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    # • 1040 (Also 1040A, 1040EZ, 1040NR) A • Above-the-Line Adjustment (or Above-the-Line Deduction) • Additional Chi... Interactive Tax Dictionary
    EPS
    # • 1040 (Also 1040A, 1040EZ, 1040NR) A • Above-the-Line Adjustment (or Above-the-Line Deduction) • Additional Chi... Interactive Tax Dictionary
    EPS
     
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    Rectangle 1040 (Also 1040A, 1040EZ, 1040NR): Form 1040 is “THE TAX FORM,” aka, the Individual Income Tax Form. Other forms and...
    Rectangle Automated Collection System (ACS) This is the system through which the IRS contacts taxpayers when they don’t pay an ...
    Rectangle Adjusted Gross Income (AGI) Gross income is every dollar you earn. AGI is that total taxable amount minus certain de...
    Rectangle Alternative Minimum Tax (AMT) This is a second way to calculate how much tax is owed. Certain taxpayers must calculat...
    Rectangle American Opportunity Credit (AOC) This tax credit is for qualified education expenses at an eligible education insti...
    Rectangle Above-the-Line Adjustment (or Above-the-Line Deduction) Where is this “line”? Roughly, it’s at the end of the first ...
    Rectangle Additional Child Tax Credit (ACTC) You must have at least $3,000 in earned income in order to claim the Additional C...
    Rectangle Basis In most cases, this is how much an asset originally cost you, and is used to determine gain or loss on the sale...
    Rectangle Business Expenses These are ordinary and necessary costs of operating your business. In certain situations they may b...
    Rectangle Capital Gains Politicians seem to like talking about these. They are the profits that result when you sell a capital ...
    Rectangle Child and Dependent Care Credit “Care” is the operative word. This credit is available to qualifying families who pay...
    Rectangle Child Tax Credit (CTC) This credit may allow you to reduce your federal income tax by up to $1,000 for each qualifyi...
    Rectangle Credit There are two kinds of tax credits: refundable and nonrefundable. See each for their separate definition. Gen...
    Rectangle CP2000 This is the notice letter the IRS sends for the dreaded underreported income, which the IRS sends in two main ...
    Rectangle Defined Benefit Plan/ Defined Contribution Plan These are retirement savings plans. A defined benefit plan, like a pe...
    Rectangle Dependent A dependent may be either a qualifying child or a qualifying relative. See both of those definitions for e...
    Rectangle Direct Debit Installation Agreement (DDIA) Call the IRS to set up with a payment plan, and the IRS will always ask fo...
    Rectangle Earned Income Generally, you get earned income when you work for someone who pays you or you own or operate a busine...
    Rectangle Earned Income Tax Credit (EITC) The EITC is a refundable credit for working people with low to moderate income. You d...
    Rectangle Exemption In 2015, each exemption reduces your income by up to $4,000. Depending on your situation, you may claim exe...
    Rectangle First Time Penalty Abatement (FTA) According to the Treasury Inspector General for Tax Administration, only 8% of eli...
    Rectangle Fair Market Value (FMV) This is the estimated value of a piece of property. It is not what you think it is worth, rat...
    Rectangle Filing Status Every tax return must have a filing status selected. The filing status is based on your personal life,...
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    Single Head of Household (essentially single but supporting dependents) Married filing jointly Married filing separately Qualifying widow(er)
    Rectangle Gift Tax A gift tax may apply to the transfer of money or property, whether or not it is intended as a “gift.” Basica...
    Rectangle Head of Household This is an often overlooked filing status. Head of Household has a greater standard deduction and o...
    Rectangle Household employees A household employee is someone who is paid to perform a service in or around a personal residenc...
    Rectangle Injured Spouse Exemption or Allocation This does not refer to any physical act between two spouses. You may be an inj...
    Rectangle Internal Revenue Service (IRS) The IRS is a government agency that is responsible for collecting taxes and enforcing ...
    Rectangle Itemized Deductions You can claim the standard deduction, which is a fixed dollar amount, or you can itemize your ded...
    Rectangle Joint return This is a casual way to refer to a tax form that uses the “married filing jointly” (MFJ) status. MFJ may...
    Rectangle Kiddie Tax Well, that sounds mean. But yes, kids can be taxed on their income, too. Specifically, the “kiddie tax” re...
    Rectangle Lien, Levy These two terms are often confused. A levy is a seizure of a taxpayer’s wages, bank account balances or ot...
    Rectangle Lifetime Learning Credit This nonrefundable credit is worth up to $2,000. It is based on qualified education expenses...
    Rectangle Medical Expense Deduction This refers to the ability to deduct amounts paid on medical and dental expenses. That incl...
    Rectangle Mortgage Interest Deduction If you own a home, this is important for you. Generally, you can deduct qualified interes...
    Rectangle Net Investment Income (NII) This income is subject to an additional 3.8% tax for certain people (net investment inco...
    Rectangle Net Investment Income Tax (NIIT) If you have NII and income over a certain amount (it depends on your filing status)... GraphicLine Oval
    Rectangle Nonrefundable Credit These credits reduce your tax bill but cannot reduce the balance beyond zero. So if you owe $10...
    Rectangle Ordinary Income Just the regular old stuff taxed at the normal income tax rates: wages, tips, rents, royalties, inter...
    Rectangle Office Audit What happens when you have to visit an IRS office to complete a tax audit. Alternatively, they could com...
    Rectangle Penalties & Interest (P&I) These are what you have to pay if you don’t file on time or don’t pay any tax owed on tim...
    Rectangle Personal Exemption This exemption acts like a deduction – it reduces your taxable income. One personal exemption may ...
    Rectangle Phaseout Many deductions and credits gradually decrease as your income increases, until they are completely eliminat...
    Rectangle Qualifying Child In order to be a qualifying child, the dependent must meet several criteria. They must be your chil...
    Rectangle Qualifying Relative A qualifying relative is either related to you or your spouse, or lived in your household the en...
    Rectangle Refund Money the government will pay you if you overpaid taxes during the year or if you qualified for refundable ta...
    Rectangle Refundable Credit Money! Ok, not really. Just like all credits, a refundable credit will reduce dollar-for-dollar the...
    Rectangle Resident Alien Someone who is not a U.S. citizen but meets either the green card test or the substantial presence tes...
    Rectangle Self-Employment Income These are your net earnings from self-employment. You may be a sole proprietor or independent ...
    Rectangle Standard deduction This is a dollar amount you can automatically deduct from your Adjusted Gross Income (AGI). By ha...
    Rectangle Student Loan Interest Deduction You may be able to claim this if you make payments on a qualified student loan and ar...
    Rectangle Tax Home A tax home is the metropolitan area of your principal place of business. It is not necessarily the same area...
    Rectangle Tax Year For most of us, it’s January 1 to December 31 of any given year. However, businesses may choose to make thei...
    Rectangle Taxpayer Advocate Service (TAS) The TAS is a good friend of the taxpayer. If a taxpayer can’t get an issue resolved, ...
    Rectangle Transcript A transcript is a taxpayer’s electronic tax record at the IRS. There are five types of transcripts, but th...
    Rectangle Unearned income Any income that is not earned income. It can include interest, dividends, retirement account distribu...
    Rectangle Withholding allowance You claim allowances on Form W-4. Withholding allowances are used to determine how much tax is ...
    Rectangle W-2 Form W-2 is generated by your employer and mailed to you before Jan. 31 each year. The form reports how much you ...
    Rectangle W-4 The form is typically completed when you begin employment. It may be updated annually or when you have a life cha...
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