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Income Taxes
Taxes paid by individuals and businesses based on earned and unearned income.
Independent Contractor
A self-employed person who performs services for others in exchange for money or other compensation.
Indirect Tax
A tax which is not paid directly, but which is paid through a cost increase, such as sales tax.
Inflation
A decrease in the value of money and credit as consumer prices increase.
Innocent Spouse Relief
A petition filed by a divorced taxpayer (who formerly filed jointly) to be relieved of responsibility for their ex-spouse's unpaid tax bill.
Interest
Money gained from investments, such as bank accounts, bonds, or trusts. Interest is unearned income.
Internal Revenue Service (IRS)
A bureau of the Department of the Treasury, the IRS is the government agency responsible for collecting taxes and for enforcing the tax code.
Investment Income
Money or other compensation received from profitable investments, generally in the form of interest or dividends.
Individual Retirement Arrangement (IRA)
Also called an Individual Retirement Account or a Traditional IRA. A special account designed to encourage saving money for retirement. Contributions up to a certain amount are generally tax deductible and any interest the account earns is not taxed until you withdraw funds. Withdrawals of funds before you reach a certain age (59 1/2 in 2010) are usually penalized. In many cases, it is possible to convert a Traditional IRA to a Roth IRA.
Itemized Deduction
A deduction for a specific expense that may be claimed if the total amount of all itemized deductions is greater than the standard deduction.
ITIN
Individual Taxpayer Identification Number. A number used to identify foreign taxpayers to the IRS. Only taxpayers who do not have a Social Security Number must obtain an ITIN.