GlossaryGuide

Dependent A qualifying child or qualifying relative, other than the taxpayer or spouse, who entitles the taxpayer to claim a dependency exemption.

Dependency Exemption Amount that taxpayers can claim for a “qualifying child” or “qualifying relative”. Each exemption reduces the income subject to tax. The exemption amount is a set amount that changes from year to year. One exemption is allowed for each qualifying child or qualifying relative claimed as a dependent.

Deficit The result of the government taking in less money than it spends.

Compulsory Payroll Tax An automatic tax collected from employers and employees to finance specific programs.

Commission Compensation received by an employee for services performed. Commissions are paid based on a percentage of sales made or a fixed amount per sale.

Citizen or Resident Test Assuming all other dependency tests are met, the citizen or resident test allows taxpayers to claim a dependency exemption for persons who are U.S. citizens for some part of the year or who live in the United States, Canada, or Mexico for some part of the year.

Business A continuous and regular activity that has income or profit as its primary purpose.

Bonus Compensation received by an employee for services performed. A bonus is given in addition to an employee’s usual compensation.

Benefits Received A concept of tax fairness that states that people should pay taxes in proportion to the benefits they receive from government goods and services.

Authorized IRS e-file Provider A business authorized by the IRS to participate in the IRS e-file Program. The business may be a sole proprietorship, a partnership, a corporation, or an organization. Authorized IRS e-file Providers include Electronic Return Originators (EROs), Transmitters, Intermediate Service Providers, and Software Developers. These categories are not mutually exclusive. For example,… Continue reading Authorized IRS e-file Provider