Glossary terms starting with T

Tail Coverage

Tail coverage is an insurance endorsement providing an extended reporting period after a claims-made policy ends.

Tax Assessment

A tax assessment is the official determination of tax owed by a tax authority, either based on a filed return or as a result of audit or examination adjustments.

Tax Audit

A tax audit is an IRS examination of your tax return to verify that reported income, deductions, and credits are accurate.

Tax Basis

Tax basis is the original cost of an asset for tax purposes, used to calculate gain or loss upon sale and determine depreciation deductions.

Tax Basis Balance Sheet

A tax basis balance sheet presents assets, liabilities, and equity using tax accounting methods rather than GAAP, showing balances that align with how items are reported on tax returns.

Tax Basis Income Statement

A tax basis income statement presents revenue and expenses following tax accounting rules rather than GAAP, aligning financial statement results with tax return reporting.

Tax Calendar

A tax calendar is a schedule of every tax filing and payment due date for a business.

Tax Credit Vs Deduction

A tax credit reduces your tax bill dollar for dollar, while a deduction reduces your taxable income.

Tax Credits

A tax credit reduces the tax a taxpayer owes, dollar for dollar, once the credit is calculated.

Tax Deductions

A tax deduction is an expense that can be subtracted from income to reduce the amount of income that is taxed.

Tax Deposit

A tax deposit is a payment of withheld or unpaid taxes to the appropriate tax authority, typically made electronically through systems such as EFTPS for federal taxes.

Tax Distribution

A tax distribution is a payment from a pass-through entity to its owners specifically to cover their tax liability on the entity's income.

Tax Extension

A tax extension is a formal request granting additional time to file a tax return, typically 6 months for businesses, without extending the deadline to pay taxes owed.

Tax Levy

A tax levy is the IRS or state tax authority's legal seizure of property or wages to satisfy unpaid tax debt.

Tax liability

Tax liability is the total amount of taxes your business owes to federal, state, and local governments for a specific period.

Tax Lien

A tax lien is a legal claim by the government against a taxpayer's property when tax debt remains unpaid, attaching to all assets and affecting credit ratings.

Tax Loss Carryforward

A tax loss carryforward allows a business to apply losses from one year against taxable income in future years.

Tax Notice

A tax notice is official correspondence from a tax authority regarding your tax account.

Tax Organizer

A tax organizer is a questionnaire or checklist a tax preparer gives clients to collect the information and documents needed to prepare a return.

Tax Penalty

A tax penalty is an amount the tax authority charges when a filing or payment requirement is not met.

Tax Preparation Checklist

A tax preparation checklist is a comprehensive list of documents, information, and tasks required to prepare accurate business and personal tax returns.

Tax Preparer

A tax preparer is a professional who prepares tax returns for individuals or businesses, ranging from seasonal preparers to enrolled agents and CPAs with varying levels of credentials and representation authority.

Tax Provision

A tax provision is the estimated income tax expense recorded in financial statements, including current tax liability and deferred tax assets or liabilities arising from temporary differences between book and tax treatment.

Tax Reserve

A tax reserve is money a business sets aside on a regular schedule to pay future taxes.

Tax Resolution

Tax resolution is the process of settling outstanding tax debts or disputes with tax authorities.

Tax Transcript

A tax transcript is an IRS document summarizing tax return information, including return transcripts showing reported items, account transcripts showing payment history, and wage and income transcripts showing information returns received.

Tax Withholding

Tax withholding is the portion of an employee's pay that the employer holds back and sends to the government toward the employee's income tax.

Temporary Difference

A temporary difference is a gap between book income and tax income that will reverse in a future period.

Three-way Match

A three-way match is an accounts payable control that compares three documents before paying a vendor: the purchase order, the receiving report, and the invoice.

Three-Way Trust Reconciliation

Three-way trust reconciliation verifies that three numbers match: the bank statement balance, the general ledger trust liability balance, and the sum of all individual client ledger balances.

Time and Materials Contract

A time and materials contract bills the client for the actual hours worked at agreed rates, plus approved expenses.

Time Leakage

Time leakage occurs when billable work is performed but not captured in time-tracking systems, resulting in unbilled revenue.

Time Tracking

Time tracking is the recording of hours worked by task, project, or client.

Timesheet Compliance

Timesheet compliance measures how consistently and accurately employees record their time, typically expressed as the percentage of staff submitting timesheets on time with complete information.

TIN Matching

TIN matching is the IRS process of verifying that taxpayer identification numbers match the names associated with them.

Tip Credit

Tip credit allows employers to pay tipped employees a lower direct wage, with tips making up the difference to minimum wage.

Tip Reporting

Tip reporting is the process by which tipped employees report their tips to employers and employers report those tips for tax purposes.

Transfer Pricing

Transfer pricing governs how related entities price their transactions.

Travel Expense

Travel expenses are costs incurred when employees travel away from their regular place of work for business purposes.

Treasury Management

Treasury management encompasses the strategies and processes for managing a company's cash, investments, and financial risk to ensure adequate liquidity and optimize returns on excess funds.

Trial balance

A trial balance is a report listing all general ledger accounts with their debit or credit balances at a specific point in time, verifying that total debits equal total credits.

Trust Account

A trust account is a separate bank account that holds money belonging to someone else, such as client retainers, advance payments, or tenant deposits.

Trust Fund Recovery Penalty

The trust fund recovery penalty is a personal liability the IRS can assess against individuals responsible for collecting and paying withheld payroll taxes, but who willfully fail to do so.

Trust Fund Tax

Trust fund taxes are the income tax withheld from employees' wages and the employee share of Social Security and Medicare taxes.

Trust Shortage

A trust shortage exists when the money in your client trust account is less than the total of what all clients are owed.