Tax Glossary

Tax Glossary

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There are currently 20 Definitions in this directory beginning with the letter T.
Temporary additional duty for military service members. (See TDY)

Temporary Assistance for Needy Families (previously known as AFDC), a state benefit also known as welfare.

Tax Credit
A dollar-for-dollar reduction in the tax. Can be deducted directly from taxes owed.

Tax Deduction
An amount (often a personal or business expense) that reduces income subject to tax.

Tax Forgiveness
For U.S. military personnel who die while serving in a combat zone or as a result of wounds, disease, or injury incurred while so serving, any unpaid tax liability is waived and any forgiven tax liability that has already been paid is refunded.

Tax Home
The country in which the taxpayer is permanently or indefinitely engaged to work as an employee or self-employed individual, regardless of where the taxpayer maintains his or her family home. For taxpayers who work abroad, but do not have a regular place of business because of the nature of the work, their tax home is the place where they regularly live.

Tax Liability (or total tax bill)
The amount of tax after nonrefundable credits have been subtracted. Taxpayers meet (pay) their federal income tax liability through withholding, estimated tax payments, and payments made with the income tax return.

Tax-exempt Interest
Interest that is exempt from federal income tax such as bonds issued by state and political subdivisions (county or city), District of Columbia, and U.S. possessions and political subdivisions.

Taxable Income
Any income subject to federal income tax.

Tax Counseling for the Elderly

Temporary duty for military service members. (See TAD.)

Temporary Work Location
A work location is considered temporary if the service member's employment is realistically expected to last (and in fact does last) for one year or less. Service members assigned to temporary work locations can deduct travel expenses.

Third-Party Designee
Person authorized by a taxpayer to discuss the taxpayer's return with the IRS, give the IRS information missing from the return, request copies of notices or transcripts related to the return, and respond to certain IRS notices. The taxpayer designates third party by checking the Yes box and entering the person's name, phone number, and personal identification number (PIN) in the "Third party designee" section of the return.

Taxpayer Identification Number, same as Individual Taxpayer Identification Number

Tip Income
Money and goods received for services performed by food servers, baggage handlers, hairdressers, and others. Tips go beyond the stated amount of the bill and are given voluntarily.

Traditional IRA
An individual retirement arrangement that is not a Roth IRA or a SIMPLE IRA.

Transportation Expenses
Expenses service members incur when traveling to locations within their city or general area that is their tax home or post of duty (versus travel expenses).

Travel Expenses
Expenses service members incur when traveling away from their tax home or post of duty (versus transportation expenses).

Thrift Savings Account, a retirement savings and investment plan that has been available to civilian employees of the federal government since 1987, and was made available to U.S. service personnel in 2002.

Tuition and fees
Qualified higher education expenses for which taxpayers can deduct up to $4,000 in qualified tuition and related expenses paid during the tax year. The amount of the deduction is determined by filing status, modified AGI (MAGI), and other factors. Form 8917, Tuition and Fees Deduction, will help compute the MAGI for this deduction.