A tax attorney, also known as a tax lawyer, refers to an attorney who specializes in taxes. Tax attorneys are typically involved in analyzing from the tax perspective, advising clients on the tax consequences of specific transactions, and litigating the tax treatment of disputed tax positions.
A tax auditor is a financial professional who specializes in taxes and evaluates financial records to determine whether they comply with applicable laws and regulations. Tax auditors, applying accounting principles, examine companies, individuals, institutions and organizations for compliance with federal, state and local tax laws.
Tax basis is the cost or value of an asset – used to determine equity or ownership for the purpose of tax assessment, exchange, or sale. It generally includes purchase price, taxes, transportation costs, and fees, and is increased or decreased based on what occurs to the property during its owner’s period of ownership in order to determine the owner’s adjusted basis.
A tax bracket simply refers to the tax rate for a specific amount of income such as 20% taxes for the first $30,000 of income. Tax brackets are used by the Federal government and many states in their income tax systems. The United States Federal tax system is a progressive tax system, which means that the taxation progressively increases as a taxpayer’s income grows. Low incomes fall into the tax brackets with lower tax rates, while the higher incomes fall into brackets with higher tax rates.
Tax costs generally refers either to increased tax liabilities resulting from a corporate transaction or more frequently as a motion of a losing party to challenge paying certain costs of the winning party in litigation. A “motion to strike” or a “motion to tax costs” can be made in many circumstances by a losing party who has lost litigation and is ordered to pay litigation costs of the opposing party.
Tax court refers to the United States Tax Court (previously referred to as the U.S. Board of Tax Appeals and the Tax Court of the United States) which can hear challenges to tax decisions of the Internal Revenue Service (IRS). The tax court is located in Washington, D.C. and has 19 judges.
Tax credit directly decreases the tax liability of a taxpayer, unlike tax deductions which only reduce taxable income. A tax credit is subtracted from the tax liability itself. For example, a taxpayer with a tax liability of $10,000 with a tax credit of $1,500 would only owe $8,500 in taxes.
The Tax Cuts and Jobs Act of 2017 (TCJA) is the unofficial name for the large set of changes to the Revenue Code of 1986, signed into law by President Trump in 2017. TCJA made many large changes across multiple areas of the tax code, including most infamously reducing the corporate tax rate, increasing the standard deduction, and increasing the applicable exclusion amounts for estate taxes.
Tax deduction is an item or expense that can reduce the taxes a person owes in a given year. A deductible item is subtracted from the total taxable income which can substantially reduce taxes owed by an individual or corporation. Often charitable contributions, other taxes, healthcare costs, capital losses, and many business expenses can be deducted.
Tax evasion is the use of illegal means to avoid paying taxes. Typically, tax evasion schemes involve an individual or corporation misrepresenting their income to the Internal Revenue Service.
