Glossary of Tax Terms
# A B C D E F G H I J K L M N O P Q R S T U V W X Y Z
S Corporation
Sales Tax
Salvage Value
Scholarship
Section 1231 Property
Section 1245
Section 1250
Section 179 Expense Deduction
Section 457 Plan
Self-Employed Person
Self-Employment Tax
Separate Return
Series EE Bonds
Severance Pay
Short Sale
Short Tax Year
Short-Term Capital Gain or Loss
SIMPLE (Savings Incentive Match Plan for Employees)
Simplified Employee Pension Plan (SEP)
Single
Social Security Benefits
Social Security Number (SSN)
Special Needs Child
Specific Identification Inventory Valuation Method
Specific Use
Standard Deduction
Standard Mileage Rate
State Income Tax
Statutory Employee
Stock
Stock Dividend
Stock Option
Straddle
Straight-Line Depreciation Method
Support Test
A corporation that meets certain requirements and elects not to be taxed as a corporation. An S corporation does not pay federal income tax directly, but instead passes its income or losses and other tax items on to its shareholders, much like a partnership. It provides the legal liability protection of a corporation to its shareholders while avoiding corporate double taxation.
A tax based on the sales price of retail goods and services. You pay the tax at the time of the sale, and the seller turns it over to the state or other taxing authority.
The estimated amount an asset could be sold for at the end of its useful life.
An amount granted by an organization to a student for tuition and other educational expenses. You can exclude scholarships from your taxable income to the extent that they are for tuition and related expenses; however, you must include any amount for room and board in your income.
Depreciable property used in a trade or business, such as equipment, vehicles, and rental real estate. In general, if Section 1231 assets are held for the required period of time, capital gain treatment is available while a loss is a deductible ordinary loss.
The section of the IRS code that deals with depreciable personal property, such as business equipment and vehicles. Any gain on the sale in excess of depreciation may qualify for favorable capital gains tax treatment.
A deduction allowed for up to the entire cost of certain depreciable business assets, other than real estate, in the year purchased, which you may be able to use as an alternative to depreciating the asset over its useful life. The annual limit in 2002 is $24,000. From 2003 on, the annual limit will be $25,000. You cannot use the Section 179 deduction to the extent that it would cause you to report a loss from your business.
A deferred compensation plan set up by state and local governments and tax-exempt organizations that allows tax deferral of salary up to the lesser of $7,500 or one-third of salary.
A person who runs a trade or business, rather than working as an employee for someone else. You are self-employed if you are a sole proprietor or a partner working in a business.
Social security and Medicare tax paid by self-employed taxpayers on the net income from their trade or business.
The tax return you file if you are married but choose not to file jointly with your spouse.
U.S. Savings Bonds issued after 1979. The interest from these bonds is subject to federal income tax, but not state or local income tax. You can elect to pay the income taxes on accrued interest each year, at the time of maturity, or you can elect to postpone the payment of tax by reinvesting the accrued interest into Series HH bonds.
The sum of money your employer may pay you when your employment ends. You must pay taxes on severance pay, which your employer should include on your Form W-2.
The sale of securities you do not actually own yet. By selling the stock before you buy it, you may potentially profit from falling prices.
A tax period less than 12 months long, resulting from a business start-up or the transition to a tax year ending on a different date.
SIMPLE (Savings Incentive Match Plan for Employees)
A retirement plan that allows employees of small (100 or fewer employees) businesses and self-employed individuals to make salary-reduction contributions to an IRA. SIMPLE plan contributions cannot exceed $6,000 per year, and the contributions must be a percentage of the participant's earnings that is specified by the participant.
Your filing status if you are unmarried and do not qualify to file as Head of Household or Qualifying Widow(er) with Dependent Child.
The monthly benefits paid by the Social Security Administration to recipients. If you receive social security benefits, some or all of your benefits may be taxable depending on your income level.
The taxpayer identification number for most Americans. You must provide a taxpayer identification number for yourself and for each person for whom you claim an exemption or certain other tax benefits.
A child who has been determined to be a special needs child by a state because he or she probably will not be adopted unless assistance is provided. Factors that the state considers include the child's age; ethnic background; whether the child is a member of a minority or sibling group; medical condition; and mental, physical, or emotional handicaps.
Specific Identification Inventory Valuation Method
A method of tracking inventory when each item can be identified. Specific identification is usually used for large, easily traceable items, such as vehicles or furniture. If tracking individual inventory items is not practical, you can value your inventory using another method, such as the last-in, first-out method (LIFO) or the first-in, first-out method (FIFO.)
A specific use for a power of attorney that is not recorded on the Centralized Authorization File (CAF). The IRS does not record a power of attorney that is related to a specific issue, such as civil penalty issues, trust fund recovery penalties, requests for a private letter ruling, application for an EIN, corporation dissolutions, requests to change accounting methods, or requests to change accounting periods.
Because the IRS does not file a power of attorney for specific use, the person to whom you have given power of attorney must bring a copy of the power of attorney to each meeting with the IRS.
A deduction the IRS allows from your adjusted gross income (AGI) if you do not itemize. The amount of your standard deduction is determined by your filing status, your age, whether you are blind, and whether you can be claimed as a dependent on someone else's return.
An amount per mile, determined by the IRS, that you can use to calculate your vehicle expense instead of keeping track of actual costs, such as gas and maintenance. You can deduct parking, tolls, interest, and taxes in addition to the standard mileage rate. The rate for 2002 is 36.5 cents per business mile.
Depending on your state, you may pay a state tax based on your income. You can deduct on your federal tax return state tax paid in the year you pay it or have it withheld from your pay. If you later receive a refund of state income tax you had previously deducted, you must include the refund in your federal income.
An employee, such as an agent or a traveling salesperson, who is allowed to report income and expenses as a business. If you are a statutory employee, you receive a greater tax benefit by reporting your deductions as business expenses rather than as miscellaneous itemized deductions, subject to the 2 percent limitation.
A stock market strategy of investing in opposite positions to protect yourself from a loss.
One of the five tests to see if you can claim someone as your dependent. To meet this test, you must have paid more than half of the person's living expenses for the year. Living expenses include food, lodging, medical bills, vacations, clothes, books, and other items.
