What Is a Tax Preference Item? A tax preference item is a type of income, normally received tax-free, that may trigger the alternative minimum tax (AMT) for taxpayers. Tax preference items include interest on private activity municipal-bonds, qualifying exclusions for small business stock, and excess intangible drilling costs for oil and gas – if the
What Is a Tax Rate? A tax rate is a percentage at which an individual or corporation is taxed. The United States, both the federal government and many of the states, uses a progressive tax rate system, in which the percentage of tax charged increases as the amount of the person’s or entity’s taxable income
What Is the Tax Reform Act of 1986? The Tax Reform Act of 1986 is a law passed by the United States Congress to simplify the income tax code. To increase fairness and provide an incentive for growth in the economy, the passage of the Act reduced the maximum rate on ordinary income and raised
What Is the Tax Reform Act of 1993? The Tax Reform Act of 1993 was a federal law passed by the 103rd Congress and signed into law by President Bill Clinton. The Act aimed to cut the federal deficit through increased taxes and reduced spending. It is also known as the Omnibus Budget Reconciliation Act of 1993. The
What Is a Tax Refund? The term tax refund refers to a reimbursement made to a taxpayer for any excess amount paid in taxes to the federal or state government. While taxpayers tend to look at a refund as a bonus or a stroke of luck, it often represents what is essentially an interest-free loan
What Is Tax Relief? Tax relief refers to any government program or policy designed to help individuals and businesses reduce their tax burdens or resolve their tax-related debts. Tax relief may be in the form of universal tax cuts, targeted programs that benefit specific groups of taxpayers, or initiatives that bolster particular goals of the
What Is a Tax Return? A tax return is a form or forms filed with a tax authority that reports income, expenses, and other pertinent tax information. Tax returns allow taxpayers to calculate their tax liability, schedule tax payments, or request refunds for the overpayment of taxes. In most countries, tax returns must be filed
What Is a Tax Sale? A tax sale is the sale of a real estate property that results when a taxpayer reaches a certain point of delinquency in their owed property tax payments. Key Takeaways A tax sale is the sale of a piece of real estate due to unpaid property taxes.There are two types
What Is a Tax Service Fee? A tax service fee is a legitimate closing cost that is assessed and collected by a lender to ensure that mortgagors pay their property taxes on time. Tax service fees exist because lenders want to protect their access to collateral if a borrower defaults. Key Takeaways Tax service fees
What Is a Tax Shelter? A tax shelter is a vehicle used by individuals or organizations to minimize or decrease their taxable incomes and, therefore, tax liabilities. Tax shelters are legal, and can range from investments or investment accounts that provide favorable tax treatment, to activities or transactions that lower taxable income through deductions or
