What Is Tax Arbitrage? Tax arbitrage is the practice of profiting from differences that arise from the ways various types of income, capital gains, and transactions are taxed. The complexity of many countries tax codes allows for individuals to seek out legal loopholes or restructure their transactions in such a way that they are able
What Is Taxation? Taxation is a term for when a taxing authority, usually a government, levies or imposes a financial obligation on its citizens or residents. Paying taxes to governments or officials has been a mainstay of civilization since ancient times. The term “taxation” applies to all types of involuntary levies, from income to capital gains to
What Is a Tax Attribute? Tax attribute refers to certain losses, tax credits, and the adjusted basis of property that must be reduced because of the exclusion of debt cancellation from a taxpayer’s gross income. Tax attributes are adjusted when a taxpayer is insolvent or declares bankruptcy. Key Takeaways Tax attributes are specific economic benefits
What Is a Tax Benefit? The term tax benefit refers to any tax law that helps you reduce your tax liability. Benefits range from deductions and tax credits to exclusions and exemptions. They cover various areas, including programs for families, education, employees, and natural disasters. Some tax benefits are related to the ability to pay
2023 Marginal Tax Rates by Income and Tax Filing Status Tax Rate Income Tax Bracket for Single Filers Income Tax Bracket for Married Couples Filing Jointly Income Tax Bracket for Married Couples Filing Separately Income Tax Bracket for Head of Household Filers 10% $11,000 or less $22,000 or less $11,000 or less $15,700 or less
What Is a Tax Break? The term tax break refers to a benefit the government offers that reduces your total tax liability. Tax breaks are made possible by tax laws and typically come in the form of credits and deductions. Other tax breaks include exemptions and excluding certain types of income from your state or
What Is a Tax Cheat? The term “tax cheat” refers to an individual or group who fails to pay the tax required of them by law. Depending on the usage, the term may also refer to individuals who use aggressive tax avoidance strategies despite technically following the letter of the law. Key Takeaways “Tax cheat”
What Is a Tax Code? In the United States, federal and state governments impose a variety of taxes under their respective tax laws, often referred to as tax codes. An income tax code is a law that prescribes the rules that individuals, businesses, and other entities must follow in remitting a portion of their incomes
What Is a Tax Credit? The term “tax credit” refers to an amount of money that taxpayers can subtract directly from the taxes they owe. This is different from tax deductions, which lower the amount of an individual’s taxable income. The value of a tax credit depends on the nature of the credit. Certain types of tax credits are granted to
What Is Tax-Deductible Interest? Tax-deductible interest is a borrowing expense that a taxpayer can claim on a federal or state tax return to reduce their taxable income. Several types of interest are tax-deductible, including mortgage interest on a primary or second home, student loan interest, and the interest on some business loans, including business credit
