Income |
Money or its equivalent, earned periodically by an individual, a corporation, etc., in return for goods or services provided. Opposite of loss. |
Income Disability Benefits |
Insurance which pays a monthly benefit to replace a percentage of earnings lost due to illness or injury resulting from a covered accident. |
Income Statement |
A financial statement summarizing revenues, expenses, gains and losses for a stated period of time. The Income Statement is also known as Profit & Loss Statement, Statement of Earnings, Statement of Income or Statement of Operations. |
Income Tax |
These are taxes on income, both earned income (salaries, wages, tips, commissions) and unearned income (interest from savings accounts, dividends if you hold stock). Individuals and businesses are subject to income taxes. |
Incorporated (Inc.) |
See Corporation |
Incorporator |
The person or entity that prepares and files the articles of incorporation. Total Tax Solutions acts as an Incorporator for many new companies. |
Indemnify |
To reimburse or compensate. Directors and officers of corporations are often reimbursed or indemnified for all the expenses they may have incurred during the incorporation process. |
Indirect Tax |
You might not think you’re paying this tax, but you probably are. It’s the type of tax that can be shifted to others: hence the name. For example: A company might have to pay a specific tax to the government, let’s say a fuel tax. The company pays the tax but can increase the cost of their products so consumers are actually paying the tax indirectly by paying more for the company’s products. |
Individual Retirement Accounts (IRAs): |
A tax-deferred product offered by banks, mutual funds and other companies. Under current law, a married couple can put $4,000 ($2,000 each) into their own IRA each year in a wide range of savings accounts and investments. Earnings are tax-deferred until you begin withdrawing the money (which you can start doing without penalty after age 59 ½). Under current tax law, some people (depending on their income, marital status or other factors) can deduct all or part of their IRA contributions, which reduces their taxes. |
Informal Tax Legislation Process |
Ever joined a book club? What about a study group? Well, if you’re interested, there are also informal tax legislation meetings where individuals and interest groups get together to discuss tax issues. Once you become a steady wage earner, these are meetings you probably won’t want to miss. |
Insolvency |
When liabilities exceed assets. Also, the inability to pay debts when due. See Bankruptcy. |
Installment |
A part of a sum of money or a debt to be paid at regular intervals, usually made up of principal and interest combined. |
Intangible Asset |
An asset without physical substance that has value due to rights resulting from its ownership and possession (for example, goodwill, patents, trademarks). |
Interest (1) |
“Interests” represent a member’s ownership of an LLC just as a partner has an interest in a partnership and shareholders own stock in a corporation. |
Interest (2) |
The cost of using money over time usually expressed as an annual percentage. |
Interest Income |
You deposit your money into a savings account for a reason, right? So you can earn interest on your money. People also earn interest from lending money to people. We’re not talking about you lending your buddy Dave a couple bucks to buy lunch; we’re talking about lending lots of money so the interest really accumulates on the loan. Well, add up all that interest you accumulate and there’s your interest income. Not to burst your bubble, but that interest income is all fully taxable. |
Internal Auditor |
An employee of an entity (for example, a corporation) who audits for management, providing valuable information for decision-making concerning the effective operation of its business. |
Internal Control |
A coordinated system of procedures and techniques designed to safeguard a company’s assets, to ensure the accuracy of its accounting records, and to promote efficiency and adherence to prescribed policies. |
Inventory |
Items of tangible property held for sale. An Inventory is a detailed list of items and their values owned at a specific point in time. Stock inventory would include raw materials for manufacture, materials partly processed and finished products including items in transit for which title is held, but would not include items physically held for which title belongs to others. Inventories may also be made of fixed assets, stationery and supplies, etc. |
Investment |
Funds committed to acquire something tangible or intangible in order to receive a return, either in revenue or use. |
Invoice |
Document for goods purchased or services rendered showing details such as quantities, prices, dates, shipping details, order numbers, terms of sale, etc. |
Joint Products |
Two or more goods having approximately the same economic value that are manufactured simultaneously from the same raw material. |
Journal |
A book of original entry in which financial transactions are recorded (for example, a purchase journal is a record of purchase transactions). |
Journal Entry |
An entry in any journal. |
Keogh Accounts: |
Similar to a 401(k), but for the self-employed. |
Lease |
A legal contract conveying the use of property from the owner (lessor) to another (lessee) at a fixed rate, for a stated length of time. |
Leasehold Improvements |
Additions, improvements or alterations made to leased property by the lessee. |
