Tax Year

AAA

DEFINITION of 'Tax Year'

The period of time which is covered by a particular tax return. Many firms simply use the calendar year as their tax year, however this is not always required. When a firm begins or ends operations, it often needs to file a tax return for a shorter time period than a full 12 months. During normal operations, a firm may elect different dates for its tax year in the same way that it may elect different fiscal years. This is typically a simple operation requiring only that certain forms be completed.

INVESTOPEDIA EXPLAINS 'Tax Year'

Changing the firm's tax year generally does not have any long-term effect on tax liabilities. However, changing the tax year may allow the firm to more efficiently compile the financial information required to complete tax returns. Strategically timing a tax year may also allow for better utilization of accounting resources where preparing the tax return can be made to coincide with a less busy portion of the year.

RELATED TERMS
  1. Filing Extension

    An exemption made to both individual taxpayers and businesses ...
  2. Spillover Dividend

    A type of dividend in which the payment year and the taxable ...
  3. Calendar Year

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

    The time span in which certain financial events took place. The ...
  5. Netfile

    Open February to September, this service is one of the electronic ...
  6. Last Fiscal Year - LFY

    The most recent 12-month accounting period that a business uses ...
Related Articles
  1. Taxes

    3 Retirement Account Rules To Know

    Stay up-to-date on regulation amendments to avoid penalties as well as take advantage of new opportunities.
  2. Taxes

    Get A 6-Month Tax Extension

    Discover how to get some extra time from the IRS, without paying for the privilege.
  3. Taxes

    3 Common Tax Questions Answered

    We clarify some rules that often puzzle taxpayers.
  4. Retirement

    What procedure applies to a taxpayer who made excess contributions for 2001, 2002, 2003 and 2004 and ...

    If the IRA owner filed his/her 2004 tax return by the due date, including any extensions, he/she receives an automatic six-month extension to correct the 2004 excess contribution. The six-month ...
  5. Taxes

    How To Deduct All Of Your Charitable Donations?

    Donations made to charitable organizations can reduce your taxable income, thus your overall tax bill. But not all donations qualify to be deductable.
  6. Taxes

    What is Value-Added Tax (VAT) and who pays it?

    Learn about the definition of value-added tax, the necessary circumstances that require a business to pay it and when a business is exempt.
  7. Taxes

    What is the difference between gross income and earned income?

    Being able to distinguish between earned income and gross income is an important tool in preparing for and filing your individual tax returns each year.
  8. Taxes

    What are the differences among gross income, adjusted gross income and modified adjusted gross income?

    Discover how calculating total taxable income is easier when gross income, adjusted gross income and modified adjusted gross income are fully understood.
  9. Taxes

    What is the difference between gross income and taxable income?

    Understanding common tax terms including gross income and taxable income can help individuals navigate tax accounting in an efficient way.
  10. Investing Basics

    What are the potential pitfalls of owning REITs?

    Learn about pitfalls to investing in REITs, such as investors having to pay income tax, the REIT having to pay property tax and the REIT losing its status.

You May Also Like

Hot Definitions
  1. Portfolio Turnover

    A measure of how frequently assets within a fund are bought and sold by the managers. Portfolio turnover is calculated by ...
  2. Commercial Paper

    An unsecured, short-term debt instrument issued by a corporation, typically for the financing of accounts receivable, inventories ...
  3. Federal Funds Rate

    The interest rate at which a depository institution lends funds maintained at the Federal Reserve to another depository institution ...
  4. Fixed Asset

    A long-term tangible piece of property that a firm owns and uses in the production of its income and is not expected to be ...
  5. Break-Even Analysis

    An analysis to determine the point at which revenue received equals the costs associated with receiving the revenue. Break-even ...
  6. Key Performance Indicators - KPI

    A set of quantifiable measures that a company or industry uses to gauge or compare performance in terms of meeting their ...
Trading Center