Reference

Glossary

One sentence per term. If a topic page loses you, start here. Tick a term once you can explain it in your own words.

Terms you know0 / 35

Above-the-line deduction: An adjustment subtracted before AGI, available whether or not you itemize.
Accounting method change: The formal filing required to switch how income and expenses are timed.
Accrual basis: Counting income when earned and expenses when incurred, regardless of payment.
Adjusted gross income (AGI): Total income minus adjustments; the figure many credits and limits are measured against.
Audit: An examination of a return's items, most often handled entirely by mail.
Bunching: Grouping deductible costs into one year to clear the standard deduction.
Cash basis: Counting income when received and expenses when paid.
Dependent: A qualifying child or relative another taxpayer may claim after meeting the required tests.
Due diligence: The verification a paid preparer must perform before claiming certain credits on your behalf.
Enrolled agent: A tax professional licensed federally who may represent taxpayers before the IRS.
Estimated tax: Quarterly payments made by people whose income is not subject to employer withholding.
Excise tax: A tax built into the price of specific goods such as fuel, tobacco, or airline tickets.
Extension: Extra time to file a return — normally to October — that does not extend the time to pay.
Filing status: The category — single, married filing jointly, head of household, and others — that sets bracket and standard deduction amounts.
Filing threshold: The income level, based on status and age, above which a return is required.
Form 1040: The main individual income tax return, supported by numbered schedules.
Form 1099: A family of information returns reporting non-wage payments such as contract work or interest.
Form W-2: The annual statement from an employer showing wages paid and taxes withheld.
Head of household: A filing status for unmarried taxpayers who pay more than half the cost of a home for a qualifying person.
Information return: A form an issuer sends to both you and the tax agency reporting a payment made to you.
Installment agreement: An arrangement to pay a tax balance over time instead of all at once.
Internal Revenue Service (IRS): The federal agency that administers and enforces the internal revenue laws.
Notice: A letter proposing a change or requesting information, carrying a response deadline.
Payroll tax: Social Security and Medicare tax on wages, split between employee and employer.
Preparer tax identification number (PTIN): The number every paid preparer must hold and include on returns they prepare.
Progressive tax: A system where income is divided into bands and each higher band carries a higher rate.
Qualifying child: A dependent meeting the relationship, age, residency, and support tests set by law.
Refundable credit: A credit that can be paid out even when it exceeds the tax owed.
Safe harbor: A minimum amount paid during the year that protects against underpayment penalties.
Schedule: A supporting form attached to Form 1040 for specific income, adjustments, or taxes.
Statute of limitations: The window — usually three years — for the agency to examine a return or for you to claim a refund.
Substantiation: The receipts, logs, and statements that prove an item claimed on a return.
Support test: The rule measuring how much of a person's living costs someone else provided.
Taxable income: The amount left after deductions, and the figure the tax rate schedule is applied to.
VITA: Volunteer Income Tax Assistance, a free preparation program for eligible taxpayers.