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Simple English definitions for legal terms
taxable year
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A quick definition of taxable year:
A taxable year is a period of time used for calculating how much money someone or a company owes in taxes. It can be either a calendar year, which is from January 1st to December 31st, or a fiscal year, which is any 12-month period that a company chooses. The tax year is important because it determines when taxes are due and how much someone owes.
A more thorough explanation:
A taxable year is a period of time used for calculating income tax liability. It can be either a calendar year, which is twelve consecutive months starting on January 1st and ending on December 31st, or a fiscal year, which is a 12-month period ending on the last day of any month other than December.
For example, a company may have a fiscal year that runs from October 1st to September 30th. This means that their taxable year for income tax purposes would be from October 1st of one year to September 30th of the next year.
Individuals and businesses must file their tax returns based on their taxable year. This means that they must report all income earned during that period and calculate their tax liability accordingly.
For instance, if an individual's taxable year is the calendar year, they must report all income earned from January 1st to December 31st of that year on their tax return.