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Don't Mess With Taxes

Translating taxes into money-saving English

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Tax Glossary U through Z

NOTE: The Tax Glossary, which debuted in this form on Dictionary Day 2015, has five sections. If a term you think should be here isn't, or you can add to or clarify a definition that is here, let me know via Twitter or Facebook.

One of the hardest things about filing your taxes is trying to decipher the forms. You practically have to learn a new, tax-specific language.

Dictionary_3_1 Unfortunately, IRS-speak is a native tongue for very few folks.

And it's not easy to decipher. In fact, reading tax documents makes that dang VCR manual (yes, a few of us still use those antiquated devices!) seem almost coherent!

To help out, Don't Mess With Taxes has gathered some common tax terms and phrases and their plain English meanings in this Tax Glossary (and the Tax Glossary's precursor, a mini tax dictionary, if you will, that was a blog post back in 2007). Yes, I've been working on this for a while! 

As you can imagine, the IRS dictionary gives Merriam-Webster a run for its money, so I've broken the Don't Mess With Taxes glossary into several sections for ease of page loading. Tax terms starting with U through Z are below.

You can check out the other sections by clicking the links below:

  • A through E
  • F through J
  • K through O
  • P through T

And since tax laws are continually changing (thank you, Congress ... Not!), this is an ongoing list. I'll do my best to keep it updated, but if you find a tax word that's got you stumped, e-mail it to me and I'll to make sure it and its definition is added. The same goes for any tax term I've overlooked.

 

Alphabet_U Underground economy -- Money-making activities that people don't report to the government, including both illegal and legal activities.

Underpayment penalty -- The penalty for not paying all due tax by April 15. The penalty also appllies to the amount of estimated tax due, but unpaid by each of four payment dates during the year.

Unearned income -- Money that is not gained by work or delivery of a service or product. It's most well-known source is from investments: interest, dividends or capital gains produced by savings accounts, stocks and bonds, certificates of deposit or mutual funds. But it also includes unemployment compensation, alimony, taxable Social Security benefits, pensions, annuities, royalties, and distributions of unearned income from a trust. Some unearned income receipts, e.g., investment earnings, are taxed at a lower rate (usually 15 percent) than the rates applied to ordinary earned income.

Use tax -- This is a companion to a state's sales tax (details in P through T section). It generally is the same rate as the sales tax imposed on retail transactions. But rather than being charged on items or services bought within the state, it is assess on consumers of tangible personal property that is purchased outside the state, then brought into and used, consumed, or stored in the purchaser's state.

User fees -- An excise tax, often in the form of a license or supplemental charge, levied to fund a public service.

 

Alphabet_V

Value Added Tax (VAT) -- A consumption tax, assessed at the national level and similar to state and local sales taxes. But rather than being collected at the point of sale, a VAT is assessed and collected at every point in the production and distribution process on the "value added" at each step. VAT is common in most of the world, but is not imposed in the United States. However, Puerto Rico will become the first U.S. territory to collect a VAT beginning April 1, 2016.

Voluntary compliance --A system of compliance that relies on individual citizens to report their income freely and voluntarily, calculate their tax liability correctly, and file a tax return on time.

Volunteer Income Tax Assistance (VITA) -- This provides free income tax return preparation for certain taxpayers. The VITA program assists taxpayers who have limited or moderate incomes, have limited English skills, or are elderly or disabled. Many VITA sites offer electronic preparation and transmission of income tax returns. Usually referenced jointly with Tax Counseling for the Elderly, or TCE (details in P through T section).

 

Alphabet_WW-2 -- This IRS form is issued by employers to employees by the end of January. It shows the amount of taxes withheld from a worker's paycheck for the prior tax year. The information is used to file your federal and state taxes and must be attached to the returns.

W-4 -- This IRS form is officially known as Employee's Withholding Allowance Certificate. It is completed by the employee and used by the employer to determine the amount of income tax to withhold. You can file a new W-4 with your employer at any time to adjust your withholding so that you do not get back a large refund or owe too much in tax at filing time.

Wages -- Compensation you receive from work. Also referred to as salary. Withholding (see below) is taken from wages and salary to cover federal and state income taxes.

Wash sale -- Term applied when you sell stocks, bonds or mutual fund shares for a loss and within 30 days before or after that sale, you buy the same or substantially identical securities. In this case, you lose the loss deduction for that tax year.

