Define These Tax Accounting Terms Flashcards

A married taxpayer whose spouse has left home for the last six months of the year. The taxpayer may qualify for head of household filing status if the taxpayer maintains a household for qualifying child.

The depreciation system enacted by Congress in 1981 which is based on the concept of set recovery periods and accelerated depreciation methods.

An approach for determining the taxable year in which a business recognizes a particular item of income or deduction thereby dictating the timing of when a taxpayer reports income and deductions.

A fixed period in which a business reports income and deductions, generally referred to as a tax year.

method of accounting that generally recognizes income in the period earned and recognizes deductions in the period that liabilities are incurred.

a tax based on the value of property.

(AGI) gross income less deductions for AGI. AGI is an important reference point that is often used in other calculations.

A child must meet a relationship test, an age test, a residence test, and a support test to qualify as a qualifying child.

Tax credits reduce taxpayers' tax liability dollar for dollar

Taxpayers may file their tax returns as married filing jointly, married filing separately, qualifying widow or widower (or surviving spouse), head of household, or single.

Each spouse is ultimately responsible for paying the tax on a joint return.

For two years after the year in which one spouse dies, qualifying widows or widowers may file as if they were married filing jointly as long as they (1) remain unmarried and (2) maintain a household for a dependent child. However, they are not allowed to claim a dependency exemption for the deceased spouse beyond the year of the spouse's death.

(1) pays more than half the costs of maintaining a household that is, for more than half the taxable year, the principal place of abode for a dependent who is either a qualifying child or a qualifying relative who meets the exemption relationship test; or (2) pays more than half the costs of maintaining a separate household that is the principal place of abode for the taxpayer's mother or father if the mother or father also qualifies as a dependent of the taxpayer.

SINGLE TAXPAYERS

A person may be considered a qualifying relative by meeting a relationship test, a support test, and a gross income test.