1
1031 Exchange
A 1031 Exchange is a tax-deferment strategy that allows real estate investors to sell a property and reinvest the proceeds into a similar property without paying immediate capital gains taxes. This process helps investors grow their portfolios while deferring tax liabilities.
A
Adjusted Gross Income (AGI)
Adjusted Gross Income (AGI) is your total income after certain deductions are applied. It is an important figure used to determine your taxable income and eligibility for various tax credits and deductions.
C
Capital Gains Tax
A tax on the profit made from selling certain assets is known as Capital Gains Tax. It applies when you sell things like stocks or real estate for more than you paid for them.
C
Carried Interest
Carried interest is a share of the profits that investment managers receive as compensation, typically in private equity and hedge funds. It is designed to reward managers for their performance and is often taxed at a lower rate than regular income.
C
Corporate Tax
A tax imposed on the income or profit of corporations is known as corporate tax. It is calculated based on the corporation's earnings and is a key source of revenue for governments.
D
Depreciation (tax)
Depreciation in tax refers to the gradual reduction in value of an asset over time, which businesses can deduct from their taxable income. This deduction helps reduce the amount of tax a business owes, reflecting the wear and tear or obsolescence of the asset.
D
Dividend Tax
A tax imposed on the income earned from dividends received by shareholders from their investments in companies. This tax is typically withheld by the company paying the dividend before the payment is made to the shareholder.
D
Double Taxation
Double taxation refers to the situation where the same income is taxed more than once by different authorities. This typically occurs when a taxpayer earns income in one jurisdiction but is subject to taxes in both their home country and the country where the income is generated.
E
Estate Tax
An estate tax is a tax on the total value of a person's money and property when they pass away. It is typically paid by the estate before the assets are distributed to heirs.
E
Estimated Taxes
Estimated taxes are payments made to the government on income that is not subject to withholding, such as self-employment income. These payments are typically made quarterly to avoid a large tax bill at the end of the year.
E
Extension (tax)
An extension in tax refers to the additional time granted by the tax authorities for taxpayers to file their tax returns or pay their taxes. It does not mean that the taxpayer is exempt from paying taxes; it simply allows for a delay in the submission or payment deadline.
F
Filing Deadline
A filing deadline is the last date by which a person or business must submit required documents, such as tax returns, to the relevant authorities. Missing this deadline can lead to penalties or other consequences.
F
Flat Tax
A flat tax is a tax system where everyone pays the same percentage of their income, regardless of how much they earn. This means that whether you make a little or a lot, you pay the same rate on your earnings.
G
Gift Tax
A tax imposed on the transfer of money or property from one person to another without receiving something of equal value in return is known as Gift Tax. It is designed to prevent individuals from avoiding taxes by giving away their wealth.
I
Income Tax
A tax on the income earned by individuals and businesses is known as income tax. It is typically calculated based on the amount of money earned during a specific period, usually a year.
I
Itemized Deductions
Itemized deductions are specific expenses that taxpayers can deduct from their taxable income to reduce their overall tax liability. These deductions can include things like mortgage interest, property taxes, and medical expenses, among others.
L
Loss Harvesting
Loss harvesting is a tax strategy where investors sell assets that have lost value to offset capital gains taxes on profitable investments. This helps reduce the overall tax burden and can improve investment returns over time.
M
Medicare Tax
This tax is a payroll tax that funds Medicare, a federal health insurance program for people aged 65 and older, as well as certain younger people with disabilities. Employees and employers both contribute a percentage of wages to this tax.
M
Modified AGI
Modified Adjusted Gross Income (Modified AGI) is a calculation used by the IRS to determine eligibility for certain tax benefits and credits. It adjusts your total income by adding certain deductions back into the equation, providing a clearer picture of your financial situation for tax purposes.
O
Offshore Account
An offshore account is a bank account located outside of a person's country of residence. It is often used for asset protection, tax benefits, and privacy.
P
Payroll Tax
A payroll tax is a tax that employers are required to withhold from their employees' earnings. It is used to fund social insurance programs, such as Social Security and Medicare.
P
Progressive Tax
A progressive tax is a tax system where the tax rate increases as the taxable amount increases. This means that people who earn more money pay a higher percentage of their income in taxes compared to those who earn less.
P
Property Tax
A property tax is a tax paid by property owners based on the value of their property. It is usually calculated as a percentage of the property's assessed value and is used to fund local services.