Income Tax — page 2 of 2

Income Tax terms

101. tax-exempt interest income Interest income that is not subject to income tax. Tax-exempt interest income is earned from bonds issued by states, cities, or counties and the District…
102. taxable interest income Interest income that is subject to income tax. All interest income is taxable unless specifically excluded.
103. taxes Required payments of money to governments that are used to provide public goods and services for the benefit of the community as a whole.
104. telephone tax refund Taxpayers are eligible to file for refunds of all excise tax they have paid on long-distance service billed to them after Feb. 28, 2003.
105. tip income Money and goods received for services performed by food servers, baggage handlers, hairdressers, and others.
106. transaction taxes Taxes on economic transactions, such as the sale of goods and services. These can be based on a set of percentages of the sales value (ad valorem-sales…
107. transmit To send a tax return to the IRS electronically. Tax returns prepared on paper can be sent through the mail.
108. Transmitter Sends the electronic return data directly to the IRS.
109. underground economy Money-making activities that people don't report to the government, including both illegal and legal activities.
110. user fees An excise tax, often in the form of a license or supplemental charge, levied to fund a public service.
111. user tax A tax that is paid directly by the consumer of a good, product, or service.
112. vertical equity The concept that people in different income groups should pay different rates of taxes or different percentages of their incomes as taxes.
113. voluntary compliance A system of compliance that relies on individual citizens to report their income freely and voluntarily, calculate their tax liability correctly, and file…
114. Volunteer Income Tax Assistance (VITA) (VITA) This provides free income tax return preparation for certain taxpayers. The VITA program assists taxpayers who have limited or moderate incomes, have…
115. wages Compensation received by employees for services performed. Usually, wages are computed by multiplying an hourly pay rate by the number of hours worked.
116. withholding ("pay-as-you-earn" taxation) Money, for example, that employers withhold from employees paychecks. This money is deposited for the government.