Web pay -- Any online tax payment option. Most Web payment systems allow you to schedule payments in advance.

Withholding -- Money that is taken out of earnings before the payment is made to the employee. The most common form is employer withholding from employees' paychecks. This money is deposited with the U.S. Treasury and is credited against the employees' tax liability when they file their returns. Employers withhold money for federal income taxes, Social Security taxes and state and local income taxes in some states and localities.

Worthless security -- If a stock you own becomes completely worthless during the year, you can claim a capital loss as though you sold the stock for $0 on Dec. 31 of the year the asset became valueless.

 

Alphabet_X X -- Letter suffix appended to the 1040 form used to file an amended return (details in A through E section). Form 1040X is used to show what you reported on the return you are changing, what changes you are making and why you are making them. The 1040X cannot yet be e-filed. 

X-Mark signature -- An X-mark made by a person in lieu of a signature. Due to illiteracy or disability, a person may be unable to complete a full signature on a document indicating that he/she has reviewed and approved its contents. In order to be legally valid, the X-mark signature must be witnessed.

 

Alphabet_Y Year -- Time period of 12 consecutive months. The start date can vary. For individual tax purposes and the annual filing of a federal return, the tax year typically is the calendar year that begins on Jan. 1 and ends on Dec. 31. For most individual tax purposes, tax-related actions must be within the tax year. Many corporations and governments use a fiscal year, a 12 consecutive month period that starts and ends on dates other than the calendar year.

Year-end bonus -- A reward paid to an employee at the end of the year. Sometimes called a Christmas bonus. Year-end bonuses are usually made up of lump-sum payments used to reward the individual for hard work and dedication. These payments taxable and if you do not plan for their receipt, you could find yourself dealing with issues from being bumped into a higher tax bracket.

 

Alphabet_Z Z -- Alphabetic code used in box 12 of Form W-2 (see above) to indicate "Income under a nonqualified deferred compensation plan that fails to satisfy section 409A." The amount reported in box 12 using code Z is also reported in box 1 of the W-2 and is subject to an additional tax reported on the employee's Form 1040.

Zero -- The capital gains (details in A through E section) tax rate applies to individuals whose taxable income falls into the 10 percent or 15 percent income tax brackets.

Zero return -- A frivolous tax argument used by tax protesters to evade their true tax liability. This tax filing reports no income and no tax liability, hence the zero return name. Many of these taxpayers also request a refund of any taxes withheld by an employer. They typically attach to the zero return a "corrected" Form W-2, or another information return that reports income and income tax withholding, and rely on one or more of the frivolous arguments discussed throughout this outline to support their position. This was one of the tax protest tactics popularized by the late anti-tax leader Irwin Schiff.

Zilch -- A worst-case tax scenario in which this is the amount of money left in your bank account after you finish filing your taxes. Just wanted to see if you were still reading! Synonyms: zero, zip, nada, nothing. See also AARRGGHH!!! in A through E section.

Zombie tax -- A slang term for a tax on anything which we all know is clearly bad for the environment or our health. See sin tax (details in P through T section).

 

Want to go through the Tax Glossary again?
Start over with Tax Glossary A through E.

As with any language, terms are added and eliminated over the years, or the course of a Congressional session. Check back regularly for new tax terms.

Today's Tax Tip

  • Key 2023 federal tax deadlines — We made it through the first week of tax season 2023, but another deadline is looming. Jan. 31 is the filing, and tax payment, deadline for taxpayers who opted not to make their final 2022 estimated tax payment on Jan. 17. This tax calendar has that and other key individual tax due dates for the rest of this year. (Jan. 30, 2023)

  • Tax Tip; click pencil for all tax tip links

  • The 2023 Tax Tips offer ways to file your annual return, along with post-filing advice, important tax news and, of course, ways to cut your current tax year bill. You'll find the monthly assemblages on their own respective pages: January, February, March, April, May, June, July, August, September, October, November and December. Remember, tax tasks and tips don't stop after you file your annual return!

All About Kay

  • OK, some about Kay
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    Kay Bell — Native Texan
    (the blog title totally makes sense now, right?). Professional journalist. Tax geek.

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Tick ... Tick ... Tick

  • Tax Year 2023 Countdown!