Ledger |
A book of final entry containing all the accounts of a business or all the accounts of a particular type (for example, general ledger, accounts receivable ledger). |
Liability |
The Liabilities of a business are the debts of a business. For example, if money is borrowed from a bank, there is a liability to repay the loan. In this case, the borrower would be known as the debtor and the bank to which the debt is owed would be called the creditor. |
Limited (Ltd.) |
See Corporation |
Limited Liability Company |
A business entity formed upon filing articles of organization with the proper state authorities and paying all fees. LLCs are a new entity in the United States, although the concept has long been used internationally. LLCs provide limited liability to their members, and are taxed like a partnership, preventing double taxation. LLCs can be formed in every state. |
Limited Partnership |
A partnership with two classes of partners: Limited partners and one or more General partner. Limited partners have no personal liability for debts of the limited partnership beyond the amounts invested. |
Liquid Asset |
An asset, such as cash, that can be readily converted into other types of assets or used to buy goods and services or satisfy obligations. |
Liquidation |
The winding-up of an organization by settling with debtors, creditors and shareholders. Usually done by selling or otherwise disposing of assets to pay off liabilities. |
Liquidation Value |
The net amount realized on assets in the event of a liquidation. |
Local Tax |
In addition to federal and state taxes, your local town or city may also need tax money to operate services such as garbage pick-up, water treatment, and street-cleaning. |
Long-Term Health Care Insurance |
Coverage intended for elderly to provide for expenses related to long-term home health care or extended stays in nursing homes. |
Loss |
The excess of expenditures over revenues. Opposite of income/profit. |
Lump-sum distribution |
A disbursement of the entire funds in an account, commonly paid when an employee retires or leaves a company, potentially with tax consequences if not rolled over into another retirement plan or an IRA when taken prior to retirement. |
Management Accounting |
Accounting concerned with providing information to managers; that is, to those who are inside an organization and who direct and control operations. Management Accounting includes cost accumulation for product costing, budgeting and financial statement analysis. |
Manager |
An LLC may be operated by a group of managers who act much like a board of directors. If an LLC is to be controlled by mangers this fact must be stated in the articles of organization. |
Market Value |
The highest price that an owner could realize in an open market transaction. See Fair Market Value. |
Materiality |
A term used to describe the significance of financial statement information to decision makers. An item of information is material if it is probable that its omission or misstatement would influence or change a decision. |
Medicare |
The Medicare program funds the federal health program for people over 65. It helps out people at a time in their lives when they may have health problems but may not have a lot of money. |
Member |
A member is a person who is an owner of a Limited Liability Company. The members make the business decisions of an LLC unless the articles of organization provide that the LLC will controlled by a manager or managers. |
Merger |
Merger occurs when one corporation is taken over by another. |
Minority Interest |
The equity of all shareholders who do not hold a controlling interest in a company. |
Minutes |
A written record which details the events of the corporation. These records should be kept in the corporation’s record book. |
Money Market |
Financial markets in which short-term debt instruments such as Treasury bills, commercial paper and CD’s are traded. |
Name Reservation |
The name of a corporation or LLC must be distinguishable on the records of the state government. If the name is not unique, the state will reject the articles of incorporation or articles of organization (for LLCs). A name can be reserved, usually for 120 days, by applying with the proper state authorities and paying a fee. |
Net Income |
Profit after all expenditures have been deducted from the revenue. See Profit. |
Net Worth |
Excess of total assets over total liabilities as reported in a company’s balance sheet. See Capital (or Equity) |
No-Par-Value Stock |
Stock with no minimum value. Most states allow no-par stock. If the stock is no-par stock then the amount of stated capital is an arbitrary amount assigned by the board of directors. Further, the value of capital for franchise tax purposes is determined by the state and this may result in higher franchise taxes in comparison with low par-value stock. |
Not-For-Profit Corporation |
A Corporation organized for some charitable, civil or other social purpose that does not entail the generation of profits for shareholders. These corporations receive special tax treatment. Not-for-profit corporations must file not-for-profit articles of incorporation with the state. |
Note Payable (Promissory Note) |
Written promise made by one individual to another to pay a specific amount on demand or by a definite date. |
Note Receivable |
Written promise by another party to make payment to you at a specified date. |
Officers |
