E
 

EA
See enrolled agent.


earned income (income tax)
For income tax purposes, earned income is income received for personal services, such as wages or the profit from running your small business. Earned income is distinct from investment income such as interest, dividends, etc.


earned income tax credit
A tax credit available to low-income individuals who have earned income, such as wages, tips, and self-employment income. Certain low-income workers can file a tax return to get a tax refund for this credit, even if no income tax was withheld from the worker's pay. They can also apply to receive a portion of the credit in their paychecks throughout the year.


earned surplus
Another name for retained earnings.


earnings statement
An income statement (profit and loss statement or P & L).

EFTPS
EFTPS is the Electronic Federal Tax Payment System developed by the U.S. Department of the Treasury’s Internal Revenue Service (IRS) and Financial Management Service (FMS), to enable taxpayers to pay their federal taxes electronically.   For more infomation see the EFTPS FAQ page.

EIN (Form SS-4)
See federal employer identification number.


embezzlement
The fraudulent taking of property left in one's care. A proper system of internal controls in a business will reduce the opportunities for embezzlement to occur. Every facet of a company is open to embezzlement, including cash handling, receivables, payables, inventory, and equipment. Most business managers are astounded to learn how vulnerable their company is to embezzlement.


employee vs. independent contractor
For tax purposes, an employee is one who is usually under the direction and control of the employer. This is in contrast to independent contractors who set their own work routines and usually use their own tools and equipment. This is an important distinction since employees are subject to payroll and income tax withholding, and independent contractors are responsible for their own taxes.


employee stock ownership plan (ESOP)
An ESOP is a stock bonus plan in which the benefits are shares of stock in the employing company. These plans can be used to transfer ownership of the company to the employees.


endowment fund
A special account usually for the benefit of a nonprofit institution such as a school. Funded by private donations, often for a specific purpose.


enrolled agent (EA)
Certain tax preparers can represent their clients before the IRS. Tax preparers who are not attorneys or CPAs must have the enrolled agent (EA) designation to represent other taxpayers. To become an enrolled agent one must either take a tax examination given by the IRS or have a certain number of years experience working for the IRS.


entity
An organization such as a corporation, partnership, limited liability company, estate, or trust that has legal existence and can sue or be sued.


EOM
An abbreviation for "end of month." A common phrase for end-of-period accounting activities.


equity
An ownership interest in a business or property, often measured as the difference between the fair market value of the business or property and the debts against it (for example, the current value of a home minus the mortgage against it). Also the ownership section on a company's balance sheet.


ergonomics
The matching of a person to the workings of a machine in order to make for more efficient and safer working conditions.


errors and omissions insurance
E & O insurance is often part of a professional liability insurance policy. It is purchased by those professionals who offer services or who handle money or property for others. This insurance covers damages caused by mistakes (errors) made by the professional or damages caused by something the professional failed to do (omissions).


escrow
Money held in trust, often for the payment of taxes and insurance on property that is subject to a mortgage.


ESOP
See employee stock ownership plan.


estate tax
A tax imposed on an estate over a certain size. Proper planning can reduce the impact of estate taxes.


estate tax exclusion
See gift tax exclusion and unified tax credit.


estimated tax payment
Quarterly tax payments made in lieu of having taxes withheld at the income source. Federal estimated taxes for individuals are paid with Form 1040-ES and are due on April 15, June 15, September 15 of the tax year involved and on January 15 of the following year.


exchange, tax-deferred (tax-free)
Often referred to as a tax-free exchange, a tax-deferred exchange is permitted when qualified business and/or investment property is exchanged for other qualified business and/or investment property. The taxpayer must not have access to any of the funds. If you sell property and then purchase a replacement property, you will be subject to tax on any gain in the sale. If a proper exchange takes place, any potential income tax is deferred until the newly acquired property is later disposed of.
See also facilitator.


ex-dividend
When stock is sold ex-dividend, the seller has the right to a dividend that has been declared but is payable at a later date.


executor/executrix
A person or company named in a will to ensure that all the assets and debts are accounted for and that all property is distributed as specified in the will. Also called a personal representative.
 

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