    Happy New Tax Year! Are you ready to file your 2022 tax return? Me neither. But at least this year we're getting some extra time to file and pay any tax we owe. Even better, it's not COVID-19 pandemic related. Tax Day 2023 is Tuesday, April 18. This later date is because April 15, 2023, is on Saturday, and the next business day, Monday, April 17, is Emancipation Day.
    When this Washington, D.C., holiday falls on the day our federal taxes are due, it bumps Tax Day nationwide to the next business day. So this year, we have until Tuesday, April 18, to finish our federal forms and, if we find we owe, come up with the money for Uncle Sam. The states that follow the federal tax calendar, which is most of them, also tend to abide by this date change.

    The countdown clock below should help us from missing out on making important tax-saving moves the rest of this year. Plus, the Tax Moves below the counter will list some timely tasks to take care this first month of 2023, and each of the remaining 11 when they arrive. They'll speed by quickly when you're having tax fun!
    Note: I'm in the Central Time Zone, so adjust accordingly for where you live.


Time for Tax Tasks


  • monthly tax moves


  • 🎆 Happy 🎉 New 🥂 Year! 🎆

    via GIPHY

    Hello 2023! I cannot tell you how happy I am to see you! I know, I said that about 2021 and 2022, but I really, really mean it. And I'm hoping you reciprocate, you brand spanking new year, on the personal front by letting go of COVID-19, and, on the tax side, by making this the year that taxes also get back to normal. Don't laugh. A gal can hope!

    Jan. 1: Once more for the official date — Happy New Year! One way to make things more enjoyable on the tax front is to get organized this month. Early this month. It will help you keep track of the myriad tax documents — W-2 earnings statements, 1099 forms, charitable donation receipts, year-end account statements — that will soon be on their way to your email or snail mail box. You'll need those (and more) to file your 2022 tax return as soon as the Internal Revenue Service starts accepting them.

    Jan. 3: It's the first official work day of 2023. It's also a deadline for employers, including those who are self-employed, who took advantage of the COVID relief option in 2021 to defer the employer's portion of the Social Security payroll tax; that's 6.2 percent of each worker's wages. If you didn't remit thr taxes before the end of December, today is the absolute final due date for paying the balance of those postponed tax collections.

    Jan. 6: It's Friday, the end of the first holiday-shortened work week of 2023. Even though most of us are thinking about filing our 2022 returns when the IRS opens filing season later this month, we also need to start our 2023 tax planning. Start with the inflation adjustments that apply to a variety of tax situations. You can find this year's figures in the ol' blog's 10-part tax inflation series.

    Jan. 9: Tonight, TCU's Horned Frogs and Georgia's Bulldogs face off at SoFi Stadium in Los Angeles to decide the men's college football championship. Thousands of fans are rooting for their teams. Even more people with no personal connections are betting on the game, thanks to the Supreme Court's 2018 ruling to allow states to accept sports wagers. If you're one of those bettors and your pick pays off, remember that you'll owe taxes on your winnings. The good news is that you won't have to share your luck with Uncle Sam until you file your 2023 return next year. The better news is that there are ways to reduce your taxable winnings.

    Jan. 10: Do you work as a server at a restaurant or at any other establishment where gratuities from customers are part of your compensation? I hope you got lots of financial thanks for doing your job well, but remember that those tips are taxable income.

    restaurant check tip iStock
    Whether you're dining in or, still COVID leery and getting food delivered to your home, if a tip isn't included on your restaurant or delivery bill, click the image above to calculate how much to tip the person who brought it to you.

    If you got at least $20 in gratuities in November, you must account for the tips today by using Form 4070 to report last month's tips total to your employer.

    Jan. 13: It's the first Friday the 13th of 2023. That might not worry you, but even non-superstitious folks are frightened a bit by taxes. However, on this or any other day, don't fear, or fall for, these 13 scary, but wrong, tax myths.

    Jan. 16: Every Martin Luther King Jr. Day, millions of people commit to a day of service.

     MLK Day logo
    Click image to find out ways
    you can volunteer on MLK Day.

    Taking time on the Rev. Dr. King's holiday to volunteer at a charity isn't tax deductible, but some costs associated with volunteering could help reduce your tax bill if you itemize.