Officers are people who are appointed by the directors. They manage the daily affairs of the corporation. A Corporation’s officers usually consist of a president, vice-president, treasurer, and secretary. In most states, one person can hold all of these positions. |
Operating Agreement |
An agreement among the LLC members which govern the LLC operations and the rights of its members. It is analogous to corporate bylaws. |
Options |
Marketable securities that provide for future exchange of cash and common shares contingent upon the option owner’s choice. |
Organizational Meeting |
The initial meeting where the formation of the corporation is completed. At the organizational meeting a number of initial tasks are completed such as: the articles of incorporation are ratified, the initial shares are issued, officers are elected, bylaws approved, and a resolution authorizing the opening of bank accounts is passed. If the initial directors are named in the articles of incorporation, they can hold the organizational meeting. If they are not named, then the Incorporator holds the organizational meeting. |
Overhead |
Fixed costs not directly applicable to the production of a -product (for example, costs of lighting and heating a factory). |
Owner’s Equity |
What the business is worth to the owner. See Capital and Equity. |
Paid in Capital Requirements |
A few states require corporations to have a specified amount of paid in capital prior to starting business. These states include CT, DC, SD, and TX and require that the company have $1,000 in paid in capital before starting business. |
Par-Value |
The stated minimum value of a share stock. Stock must be sold for at least this value or the owner of the stock can face liability. With low par value stock or no par value stock this liability is minimized. |
Parent Company |
A corporation that directly or indirectly owns a controlling interest in another corporation. See Subsidiary. |
Partnership |
Two or more persons carrying on a business for profit, each partner having unlimited liability for the debts of the partnership, except in a limited partnership in which some of the partners may have limited liability. |
Pass-Through Taxation |
Income to the entity is not taxed. Instead the income is “passed through” to the individual shareholders or interest holders. S corporations, Partnerships and LLCs are pass-through taxation entities. |
Payable |
An obligation to pay a sum at a future date. |
Payroll |
A record of wages or salaries paid or payable. The actual wages and salaries paid during a given period. |
Payroll Taxes |
Your employer deducts a certain amount from your paycheck to pay for taxes. This tax money funds many finance specific programs, including social security, health care and worker’s disability. These programs might not mean a whole lot to you now, but you may likely benefit from them when you’re older. Check out |
Pension |
Arrangement whereby an employer agrees to provide benefits to retired employees. A pension is paid out in a series of regular payments or a lump sum of money to retired employees or their beneficiaries. |
Personal Income Tax |
Everyone pays a tax on his/her yearly total amount of taxable income. Remember that the personal income tax is not a tax on the taxpayers total income (the taxpayer can take deductions). Deductions are subtracted first from the taxpayer’s income and then he/she pays the tax on the remaining amount. |
Piercing the Corporate Veil |
If corporate formalities are not followed, it is possible that the corporate entity will not protect shareholders from corporate debt. Keeping proper records and holding regular meetings help solve this possible problem. |
Posting |
Process whereby transactions are transferred from a journal to a general ledger or subsidiary ledger. |
Preemptive Rights |
Rights delineated in the articles of incorporation granting shareholders the first opportunity to buy a new issue of stock in proportion to their current equity. The shareholder has the right to buy the new issue of stock, but is not required to make the purchase. If the shareholder elects not to exercise this right, the shares can be sold on the open market. |
Preferred Stock |
Stock that generally provides the shareholder with preferential payment of dividends but does not carry voting rights. |
Premium |
An amount paid for insurance. |
Prepaid |
Asset created by payment for economic benefits that do not expire until a later time; as the benefit expires the asset becomes an expense (for example, prepaid rent, prepaid insurance). |
Principal |
The capital portion of a loan as opposed to interest. |
Professional Corporation |
A Corporation that is organized for the purpose of engaging in a learned profession such as law, medicine or architecture. Professional Corporations must file articles of incorporation with the state which meet the state’s requirements for professional corporations. |
Profit |
The excess of total revenue over total expenses for a period of time. |
Progressive Tax |
This type of tax takes a larger percentage of income from higher income groups than from low-income groups. Is this fair? Check out What is Fair? |
Property Tax |
Proportional taxes take the same percentage of income from everyone regardless of how much (or little) a person earns. This type of tax is not currently in use, but some feel it’s the way to go. What do you think? Check out What is Fair? |
Proportional Tax |
Proportional taxes take the same percentage of income from everyone regardless of how much (or little) a person earns. This type of tax is not currently in use, but some feel it’s the way to go. What do you think? Check out What is Fair? |
