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Legally minimizing tax liability through permissible means
Tax Avoidance
Amount of tax that an individual or entity is legally obligated to pay
Tax Liability
Range of income subject to a certain tax rate
Tax Bracket
Amount that directly reduces the tax owed, often based on specific criteria
Tax Credit
Amount that reduces taxable income, lowering the amount of tax owed
Tax deduction
Transaction that triggers a tax liability
Taxable event
Examination of tax return by the IRS to verify accuracy and compliance
Tax Audit
Additional charge imposed for failing to pay taxes on time
Tax penalty
Partial payment of taxes due, spread over a period
Tax Installment
Results of actions that impact your taxes, such as deductions or credits
Tax Consequences
Illegal act of not paying taxes owed
Tax Evasion
Money returned by the government when you've overpaid taxes
Tax Refund
Income that is subject to taxation after deductions and exemptions
Taxable income
Date by which taxes must be filed and paid to avoid penalties
Document filed with the government reporting income and taxes owed
Tax Return
Money earned from sources like wages, salaries, and bonuses
Earned Income
Form used to file your annual income tax return
1040 form
Form that shows how much you earned and how much was withheld from your paychecks
W-2 form
Choosing not to have income taxes withheld from your paycheck
Exempt
Document showing details of your paycheck, including deductions and earnings
Pay stub
Person who relies on someone else for financial support
Dependent
Form used to let your employer know how much to withhold from your paycheck