Income The amount of money a person receives from all sources. These sources include wages, commissions, bonuses, Social Security and other retirement benefits, unemployment compensation, disability, interest and dividends.
Income Statement A financial statement summarizing revenues, expenses, gains and losses for a stated period of time. The income statement is also known as a profit & loss statement, statement of earnings, statement of income or statement of operations.
Income Tax These are taxes on income, both earned income, such as salaries, wages, tips or commissions, and unearned income, such as interest from savings accounts or dividends if you hold stock. Individuals and businesses are subject to income taxes.
Incorporated (Inc.) See Corporation
Incorporator The person or entity that prepares and files the articles of incorporation. Total Tax Solutions acts as an incorporator for many new companies.
Indemnify To reimburse or compensate. Directors and officers of corporations are often reimbursed or indemnified for all the expenses they may have incurred during the incorporation process.
Index An hypothetical portfolio of securities that represents a particular market or portion of it. An index is used to measure the amount of change in a particular security by comparing it to similar companies.
Indirect Tax A tax collected by an intermediary who shifts the economic burden to another. For example, a company might have to pay a specific tax to the government. The company pays the tax but can increase the cost of their products so consumers are actually paying the tax indirectly by paying more for the company’s products.
Individual Retirement Accounts (IRAs): A tax-deferred product offered by banks, mutual funds and other companies. Under current law, a married couple can put $4,000, $2,000 each, into their own IRA each year in a wide range of savings accounts and investments. Earnings are tax-deferred until you begin withdrawing the money, which you can start doing without penalty after age 59 ½. Under current tax law, some people, depending on income, marital status or other factors, can deduct all or part of their IRA contributions, which reduces their taxes.
Inflation The general rise in the prices of goods and services that occurs when demand increases relative to supply.
Informal Tax Legislation Process Meetings where individuals and interest groups get together to discuss tax issues.
Initial Public Offering (IPO) A company’s first public offering of stock.
Insolvency When liabilities exceed assets. Also, the inability to pay debts when due. See Bankruptcy.
Installment A part of a sum of money, or debt, to be paid at regular intervals, usually made up of principal and interest combined.
Insufficient Funds Not having enough money in a bank account to cover a specific debt.
Insurability An insurance applicant’s likelihood of being accepted by an insurer, based on health, occupation, lifestyle and finances.
Insurable Interest A vested financial interest in the life of another person.
Insured An individual who is covered by an insurance policy.
Intangible Asset An asset without physical substance that has value due to rights resulting from its ownership and possession. For example, goodwill, patents or trademarks are all intangible assets..
Integrated Plan An employee pension plan included with Social Security benefits or with Old-Age, Survivorship and Disability Insurance (OASDI) contributions.
Intellectual Capital The financial value that human innovations and intelligence bring to a business enterprise.
Interest (1) “Interests” represent a member’s ownership of an LLC just as a partner has an interest in a partnership and shareholders own stock in a corporation.
Interest (2) The cost of using money over time usually expressed as an annual percentage.
Interest Income Fully-taxable income earned in the form of interest which accumulates from cash temporarily held in savings accounts, certificates of deposits, or other investments.
Interest Rate The cost of borrowed money expressed as a percentage for a given period of time, usually one year.
Internal Auditor An employee of an entity, such as a corporation, who audits for management, providing valuable information for decision-making concerning the effective operation of its business.
Internal Control A coordinated system of procedures and techniques designed to safeguard a company’s assets, to ensure the accuracy of its accounting records and to promote efficiency and adherence to prescribed policies.
Internal Rate of Return (IRR) The theorem of compounding interest in reverse, or discounting. IRR is important in planning capital outlays and evaluating rental real estate investments.
Inventory Items of tangible property held for sale. An inventory is a detailed list of items and their values owned at a specific point in time. Stock inventory would include raw materials for manufacture, materials partly processed and finished products including items in transit for which title is held, but would not include items physically held for which title belongs to others. Inventories may also be made of fixed assets, stationery and supplies, etc.
Investment Funds committed to acquire something tangible or intangible in order to receive a return, either in revenue or use.
Investment Objective The financial goal of an investment.
Invoice Document for goods purchased or services rendered showing details such as quantities, prices, dates, shipping details, order numbers, terms of sale, etc.
Irrevocable Trust A trust that cannot be altered or canceled without the permission of the beneficiary or trustee. The grantor gives up all ownership rights to the assets and the trust in such cases.