Tag: tax

Electronic Filing (e-file) The transmission of tax information directly to the IRS using telephones or computers. Electronic filing options include (1) Online self-prepared using a personal computer and tax preparation software, or (2) using a tax professional. Electronic filing may take place at the taxpayer’s home, a volunteer site, the library, a financial institution, the… Continue reading Electronic Filing (e-file)

Earned Income Credit A tax credit for certain people who work, meet certain requirements, and have earned income under a specified limit.

Earned Income Includes wages, salaries, tips, includible in gross income, and net earnings from self-employment earnings.

Direct Deposit This allows tax refunds to be deposited directly to the taxpayer’s bank account. Direct Deposit is a fast, simple, safe, secure way to get a tax refund. The taxpayer must have an established checking or savings account to qualify for Direct Deposit. A bank or financial institution will supply the required account and… Continue reading Direct Deposit

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.