequate.
Tenancy in severalty refers to the ownership of property by a single person or a single legal entity. It is a form of ownership where the owner has exclusive rights and control over the property.
A tenant is an individual or entity who leases or occupies a premises, land, or estate under various terms and rights.
A Tenant Finish-Out Allowance refers to the monetary compensation provided to retail or office tenants to accommodate their unique requirements for setting up their leased space, including modifications such as walls, partitions, and lighting installations. This allowance is typically provided by the landlord and is expressed in dollars per square foot.
