George V. Famiglio, Jr, CPA/PFS, CFP, CFS. Est. 1971
Accounting, Tax, & Financial Term Glossary
As your Financial Advisors, there are times we need to use terminology that is common to our field. You may have noticed that when one of these terms is used on Famiglio.com, it is explained when you move your mouse over the word. If there is anything that is unclear, or that you would like added, please contact us and let us know.
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1040
The U.S. Individual Income Tax Return form for the majority of filers.
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1040NR
U.S. Nonresident Alien Income Tax Return
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941
Employer’s Quarterly Federal Tax Return
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AICPA
The American Institute of Certified Public Accountants (AICPA) is the world's largest association representing the accounting profession. AICPA members represent many areas of practice. The AICPA sets ethical standards for the profession and U.S. auditing standards for audits of private companies, non-profit organizations, federal, state and local governments. It develops and grades the Uniform CPA Examination.
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C Corporation
For federal income tax purposes, a C corporation is recognized as a separate taxpaying entity. A corporation conducts business, realizes net income or loss, pays taxes and distributes profits to shareholders.
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CFP
The Certified Financial Planner (CFP) designation is a professional certification mark for financial planners conferred by the Certified Financial Planner Board of Standards, Inc. in the United States. To have the designation, the candidate must meet education, examination, experience and ethics requirements.
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Commingling Funds
Failure to observe strict separation of corporate and personal property or accounts.
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CPA
Certified Public Accountant (CPA) is the statutory title of qualified accountants in the United States who have passed the Uniform Certified Public Accountant Examination and have met additional state education and experience requirements for certification as a CPA.
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EA
Enrolled Agent - “Enrolled” means to be licensed to practice by the federal government, and “Agent” means authorized to appear in the place of the taxpayer at the IRS. Only Enrolled Agents, attorneys, and CPAs may represent taxpayers before the IRS.
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FBAR
If you have a financial interest in or signature authority over a foreign financial account, including a bank account, brokerage account, mutual fund, trust, or other type of foreign financial account, the Bank Secrecy Act may require you to report the account yearly to the U.S. Department of the Treasury by filing Form TD F 90-22.1, Report of Foreign Bank and Financial Accounts (FBAR).
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Fiscal Year End
A entity has a Fiscal Year End, if the last month of its tax reporting period is not December. This may be advantageous for many reasons, and is something that we will discuss when doing tax planning.
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Master's Degree in Tax
The Master of Science in Taxation (MST) is a advanced professional graduate degree specifically designed for individuals who are tax specialists.
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OCR
Optical Character Recognition, a technique used to determine the letters and words in an image.
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Offer In Compromise
An offer in compromise (OIC) is an agreement between a taxpayer and the Internal Revenue Service that settles the taxpayer’s tax liabilities for less than the full amount owed.
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Partnership
A partnership is the relationship existing between two or more persons who join to carry on a trade or business. Each person contributes money, property, labor or skill, and expects to share in the profits and losses of the business.
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PFS
A Personal Financial Specialist (PFS) shows that a CPA has demonstrated their knowledge and expertise in personal financial planning. PFS credential holders have a specific experience, education and examination requirement that sets them apart from other CPAs and financial planners, and is regulated by the AICPA.
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Ponzi Schemes
A Ponzi scheme is a fraudulent investment operation that pays returns to separate investors, not from any actual profit earned by the organization, but from their own money or money paid by subsequent investors.
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Reasonable Wage
A reasonable and appropriate salary that is paid to officers or shareholders who provide more than minor services to their S Corporation.
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Red Flag
An informal term describing an action that is considered to raise the likelihood of an audit.
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S Corporation
S Corporations are corporations that elect to pass corporate income, losses, deductions and credit through to their shareholders for federal tax purposes. Shareholders of S corporations report the flow-through of income and losses on their personal tax returns and are assessed tax at their individual income tax rates. This allows S corporations to avoid double taxation on the corporate income.
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Schedule C
A Schedule C is used to report profit or loss from sole proprietorship 'business' on an Individual's tax return.
The industry often calls individuals operating a 'business' under their own name, instead of a business entity like a Corporation or LLC, a 'Schedule C' or a 'Schedule C Business.'
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Section 444 Election
An election requesting a Fiscal Year End vs a calendar year end.
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Sole Proprietorship
A sole proprietorship is a type of business entity where there is no legal distinction between the owner and the business. From a tax perspective the owner receives all profits (subject to taxation specific to the business) and has an unlimited liability for all losses and debts.
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U.S. Tax Court
U.S. Tax Court specializes in adjudicating disputes over federal income tax. Only a few hundred non-attorney CPAs have passed the intense Tax Court exam, and have the qualification: Admitted to Practice: U.S. Tax Court.
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W2
A United States federal tax form issued by employers and stating how much an employee was paid in a year.
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