Reference

Glossary

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Above-the-line deduction: A deduction subtracted before adjusted gross income is calculated, available whether or not you itemize.
Adjusted gross income (AGI): Total income minus above-the-line adjustments. Most credit and deduction limits are measured against it.
American Opportunity Credit: An education credit for the first four years of undergraduate study, part of which is refundable.
Bunching: Concentrating two years of deductible spending into one year so that year clears the itemizing threshold.
Child Tax Credit: A per-child credit for qualifying children, partly refundable for lower-income families.
Dependent: A qualifying child or relative whose support and residency facts allow another taxpayer to claim them.
Earned income: Money received for work — wages, tips, and net self-employment profit.
Earned Income Tax Credit: A refundable credit for lower-income workers that rises with earnings before phasing out.
Estimated tax: Quarterly payments made by people whose income is not subject to employer withholding.
Exclusion: An item of value the law specifically keeps out of taxable income, such as a gift.
Filing status: The category — single, married filing jointly, head of household, and others — that sets bracket and standard deduction amounts.
Health savings account (HSA): A savings account paired with a high-deductible health plan offering a deduction going in and tax-free medical withdrawals.
Hobby loss rules: Limits that deny expense deductions for activities lacking a profit motive.
Itemized deduction: A specific deductible expense such as mortgage interest, charitable gifts, or state taxes, claimed instead of the standard deduction.
Marginal bracket: The rate applied to the next dollar of income, which sets what a deduction is worth.
Nonrefundable credit: A credit that can reduce tax to zero but cannot create a refund by itself.
Phase-out: The income range over which a credit or deduction gradually shrinks to nothing.
Profit motive: The genuine intent to make money that separates a business from a hobby.
Refundable credit: A credit that can be paid out even when it exceeds the tax owed.
Roth conversion: Moving traditional retirement money into a Roth and paying the tax now.
Safe harbor: A minimum amount of tax paid during the year that protects against underpayment penalties.
Saver's Credit: A credit for lower-income taxpayers who contribute to a retirement account.
Self-employment tax: Social Security and Medicare tax paid by people working for themselves, covering both the employee and employer halves.
Standard deduction: A flat amount set by filing status that most taxpayers subtract instead of itemizing.
Withholding: Tax an employer removes from each paycheck and sends in on your behalf.