Proxy |
If a shareholder can not attend a meeting, the shareholder is allowed to vote by proxy. A proxy grants another individual the power to vote on their behalf. |
Qualified Retirement Plans |
Plans such as 401(k)s, IRAs, etc., which are IRS approved for favorable tax treatment for contributions and tax-deferred earnings. |
Quorum |
The minimum attendance required to conduct business at a meeting. Usually, a quorum is achieved if a majority of directors are present (for directors meetings) or outstanding shares are represented (for shareholder meetings). The percentage needed for a quorum may be modified in the bylaws. |
Ratio |
Relative size, expressed as the number of times one quantity is contained in another (for example, the ratio of assets to liabilities of a company having total assets of $200,000 and liabilities of $150,000 would be $200,000 / $150,000 = 1.33) |
Receivable |
An amount to be received at a future date. |
Refinancing |
Rescheduling of payments due, usually resulting in smaller payments over a longer period of time. |
Refund |
When your employer deducts too much money from your paycheck, the government owes you that money back. When they pay it, it’s called a refund. |
Registered Agent |
The agent named in the articles of incorporation. The agent will receive service of process on the corporation and other important documents. The agent must be named in the articles of incorporation. |
Registered Office |
The office named in the articles of incorporation. The registered office must be where the registered agent is located, and need not be the principal office or place of business of the corporation. |
Regressive Tax |
This is the tax that takes a smaller percentage from those with high income than from those with lower income. Is this fair? What do you think? |
Required Minimum Distribution |
Minimum distribution, based on life expectancy or the joint life expectancies of holder and beneficiary, that the IRS rules must be withdrawn from IRAs, 401(k)s, etc. or be subject to penalties. |
Resolution |
A resolution is a formal decision of the corporation that has been adopted by either the shareholders or the board of directors. |
Retained Earnings |
Cumulative net incomes of a corporation less losses and dividend distributions to shareholders (profits not distributed). |
Revenue |
Gross proceeds from sale of goods or services. Also, interest and dividends earned on investments. Revenue is a source of income. |
Review Engagement |
The un-audited review of financial statements of a business or organization by an independent accountant for the purpose of determining the plausibility of the information reported on. A review includes making inquiries concerning financial, operating and contractual information, applying analytical procedures and having discussions with appropriate officials of the enterprise. |
Review Engagement Report |
The accountant’s report that prefaces un-audited financial statements and provides negative assurance that the financial information conforms to generally accepted accounting principles. |
Risk |
Possibility that the actual return on an investment will be less than its expected return. |
Rollover |
Transfer of funds from one tax-deferred account to another without tax consequences, provided IRS rules are followed. |
Roth IRA |
Differing from a traditional IRA, contributions to a tax-deferred Roth IRA are not tax-deductible, but there is no tax on withdrawals if the taxpayer is over 59 1/2 and the account has been open for five years. |
S Corporation |
A small corporation which elects subchapter S tax treatment. This tax treatment allows the corporation to avoid federal level taxation. Corporate Profits and Losses are passed through to the shareholders. |
Sales Taxes |
You gotta have that new CD, but do you have enough cash? Don’t forget to add the sales tax to the price. Depending on the state you live in, you pay an extra percentage of sales tax for items purchased. |
Schedule |
Your class schedule essentially organizes your day, right? Taxpayers have to be organized too. They use certain schedules (or forms) to itemize specific sources of income or specific expenses they claim should be deducted from their taxes. It can pay to be organized! SOCIAL SECURITY |
Security |
Collateral for a debt (for example, accounts receivable may be pledged as security for a loan). Security is a generic term used to refer to a bond, share certificate or other medium or long-term investment evidencing debt or ownership. |
Self-Select Pin |
Does a paperless return sound good to you? If you choose the Self-Select Pin option, it’s magic. . . no paper to mail! |
SEP or SEP-IRA |
Generally following the rules for IRAs, a Simplified Employee Pension is a tax deferred retirement plan for self-employed persons and for businesses with fewer than 25 employees. |
Share |
An interest in a corporation. The total ownership of a corporation is divided into shares of stock. See Stock |
Shareholder |
Any holder of one or more shares in a corporation. A shareholder usually has evidence that they are a shareholder. This evidence is represented by a stock certificate. |
Simple IRA |
The Savings Incentive Match Plan for Employees is a tax-deferred retirement plan for businesses with fewer than 100 employees and for self-employed persons which generally follows rules for traditional IRAs. |
Social Security |
