A way of reimbursing employees who use their own or leased vehicles for work-related activities. FAVR payments must be made at least quarterly. Certain restrictions on how and how much the vehicle must be used to qualify for the FAVR allowance are set forth and enforced by the Internal Revenue Service (IRS). An FAVR allowance includes two payment types: periodic fixed payments, and periodic variable payments. The periodic fixed payment includes fixed costs associated with driving and owning the vehicle, including depreciation, insurance and taxes. The total costs for these expenses are calculated and then adjusted to reflect the percentage of time the vehicle is used for business purposes. The periodic variable payment includes operating costs, such as gasoline, oil changes, tires and routine maintenance.
A situation where all of the future debt obligations of a government are different from the future income streams. Both of the obligations and the income streams are measured at their respective present values, and will be discounted at the risk free rate plus a certain spread. A vertical fiscal imbalance describes a situation where revenues do not match expenditures for different levels of government. A horizontal imbalance describes a situation where revenues do not match expenditures for different regions of the country. To measure the fiscal imbalance, take the difference between the present value of all future debt and the present value of all income streams. At any given time, there will be a fiscal imbalance for a particular government; a sustained and positive balance will be detrimental to society and the economy. If there is a sustained positive fiscal imbalance, then tax revenues will likely increase in the future, causing both current and future household consumption to fall.
Fiscal drag is an economics term referring to a situation where a government's net fiscal position (equal to its spending less any taxation) does not meet the net savings goals of the private economy. This can result in deflationary pressure attributed to either lack of state spending or to excess taxation. One cause of fiscal drag is the consequence of expanding economies with progressive taxation. In general, individuals are forced into higher tax brackets as their income rises. The greater tax burden can lead to less consumer spending. For the individuals pushed into a higher tax bracket, the proportion of income as tax has increased, resulting in fiscal drag. Fiscal drag is essential a drag or damper on the economy caused by lack of spending or excessive taxation. As increased taxation slows the demand for goods and services, fiscal drag results. Fiscal drag is a natural economic stabilizer, however, since it tends to keep demand stable and the economy from overheating. Because it is an economic stabilizer, fiscal drag can influence economic equality among citizens of the same region.
A U.K. tax allowance that permits British corporations to claim on eligible plan or machinery purchases. The allowance can only be claimed during the first year of the equipment purchase. The allowance helps corporations offset a portion of their taxable profits and can help ease the strain on a company's cash flow. This allowance replaces a standard U.K. write-down allowance previously available to small and medium-sized businesses. The British government permits first-year allowances for different types of capital investments including computer and internet technology as well as energy-saving ("green") inputs. The allowable allowance can vary widely, between 6% and 100%.
An IRS tax form completed by taxpayers claiming a charitable contribution exceeding $10,000. Form 8283-V is used if the charitable contribution is an easement on the exterior of a building located in a registered historic district, and is sent to the IRS along with a filing fee. The deduction for a charitable contribution is not recognized by the IRS if the filing fee, typically $500, is not paid. Each property that meets the charitable contribution requirements carries with it an additional filing fee (e.g. two properties claimed by a taxpayer require a $1,000 filing fee). Form 82826-V is not required if the filing fee is paid electronically instead of by a check or money order.
A tariff imposed on Australian residents by their government on asset value gains from offshore holdings. The FIF tax was implemented in 1992 to prevent citizens from deferring the payment of Australian tax on investments made outside of the country. Investments that can fall within the definition of FIF funds include personal retirement funds, such as American IRAs and Canadian RRSPs, as well as life insurance wrappers, which are often sold by overseas advisors. The FIF tax is as controversial as it is complicated, with a variety of exceptions and loopholes. In its 2009 Federal Budget, the Australian government attempted to address these problems by announcing its intent to repeal and replace the foreign investment fund (FIF) provisions with a more specific rule.
An allowance for taxpayers who live and work in a foreign country to exclude any amount that their employer allocates to them to cover housing costs. The exclusion applies regardless of whether the expenses are paid directly to the taxpayer or on his or her behalf. This exclusion applies for expenses related to housing, rent, repairs, utilities and several other types of expenses. In order to qualify for this exclusion, taxpayers must meet the same time criteria as for the bona fide resident or physical-presence tests. Qualifying expenses may also include payments intended to equalize taxes and education expenses for the taxpayer's children or dependents. Costs relating to the purchase of property or the employ of domestic servants do not qualify for the exclusion.
The amount of income earned from a foreign source that is excludable from domestic taxation. The foreign earned income exclusion can only be claimed by those who meet the foreign residence or physical presence tests, who have a tax home in a foreign country, and have foreign income.Tax payers wishing to exclude foreign earned income must make an election to do so. During the 2007 tax year, the maximum foreign earned income exclusion was $85,700. If the election is made, the taxpayer must proactively elect to use this exclusion (on an moving-forward basis); this exclusion is not assigned automatically. The exclusion is elected on Form 2555. Furthermore, taxpayers who claim this exclusion cannot deduct any business expenses incurred relative to the foreign income, make domestic retirement plan contributions of any kind that are based on this income or claim the foreign tax credit or deduction for any taxes paid to a foreign government on this income.