Definitions of tax terms:S-T

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Definitions of tax terms: S-T

One of the hardest things about taxes is learning the language. You've got all the forms and instructions, but it seems they're harder to decipher than your VCR user manual! Here are some of the more common tax terms to help you become tax fluent in no time.
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Self-Employed Person	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. You can be an employee and self-employed at the same time if you have an independent business outside your regular employee hours. To qualify for many business tax exclusions and deductions, the enterprise must make a profit in three of five years.
Self-Employment Tax	Social Security and Medicare tax paid by self-employed taxpayers on the net income from their trade or business.
Separate Return	The tax return you file if you are married but choose not to file jointly with your spouse.
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Savings Incentive Match Plan for Employees (SIMPLE)	A retirement plan that allows employees of businesses with small 100 or fewer employees and self-employed persons to make 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.
Short Tax Year	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.
Short-Term Capital Gain or Loss	Your profit or loss from the sale of a capital asset that you held for one year or less.
Simplified Employee Pension Plan (SEP)	A retirement plan similar to an individual retirement arrangement for self-employed individuals and their employees. But where an individual establishes the IRA account, a SEP is set up by the employer.
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Single	You may file as a single taxpayer if you are unmarried, divorced or legally separated, either according to your state law or under a separate maintenance decree, and you don't qualify for another filing status. Your marital status the last day of the tax year determines your filing status, so in most cases if you are not married on Dec. 31, you will file as single in April.
Social Security	America's government-run retirement supplement plan. Payroll taxes from employers and employees go to pay for the program.
Standard Deduction	This is a fixed dollar amount that is generally based on a person's filing status. It is a benefit that eliminates the need for many taxpayers to itemize actual deductions, such as medical expenses, charitable contributions or taxes.
Standard Mileage Rate	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.
State Tax ID or registration number	Issued by a state when new businesses register, usually a requirement to do business in a state.
Support Test	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.
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Tangible Personal Property	Assets other than real estate that physically exist. Business equipment and vehicles are tangible personal property. Assets such as stock certificates and franchises only represent value and are therefore intangible property.
Tax Certificate ID	State sales tax ID number issued when tax certificate issued.
Tax Deferral	The postponement of taxes to a later year, usually by recognizing income or a gain at a later time. Remember, this only delays your tax liability; it doesn't eliminate it. Qualified retirement plans are a common method of tax deferral.
Tax Home	Your principal place of work or post of duty. Your tax home is used for tax purposes, including determining if travel expenses are allowable as incurred away from home and determining if you qualify for the foreign earned income exclusion.
Tax Liability	The total amount of tax you owe.
Tax Preference Items	Items, such as accelerated depreciation, percentage depletion or certain tax-exempt income, that are considered to have favorable tax treatment. Using these items could cause you to face the alternative minimum tax.
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Tax Shelter	An investment that is planned to result in tax-favored treatment. The IRS has placed restrictions on tax shelters where the principal purpose of the activity appears to be the avoidance or evasion of taxes or where the activity might result in more deductible expenses than the investors have at risk.
Tax-sheltered Annuity	A retirement plan for employees of tax-exempt organizations and public schools, also known as a Section 403(b) plan. The plan is funded by pretax salary reductions and it earns tax-deferred income until withdrawal. Also see Annuity.
Tax Schedules	Forms published by the IRS for taxpayers with taxable income of more than $100,000 to use to compute their income tax. Tax rates each year are organized into what the IRS calls the Tax Rate Schedules.
Tax Tables	Tables published by the IRS for taxpayers with taxable income of $100,000 or less to use to compute their income tax. Taxpayers with taxable income of more than $100,000 must use the tax rate schedules.
Taxable Income	Taxable income is your gross income reduced by all your adjustments, deductions and exemptions. The amount of income before taxes used to calculate your income tax.
Taxpayer Bill of Rights	When Congress passed the IRS Restructuring and Reform Act in 1998, it instructed the IRS to change its mission statement and to tell taxpayers what they can expect when dealing with the agency. Among the orders: shift the burden of proof in tax cases from the taxpayer to the IRS and extend the attorney-client confidentiality privilege to communications between a taxpayer and any individual authorized to practice before the IRS, such as CPAs, enrolled agents and enrolled actuaries. These and other taxpayer rights can be found in IRS Publication 1, which is also referred to as the Taxpayer Bill of Rights.
Taxpayer Identification Number	Your Social Security number (SSN) for yourself as an individual, or your employer identification number (EIN) for your business. See adoption taxpayer identification number (ATIN) and individual taxpayer identification number (ITIN) for aliens.
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--Posted Oct. 29, 1999