Social Security is America’s government-run retirement plan. One day, when you’re your grandparents’ age, you’ll get the money back. |
Sole Proprietorship |
A business carried on by the owner as an individual. The owner of a sole proprietorship is personally liable for all business debts; thus, personal property could be taken to pay business debts. A Sole Proprietorship is an unincorporated business wholly owned by one individual. |
Spousal IRA |
A tax-deferred retirement account for spouses who do not work for pay which allows an employed taxpayer to contribute $2,000 a year on behalf of a stay-at-home spouse, provided the couple files a joint return. |
Standard Deductions |
Some taxpayers choose to take a standard amount instead of itemizing all of their deductions. This is a fixed amount that is generally based on a person’s filing status. |
State Taxes |
There are all kinds of taxes which are used to pay for all sorts of things. Some of our money goes to the Federal government, which pays for services like Interstate highways, the armed forces, the FBI, and a lot more. Your state also needs money for schools, roads, state troopers-to name just a few. At the end of the tax year, you will need to send one form to the Federal government, and another to your state government. |
Stated Capital |
The par value of shares multiplied by the number of shares outstanding. The amount of stated capital may affect the ability to pay dividends. |
Statement |
Summary of an account for a period of time (usually one month) showing invoices, credits and balance due. A statement is provided to a customer by a supplier. |
Statement of Changes in Financial Position |
A financial statement showing the effect of operating, financing and investing activities effecting the cash position of the company. Also known as Cash Flow Statement, Statement of Cash Flow, Statement of Operating, Financing and Investing Activities, or Statement of Changes in Cash Resources. |
Statement of Earnings |
See Income Statement |
Statement of Financial Position |
See Balance Sheet. |
Statement of Retained Earnings |
A financial statement summarizing the changes in retained earnings for a stated period. Also known as Statement of Changes in Capital Accounts or Statement of Changes in Retained Earnings and Reserves. |
Stock |
Capital of a corporation that is divided into portions or shares. Stock refers to an equity or ownership interest in a corporation. There may be several classes of stock in a corporation, each class divided into equal portions or shares. Ownership of shares is demonstrated by stock certificates. See Share. |
Stock Certificate |
A written instrument that shows ownership of shares in a corporation. |
Stock Dividend |
A dividend paid by the issuance of shares of capital stock. |
Stock Option |
The right to buy shares of capital stock at a stated price on or by a given date. A privilege often extended to executives or employees of a company. |
Stock Transfer Book |
A record book which lists the owners of shares of stock in a corporation. |
Stockholder |
See shareholder. |
Subsidiary |
A corporation controlled by another corporation that owns directly or indirectly an interest sufficient to elect a majority of the board of directors. See Parent Company. |
Tariff Duty |
Ever travel abroad and do a little duty-free shopping at the airport? You’re buying tax-free products. When you buy that same product at your corner store (assuming it’s not a duty-free shop), you’re paying a tariff duty or tax on the product. |
Tax Avoidance |
Legal minimization of the impact of taxation. |
Tax Basis |
The basis used for calculating capital gains or losses, it is the original cost paid for an investment, plus expense, which must be reported to the IRS when the investment is sold. |
Tax Credits |
The amount of money that tax payers can deduct directly from their taxes. |
Tax Deductions |
The amount that a person or business can subtract from their taxable income. The more you can deduct, the less you pay. |
Tax Deferment |
Certain contributions and investment with earnings which are taxed at a later date. |
Tax Evasion |
Illegal attempt to escape the impact of taxes. |
Tax Exempt |
Pretty excited when you’re exempt from gym class? Taxpayers are pretty happy when they see there’s a part of their total income on which no tax is imposed. That’s a tax exemption. |
Tax Free |
Investments, such as municipal bonds, whose earnings are never taxed, but whose capital gains may be taxed if investment is sold at a profit. |
Tax Liability |
There’s no getting out of it- tax liability is the total amount of tax that a person must pay. Taxpayers pay this through withholdings, estimated tax payments, and payments attached to their yearly tax forms. |
Tax Shelter |
Investment to acquire something of value with the expectation it will produce income and reduce or defer taxes. |
Tax Shift |
One lucky person or group is able to shift a tax that they’re supposed to pay to someone else. |
Tax Witholdings |
There’s a portion that your employer takes from your (and other employees) paycheck to pay part or all of your taxes. |
Taxable Income |
Everything you earn that can be taxed. |
Taxes |
Taxes are required payments of money to the government. This money is used to make your life better. You might not even realize it, but tax money provides public goods and services for the community as a whole (think roads, schools, law enforcement, public libraries, etc.). Show a little gratitude, pay your fair share. |