    Jan. 17: Today is the due date for the final estimated tax tax payment for the 2022 tax year. It's usually on the 15th, but that fell on Sunday. Then Monday was the federal MLK Day holiday. So the final estimated tax payment deadline was shifted to the next business day, Tuesday, Jan. 17.

    Jan. 17: This date isn't firm yet, but the IRS and its Free File Alliance partners usually offer their no-cost online tax preparation and electronic filing program Free File around the middle of January. When the special Free File website at IRS.gov is available, take advantage of it if you qualify.

    IRS Free File; click image for details

    Free File last year was open to taxpayers whose adjusted gross income was $73,000 or less, but that earnings limit should be bumped up a bit for the 2023 filing season. Whatever the amount, the income level applies to all filing statuses.

    Jan. 23: If you make too much to use Free File, and don't want to use its Free Forms option, you always can purchase your own tax prep software or high a tax pro to handle your taxes. If you looking to hire someone, get to it now. At this point, if you can find a tax preparer taking new clients, you'll be at the end of the filings list. But at least you'll be on the list.

    Jan. 27: It was this week last year that the IRS started accepting and, more importantly, processing tax year returns. If you plan to be among the earliest of filers, you need to make sure you have all the necessary information and documentation. Check out this list of the statements, documents, and forms you'll need before you start work on your return.

    Jan. 31: Wow! The first month of 2023 is over? Time really does fly when you're having tax fun. We'll keep it going here in this new year with new Tax Moves to Make each month, which you also can find on their monthly tax tips pages. January already is filling up!

    Small Business Tax Calendar: Important filing, deposit and record keeping dates throughout the year that your company needs to know. You can get more tax calendar information at the IRS' online calendar page and view the full year's important business and individual tax dates in IRS Pub. 509.

State Tax Help

  • Don't forget your state taxes!
    Forty-three states and D.C. collect personal income taxes. But even if you live in of the seven states without an income levy, you still face other state (and local) taxes.

    State Tax Departments provides links to your state's Web page. The companion page, Tax Tidbits, is the compilation of blurbs about each state's tax laws. And for more state tax news, check out all our state tax bloggings.

Tax Forms

  • Tax Forms
    Thanks to our increased use of tax preparers and computer software, many of us don't see our tax forms until we sign and file them. But knowing what's on these documents, either in paper or digital form, and why the IRS wants it is key to understanding our tax system. And knowledge definitely is power, especially when it comes to tax savings. Find this valuable information in the ol' blog's special Tax Forms 2023 page.

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I gotta tell ya ...

  • AKA Disclaimer:
    I am a professional journalist who has been covering tax issues since 1999.
    I am not a professional tax preparer.
    The content on Don't Mess With Taxes is my personal opinion based on my study and understanding of tax laws, policies and regulations. It is provided for your private, noncommercial, educational and informational purposes only. It is not a recommendation of any specific tax action(s) you should or should not take. Similarly, mentions of products or services are not endorsements. In other words, my ramblings on the ol' blog are free advice and you know what they say about getting what you pay for. That's why when it comes to filing your taxes, I urge you to get additional, professional, paid-for guidance from an accountant, Enrolled Agent or other qualified tax preparer who is familiar with your individual tax circumstances.

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COVID-19 & Taxes

  • COVID-19
    Coronavirus has wreaked havoc
    on the 2020 and 2021 tax seasons.
    These three Coronavirus (COVID-19) and Taxes pages have details:
    March-July 2020,
    August-December 2020,
    January-December 2021, and
    January-December 2022
    You can find medical coronavirus resource links in the next section.

COVID-19 Resources

  • COVID-19
    Need help finding a coronavirus vaccine in the United States?
    Call 1-800-232-0233
    or TTY 1-888-720-7489.
    More information and resources at:
    CDC Vaccines
    CDC Booster Shots
    HHS Combat COVID
    USA.Gov COVID Info

January 2023

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Tell it to the Hill

  • DMWT Politics Posts
  • While it's easy to rail at the IRS, for the most part we can thank — or blame — our tax laws on Congress and the White House. So if you have an issue with tax legislation or want a tax bill passed, you need to let your federal legislators and the White House occupant know of your concerns. You can find out who in Washington, D.C., to contact (and how), as well as get information on your local lawmakers for matters, tax or otherwise, closer to home, at USA Gov.

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