| As a courtesy to our clients, we have compiled a comprehensive list of common tax terms and definitions for quick reference. | Tax Lingo Troubles? |
Accrual method of accounting |
A business method of accounting requiring income to be reported when earned and expenses to be deducted when incurred. However, deductions generally may not be claimed until economic performance has occurred. |
| Term | Definition |
|---|---|
| W-2 Form |
The form that an employer must send to an employee and the IRS at the end of the year. The W-2 form reports an employee's annual wages and the amount of taxes withheld from his or her paycheck. |
| W-3 Form |
The form that an employer must send to the IRS at the end of the year. The W-3 form reports the total annual wages and the total taxes withheld from all employees’ paychecks during the year. |
| W-4 Form |
The form completed by an employee to indicate his or her tax situation (exemptions, status, etc.) to the employer. The W-4 form tells the employer the correct amount of tax to withhold from an employee's paycheck. |
| Wash sales |
Sales on which losses are disallowed because you recover your market position within a 61-day period. |
| Withholding |
An amount taken from income as a prepayment of an individual's tax liability for the year. In the case of wages, the employer withholds part of every wage payment. Backup withholding from dividend or interest income is required if you do not provide the payer with a correct taxpayer identification number. Withholding on pensions and IRAs is automatic unless you elect to waive withholding. |