An interactive computer program that allows a qualified taxpayer to file a simple federal tax return electronically with the IRS using a toll-free number. The IRS determines which taxpayers can use the TeleFile option and mails those taxpayers a TeleFile booklet explaining the process.

Money and goods received for services performed by food servers, baggage handlers, hairdressers, and others. Tips go beyond the stated amount of the bill and are given voluntarily.

Taxes on economic transactions, such as the sale of goods and services. These can be based on a set of percentages of the sales value (ad volorem-sales taxes), or they can be a set amount on physical quantities ("per unit"-gasoline taxes).

To send a tax return to the IRS electronically. Tax returns prepared on paper can be sent through the mail.

Sends the electronic return data directly to the IRS.

Money-making activities that people don't report to the government, including both illegal and legal activities.

- A penalty for not paying enough total estimated tax and withholding. You can avoid underpayment penalties by paying a percentage amount of last year's tax due or of the current year's expected tax due. You may pay the taxes in combined estimated and withholding tax payments.

Income such as interest, dividends, capital gains or rents, as opposed to earned income, such as wages, tips and salaries.

An excise tax, often in the form of a license or supplemental charge, levied to fund a public service.

A tax that is paid directly by the consumer of a good, product, or service.

The concept that people in different income groups should pay different rates of taxes or different percentages of their incomes as taxes. "Unequals should be taxed unequally."

A system of compliance that relies on individual citizens to report their income freely and voluntarily, calculate their tax liability correctly, and file a tax return on time.

This provides free income tax return preparation for certain taxpayers. The VITA program assists taxpayers who have limited or moderate incomes, have limited English skills, or are elderly or disabled. Many VITA sites offer electronic preparation and transmission of income tax returns.

Volunteer Income Tax Assistance (VITA) sites are available in most communities to help with tax return preparation. People volunteer their time to help their neighbors. The service is free to those with limited or moderate income people, non-English-speaking, the elderly and the disabled. Some VITA sites even offer free electronic filing.

Compensation received by employees for services performed. Usually, wages are computed by multiplying an hourly pay rate by the number of hours worked

Money, for example, that employers withhold from employees paychecks. This money is deposited for the government. (It will be credited against the employees' tax liability when they file their returns.) Employers withhold money for federal income taxes, Social Security taxes and state and local income taxes in some states and localities.