An incentive that lets taxpayers reduce the overall amount of taxes they owe by meeting certain qualifications. Examples of tax credits offered by the IRS include the Child Tax Credit and tax credits for first-time home buyers.
A deferred compensation retirement plan in which an employer withholds a portion of an employee's pretax wages and invests them in a qualified plan; an employer may contribute to an employee's 401(k) plan, e.g. by matching an employee's contributions. Wages invested in a 401(k) plan and income earned therefrom are not taxed until the employee withdraws them from the plan.
An exchange, i.e. sale and reinvestment of the proceeds therefrom, of business or investment property for like-kind business or investment property, which allows a seller to defer payment of capital gains taxes.
A rebuttable IRS presumption that a business venture that does not make a profit in three out of five consecutive years of operation is a hobby and not a business for tax purposes. Not meeting this test has significant tax consequences because businesses can take advantage of many tax benefits and advantages that hobbies do not get.
A number assigned by the IRS or the SSA to be used for tax administration. Taxpayer identification numbers include Social Security numbers, employer identification numbers, and individual taxpayer identification numbers.
Federal tax laws that restrict IRS conduct and establish taxpayer rights in dealing with the IRS.
An individual's or business's gross income minus all allowable deductions, adjustments, and exemptions.