Tax Glossary
Tax Glossary
There are currently 31 Definitions in this directory beginning with the letter P.
Paid Preparers
Paid preparers are legally liable under federal law for the returns they prepare; volunteers are not.
Passive Activity
When a taxpayer receives income mainly from the use of property rather than for services. Passive activity means the taxpayer is not involved in making significant rental or business management decisions (versus active participation). Because rental activities are generally considered passive activities, rental losses may not fully deductible.
Passive Income
Taxable income that comes from passive activity, such as dividends, interest, royalties, rents, and annuities.
Payroll Tax
In 2011, social security tax is withheld from an employee's wages at the rate of 4.2% (down from 6.2%) up to the social security wage limit of $106,800.
Pension
A series of definitely determinable payments made to an employee or survivor (the beneficiary of a deceased employee's pension) after the employee retires from work.
Period of Stay
Amount of time a taxpayer stays in a foreign country, which is one of the factors used to determine whether the taxpayer is eligible for the foreign earned income exclusion. To meet the period of stay requirement, the taxpayer must meet either the Bona Fide Residency test or the Physical Presence test.
Personal Exemption
An exemption that allows taxpayers to claim themselves as exemptions on their tax return. Also included in this category is the taxpayer's spouse, when filing a joint return.
Physical Presence Test
To meet the physical presence test for the foreign earned income exclusion, a taxpayer must be physically present in a foreign country 330 full days during a period of twelve consecutive months.
Property Taxes
Taxes on property, especially real estate. It can also be levied on boats, automobiles (often paid along with license fees), recreational vehicles, and business inventories.