Vocabulary

• Tax – A compulsory contribution to state revenue, levied by the government on workers' income and business profits, or added to the cost of some goods, services, and transactions.
• Gross Income – All a person's income from all sources before deductions.
• Net Income – The actual earnings of an individual or company after subtracting all expenses and taxes.
• Tax Bracket – A range of incomes subject to a certain income tax rate.
• Tax Deduction – A reduction of income that is able to be taxed and is commonly a result of expenses, particularly those incurred to produce additional income.
• Tax Credit – A tax incentive which allows certain taxpayers to subtract the amount of the credit from the total they owe the state.
• Tax Exemption – A monetary exemption which reduces taxable income.
• Tax Liability – The total amount of tax debt owed by an individual, corporation or other entity to a taxing authority.
• Withholding Tax – An amount held from an employee's wages and paid directly to the government by the employer.
• Capital Gains Tax – A tax on the profit when you sell something (an 'asset') that's increased in value.
• Income Tax – A tax on people's income.
• Corporate Tax – A tax imposed on the net profit of a corporation.
• Value-Added Tax (VAT) – A tax on the amount by which the value of an article has been increased at each stage of its production or distribution.
• Tax Avoidance – The use of legal methods to modify an individual's financial situation to lower the amount of income tax owed.
• Tax Evasion – The illegal evasion of taxes by individuals, corporations, and trusts.
• Tax Year – The 12-month period covered by a tax return.
• Taxable Income – The amount of income used to calculate an individual's or a company's income tax.
• Progressive Tax – A tax that takes a larger percentage from the income of high-income earners than it does from low-income individuals.
• Regressive Tax – A tax that takes a larger percentage from low-income people than from high-income people.
• Proportional Tax – A tax imposed so that the tax rate is fixed, with no change as the taxable base amount increases or decreases.
• Sales Tax – A tax on sales or on the receipts from sales.
• Property Tax – A tax based on the value of the property.
• Inheritance Tax – A tax paid by a person who inherits money or property.
• Estate Tax – A tax on the transfer of the estate of a deceased person.
• Gift Tax – A tax imposed on the transfer of any property by one individual to another while receiving nothing, or less than full value, in return.
• Excise Tax – A tax on the production or sale of a good.
• Filing Status – A category that defines the type of tax return form a taxpayer must fill out.
• Dependent – A person who relies on another, usually a family member, for financial support.
• Standard Deduction – A dollar amount that non-itemizers may subtract from their income before income tax is applied.
• Itemized Deduction – An eligible expense that individual taxpayers in the United States can report on their federal income tax returns.
• Tax Return – A form on which a taxpayer makes an annual statement of income and personal circumstances, used by the tax authorities to calculate the tax liability.
• Tax Refund – A reimbursement to a taxpayer for any excess amount paid to the government.
• Taxable Event – Any event or transaction that results in a tax consequence for the party who executes the event.
• Tax Shelter – Any method of reducing taxable income resulting in a reduction of the payments to tax collecting entities.
• Tax Code – The federal government's official rules and regulations on how individual and corporate citizens should pay taxes.
• Capital Loss – The loss incurred when a capital asset, like an investment or real estate, decreases in value.
• Dividend – A sum of money paid regularly (typically quarterly) by a company to its shareholders out of its profits or reserves.
• Taxable Account – An investment account through which investment income and realized capital gains are subject to taxes in the year they are received.
• Tax-Deferred – Referring to investment earnings such as interest, dividends or capital gains that accumulate tax-free until the investor withdraws and takes possession of them.
• Tax-Free – An income or value that is not subject to tax.
• Alternative Minimum Tax (AMT) – A tax levied by the United States federal government on individuals, corporations, estates, and trusts.
• Payroll Tax – Taxes withheld from employees' paychecks and matched by employers, paid to the government.
• Tax Relief – Any program or incentive that reduces the amount of tax owed by an individual or business entity.
• Tax Base – The total amount of assets or income that can be taxed by a taxing authority, usually by the government.
• Tax Rate – The percentage at which an individual or corporation is taxed.
• Double Taxation – The levying of tax by two or more jurisdictions on the same declared income, asset, or financial transaction.
• Tax Treaty – An agreement made by negotiating countries to discuss matters of tax.
• Tax Advisor – An expert in tax law, planning and compliance who helps businesses and individuals meet their tax responsibilities.
• Before-Tax Contributions – Money that is invested, before taxes have been deducted, into a retirement plan.
• After-Tax Contributions – Money that is invested into a retirement plan after taxes have been taken out.