6/28/2017

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Tax Definitions

Tax Definitions
Tax Definitions A
Tax Definitions B
Tax Definitions C
Tax Definitions D
Tax Definitions E
Tax Definitions F
Tax Definitions G,H
Tax Definitions I
Tax Definitions J,K,L
Tax Definitions M
Tax Definitions N,O
Tax Definitions P,Q
Tax Definitions R
Tax Definitions S
Tax Definitions T
Tax Definitions U,V,W

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Tax Definition and Terms (D)

Deductions: Expenses subtracted from income tax liabilities that are taken to reduce the amount of taxable income.

Deferred Compensation: Money withheld from an employee's earnings and put into a retirement account by the employer to be distributed at a later date. The deferred amount is not taxed until it is withdrawn or paid at a later date.

Deficiency: The excess or difference between the tax that is assessed by the IRS as opposed to what was originally reported on your tax returns.

Defined Contribution Plan: A retirement plan, such as a 401k or other retirement account, that pays fixed benefits based on a percentage of earned income and contributions to the plan.

Dependent: Person or persons who are claimed as exemptions on your tax returns, usually a child or other relative or some other person that you are taking care of.

Depreciation: Tax deductions that are allowed as a cost of writing off business assets and wear and tear of real estate investments over a period of time.

Depreciation Recapture: Depreciation claimed on the sale of certain property in which the gain is treated as ordinary income.

Discount Points: A percentage of a loan paid to a lender at it's origination to account for the difference between the market rate and the rate of the note. Borrowers sometimes pay discount points to reduce the interest rate on the loan that they are trying to get, called a buy down, and the costs can be written off on their taxes.

Diversify: The act of investing in more than one vehicle, meaning putting your money in a variety of stocks and bonds, real estate, retirement plans, and mutual funds.

Dividend: Income derived from stock or mutual fund distributions that may or may not be taxable. Dividends may be paid in cash or stock, usually on a quarterly basis.

Documentary Transfer Tax: A state tax on the sale of real estate that is usually based on the sales price or, in some instances, the amount of equity that is transferred.

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