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LSDefine
Simple English definitions for legal terms
tax year
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A quick definition of tax year:
Tax Year: A period of time used for calculating how much money a person or company owes in taxes to the government. It can either be a calendar year, which is 12 months from January 1st to December 31st, or a fiscal year, which is any 12-month period ending on a day other than December 31st. The tax year is important for determining how much income tax a person or company owes to the government.
A more thorough explanation:
A tax year is a period of time used for calculating federal or state income tax liability. It can either be a calendar year, which is twelve consecutive months starting from January 1 and ending on December 31, or a fiscal year, which is a period of twelve months ending on the last day of a month other than December.
For example, if a company's fiscal year is from October 1 to September 30, then their tax year would be from October 1 of one year to September 30 of the next year. This is because their fiscal year does not align with the calendar year.
Another example is an individual who starts a business in May. They may choose to have a tax year that starts in May and ends in April of the following year, rather than using the calendar year.
Understanding the tax year is important for individuals and businesses to accurately calculate their tax liability and file their tax returns on time.