Tax Year

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.

BREAKING DOWN '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. Effective Tax Rate

    The average rate at which an individual or corporation is taxed. ...
  2. Tax Return

    1. The tax form or forms used to file income taxes with the Internal ...
  3. Tax Season

    The time period between January 1 and April 15 of each year in ...
  4. Direct Tax

    A tax that is paid directly by an individual or organization ...
  5. Tax Break

    A tax break is a savings on a taxpayer's liability. A tax break ...
  6. Net Of Tax

    An accounting figure that has been adjusted for the effects of ...
Related Articles
  1. Professionals

    Tax Accounting

    Tax Accounting
  2. Savings

    Explaining Tax Returns

    A tax return is the form or forms used to file income taxes with the IRS.
  3. Taxes

    Use Tax Vs. Internet Sales Tax: How Are They Different?

    Learn about the differences between a use tax and an Internet sales tax. Find out about transactions in which the taxes apply, and to whom they apply.
  4. Economics

    Calculating Net of Tax

    Net of tax is a figure that has been adjusted for taxes.
  5. Professionals

    Types Of Taxes

    These taxes are unavoidable for corporations.
  6. Taxes

    5 Most Taxing Taxes for Americans

    There’s not much that unites Americans like their hatred of taxes. Here's a list of taxes we dislike the most.
  7. Investing

    Deferred Tax Liability

    Deferred tax liability is a tax that has been assessed or is due for the current period, but has not yet been paid. The deferral arises because of timing differences between the accrual of the ...
  8. Professionals

    Adjustments To Financial Statements From Tax Rate Changes

    CFA Level 1 - Adjustments To Financial Statements From Tax Rate Changes. A look at how changes in tax rates affect the value of deferred tax assets on the balance sheet, including calculations ...
  9. Taxes

    Tax Haven Vs. Tax Shelters: Is There a Difference?

    Learn about the difference between tax havens and tax shelters, and how both are used to reduce tax liability or avoid paying taxes altogether.
  10. Taxes

    3 Federal Income Tax Facts You Didn't Know

    Learn about three federal income tax facts that most Americans may not know from one of the most trusted financial resources on the Web.
RELATED FAQS
  1. Do I need to file an income tax return every year?

    Understand if a person needs to file a tax return every year. Learn the benefits of filing a yearly income tax return even ... Read Answer >>
  2. What is the difference between federal and state withholding tax?

    Discover whether you can file your taxes by yourself. The three main options for tax preparation are a tax professional, ... Read Answer >>
  3. What is the difference between income tax and capital gains tax?

    Understand the difference between a person's income tax and his capital gains tax. Learn when a person needs to pay taxes ... Read Answer >>
  4. What's the difference between the marginal tax rate system and a flat tax?

    Find out about the difference between marginal tax rates and flat taxes. Gain insights on both systems and the arguments ... Read Answer >>
  5. How does the marginal tax rate system work?

    The marginal tax rate is the rate of tax that income earners incur on each additional dollar of income. As the marginal tax ... Read Answer >>
  6. What are the differences between regressive, proportional and progressive taxes?

    Understand the differences between the most common tax systems including regressive taxes, proportional taxes and progressive ... Read Answer >>
Hot Definitions
  1. Law Of Demand

    A microeconomic law that states that, all other factors being equal, as the price of a good or service increases, consumer ...
  2. Cost Of Debt

    The effective rate that a company pays on its current debt. This can be measured in either before- or after-tax returns; ...
  3. Yield Curve

    A line that plots the interest rates, at a set point in time, of bonds having equal credit quality, but differing maturity ...
  4. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
  5. Keynesian Economics

    An economic theory of total spending in the economy and its effects on output and inflation. Keynesian economics was developed ...
  6. Society for Worldwide Interbank Financial Telecommunications ...

    A member-owned cooperative that provides safe and secure financial transactions for its members. Established in 1973, the ...
Trading Center