Small Business Tax Dictionary

The tax year is a specific 12-month period for which taxes are calculated and reported. The tax year may align with the calendar year, or it may follow a different 12-month cycle, such as a fiscal year used by businesses. The definition of the tax year varies by jurisdiction and may differ for individuals and entities. Understanding the applicable tax year is essential for accurate tax planning, reporting, and compliance. It determines the timing of income recognition, deductions, credits, and other tax-related matters, influencing the overall tax liability and financial planning strategies. The tax year serves as the fundamental time frame for tax administration, providing a consistent basis for assessing and collecting taxes, and facilitating comparisons and analysis of financial information.