Tax Settlement: A tax settlement is an agreement between a taxpayer and the taxing authority that resolves a tax liability for a specific amount, often less than the originally owed amount. This arrangement can occur due to various reasons, such as an inability to pay the full amount or the taxpayer disputing the validity of...

Tax Shelter: A tax shelter is a financial strategy or investment that reduces or eliminates taxable income, thereby lowering the overall tax liability for individuals or businesses. Tax shelters can take various forms, including retirement accounts (like 401(k)s and IRAs), certain types of insurance policies, and investments in real estate or qualified business ventures. The...

Tax Sheltered Account A Tax Sheltered Account is a type of investment account that offers tax advantages to encourage savings and investment for retirement or specific purposes. Contributions to these accounts may be tax-deductible, and the investment growth is typically tax-deferred, meaning that taxes are not paid on earnings until withdrawals are made. Common examples...

Tax Software refers to specialized computer programs or applications designed to assist individuals and businesses in preparing and filing their tax returns. These tools simplify the tax preparation process by automating calculations, providing guidance on deductions and credits, and ensuring compliance with current tax laws. Tax software can range from basic applications for simple tax...

Tax Strategies for Independent Contractors Tax strategies for independent contractors refer to financial planning techniques and methods that self-employed individuals can utilize to minimize their tax liabilities and maximize their tax benefits. These strategies are crucial for managing the unique tax responsibilities that come with self-employment. Examples of common tax strategies include: Deductions for Business...

Tax Transcript refers to a summary of a taxpayer's tax return information, as recorded by the Internal Revenue Service (IRS). Tax transcripts are used for various purposes, including verifying income for loan applications, reviewing past tax returns, or resolving tax issues. There are different types of tax transcripts, such as the Tax Return Transcript, which...

Tax Treaty: A tax treaty is an agreement between two or more countries that aims to prevent double taxation and fiscal evasion regarding income and capital taxes. These treaties typically specify which country has taxing rights over various types of income, such as dividends, interest, and royalties, thereby providing clarity and protection for individuals and...

Tax Year The Tax Year is a 12-month period used by individuals and businesses to report income, expenses, and other tax-related information to the Internal Revenue Service (IRS) or relevant tax authority. For individuals, the tax year typically aligns with the calendar year, running from January 1 to December 31. Businesses, however, may choose a...

Taxable Event A taxable event refers to any occurrence or transaction that results in a tax liability. This can include various activities such as selling an asset, receiving income, or engaging in certain financial transactions. When a taxable event occurs, it triggers the requirement to report and pay taxes on the income or gain derived...

Taxable Income refers to the portion of an individual's or business's income that is subject to taxation by the government. It is calculated by taking gross income and subtracting allowable deductions, exemptions, and non-taxable income. For individuals, taxable income includes wages, salaries, interest, dividends, and any other income sources, minus specific deductions such as student...