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GLOSSARY
Tax liability
The amount of money you owe for taxes.
Tax lien
When taxes are not paid, a tax lien is put against the property before it can be sold in order to secure that the taxes will be paid.
Tax preference items
Tax preference items are specific income and expense figures that are used in the calculation of Alternative Minimum Tax (AMT) in U.S. tax law. Some of the tax preference items are: addition of personal exemptions, addition of standard deduction, subtraction of any state and local tax refund included in gross income, and changes to passive activity loss deductions.
Tax return
Tax return is a generic term for the set of forms that are submitted to a taxing authority (such as the IRS) which document an individual's or entity's annual tax liability.
Tax sale
When the government sells a property in order to recover unpaid taxes. The property is sold to the highest bidder at a public auction after the owner and mortgage company have been given notice.
Tax schedules
Forms published by the IRS for persons with a taxable income of more than $100,000, used to calculate their income tax.
Tax shelter
An investment that makes it feasible to hide money from taxes. The IRS has out restrictions on tax shelters when it seems the sole purpose of the investment is to evade paying taxes.
Tax stamps
A levy mandated by the government on the transfer of ownership of real estate.
Tax tables
Tables published by the IRS for taxpayers with an income of 100,000 or less used to calculate their income tax.
Tax-exempt security
Tax-exempt security is a mutual fund or bond that produces income which isn't subject to federal income taxes. Tax-free municipal bonds are an example. These are fixed-income securities issued by state, county, city, or local governments. Mutual funds that invest strictly in tax-exempt securities would also be tax-exempt.
Tax-free money market mutual fund
Tax-free money market mutual fund is a diversified investment fund that invests only in short-term, tax-exempt securities. These funds are usually purchased through brokers and provide income that's free from federal tax liability.
Tax-sheltered annuity
Tax-sheltered annuity is a type of retirement planning instrument available to employees of tax-exempt organizations. Contributions are tax-deductible and earnings within the annuity aren't taxed until withdrawn.
Taxable estate
Taxable estate is the value of a decedent's estate that's used to calculate death taxes, also known as estate taxes. Generally, the taxable estate equals the total value of the assets, less liabilities and any tax-deductible assets.
Taxable income
Your gross income minus all of your adjustments, deductions, and exemptions.
Taxes
Taxes are fees assessed by a governing body. Taxes are typically assessed on transactions (sales tax), property (property and vehicle taxes), and income (income tax).