Telefile |
The IRS knows that millions of people like you have simple tax returns, but some of them don’t have access to a home computer. However, most people do have access to a touch-tone telephone. Telefile lets you use your tone touch phone, but not a cell phone, to send tax information directly to an IRS computer. It’s free, simple, accurate and secure. The IRS will send you the TeleFile package if you are eligible to participate. Check out IRS e-file using Telefile. When you visit, be sure to check out the seven states that offer state TeleFile during the same call! |
Tips |
Here’s a tip on receiving tips: If you earn more than $20 a month in tips, you must report the amount to your employer. To keep track of your tips keep a daily “tips-earned log” where you write down the exact amount of tips you earn each day. Share the monthly total with your employer who will make certain federal, state, and local taxes are paid. Remember, it still pays to be nice . . . so don’t forget to smile. Publication 1244 contains forms for daily record keeping of tips and for reporting tips to your employer. The freely available Adobe Acrobat Reader is required to view this publication. |
Title |
Legal right to ownership of property. |
Transaction Taxes |
The sale of all goods and services have transaction taxes. These taxes can be a set percentage of a sales value or a set amount of a physical quantity. What’s that all about? Let’s say you buy a CD-you pay a set amount in sales tax, but when you fill up your tank with gas, you pay a tax per gallon. |
Treasury Bills |
Debt obligations of the U.S. Government that mature in one year or less. |
Treasury Shares |
Shares of stock that were issued and later acquired by the corporation. |
Trial Balance |
Listing and totaling all balances in a ledger to verify that total debits equal total credits. |
Trust |
Fiduciary relationship under which property is held by one person (a trustee) for the benefit of another (the beneficiary). |
Trust Fund |
Money, property or valuables legally held by a person or company for the benefit of another. |
Trustee |
A person or company legally responsible for the property of another. |
Ultra Vires |
Traditionally, the purpose of a corporation was closely spelled out in its articles of incorporation. If the corporation acted beyond its described purposes these actions were unenforceable against the corporation or by the corporation. However, most modern statutes allow corporate purposes to be any lawful activity. Therefore, the importance of this doctrine has greatly diminished. |
Unanimous Written Consent |
Nearly all states allow directors to act without a meeting if they each give their consent |
Valuation Day |
Date established by law as the basis of one method of valuation for the calculation of capital gains or losses for income tax purposes. |
Variance |
Difference between standard cost and actual cost. Also, the difference between an actual revenue or expense item and the budget for that item (budget variance). |
Vertical Equity |
Who said all taxpayers are created equal? Vertical equity states that people in different income groups should pay different rates of taxes. Our current tax system is one of vertical equity. |
Voluntary Compliance |
Your mom might order you to clean up your room. Well, the IRS doesn’t have time to tell every single taxpayer to file taxes correctly and on time . . . there are millions of taxpayers in this country after all. This system relies on citizens to report their income, calculate tax liability and file tax returns on time. Everyone’s gotta grow up sometime. Check it out. |
Volunteer Income Tax Assistance |
Available in most communities are Volunteer Income Tax Assistance (VITA) sites to help with tax return preparation. People volunteer their time to help their neighbors. The service is free to those with limited or moderate income people, non-English speaking, the elderly and the disabled. Some VITA sites even offer free electronic filing. If you want to know more about a VITA site in your community or volunteering your time, call the IRS at 1 800-829-1040. Check out IRS e-file. |
Walk-In Electronic Filing |
If you need help preparing your taxes visit the Volunteer Income Tax Assistance (VITA) office nearest you. Many VITA offices have IRS representatives who can help you fill out your forms and then transmit the information on your forms electronically. |
Withholding (“Pay-As-You-Earn” Taxation) |
Your employer takes out a certain amount from your check for the government. You are credited for these taxes when you file your return. This money is used to pay for your federal income taxes, federal social security, and Medicare taxes, and state and local income taxes. |
Withholding Allowance |
An allowance an individual claims on a W-4 Form. It is mainly used to assist an employer in calculating the amount of income tax to withhold from an employee’s paycheck. The more allowances you wish to claim, the less income tax will be withheld from your paycheck. You can claim one allowance for yourself, one for your spouse, and one for each of your dependents. |
Worker’s Compensation |
Insurance required by law which compensates employees who are injured on the job. |
Write-off |
To transfer an item that was an asset to an expense account (for example, to transfer an uncollectable account receivable to bad debts expense). |
Yield |
Interest earned on a bond, or the dividend paid on a stock or mutual fund, usually expressed as a percentage. |