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Dependency exemption
Amount that taxpayers can claim for their eligible dependents. Each exemption reduces the income subject to tax. The exemption amount is a set amount that changes from year to year.
Acquisition
The purchase of one corporation by another, through either the purchase of its shares, or the purchase of its assets.
Federal Insurance Contributions Act (FICA) Tax
Provides benefits for retired workers and their dependents as well as for disabled workers and their dependents. Also known as the Social Security tax.
Subchapter S
The S-Corporation must complete and file IRS Form 1120s to report its annual income to the IRS each year.
Form W-4, Employee's Withholding Allowance Certificate
Completed by the employee and used by the employer to determine the amount of income tax to withhold.
Earned Income Credit
A tax credit for certain people who work, meet certain requirements, and have earned income under a specified limit.
Dependent
A person, other than the taxpayer or spouse, who entitles the taxpayer to claim a dependency exemption.
Installment Agreements
To be eligible for an installment agreement, all returns that are due must first be filed. Installment agreements generally require equal monthly payments. The amount of an installment payment will be based on the amount owed and on the taxpayer’s ability to pay that amount within the time legally available for the IRS to collect.
Estate and Gift Tax
One of the oldest and most common forms of taxation is the taxation of property held by an individual at the time of their death. Such a tax can take the form, among others, of estate tax (a tax levied on the estate before any transfers). An estate tax is a charge upon the decedent's entire estate, regardless of how it is disbursed.
Federal income tax
The federal government levies a tax on personal income. The federal income tax provides for national programs such as defense, foreign affairs, law enforcement, and interest on the national debt.
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