Short Tax Year


DEFINITION of 'Short Tax Year'

A tax year, whether fiscal or calendar, that is less than one year in length. Short tax years occur either when a business is started or the method of accounting is changed. Short tax years occur only for businesses, never for individual taxpayers, because individuals must file on a calendar-year basis and do not have the option of choosing a fiscal year.

BREAKING DOWN 'Short Tax Year'

If a business begins in the middle of May, and the business owner wishes to file on a calendar-year basis, the business will have a short tax year, with income and expenses for only 8.5 months reported on the 1040. A similar situation would occur if the business owner wished to use a fiscal year that began in a different month than that in which the business was established.

A short tax year can also occur when a business desires to change its taxable year. For example, a business that reports income from June to June every year decides to change its fiscal year to begin in October. Therefore, a short tax year from June to October must be reported.

  1. Calendar Year

    The one-year period that begins on January 1 and ends on December ...
  2. Accounting Period

    The time span in which certain financial events took place. The ...
  3. Fiscal Year - FY

    A period that a company or government uses for accounting purposes ...
  4. Tax Year

    The period of time which is covered by a particular tax return. ...
  5. Year

    A period of time that is comprised of 12 consecutive months. ...
  6. Last Fiscal Year - LFY

    The most recent 12-month accounting period that a business uses ...
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