Taxes

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Babybubblez28
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208318
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Taxes
Updated:
2013-03-19 16:21:11
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  1. Adjusted gross income (AGI)
    1Adjusted gross income (AGI) Earned income and unearned income mi- nus certain allowed adjustments to income.
  2. Alternative minimum tax
    A federal income tax designed to ensure (AMT) that people who receive certain tax breaks pay their fair share of taxes.
  3. Average tax rate
    The proportion of a taxpayer’s total taxable income that goes to paying taxes.
  4. Capital gain
    Profit on the sale of an investment. This profit is subject to a lower tax rate if the investment has been held for more than one year.
  5. Dependent
    A member of a household who receives at least half of his or her support from the head of the household.
  6. Earned income
    Income from salaries, wages, tips, bonuses, commissions, and other sources.
  7. Exemption
    The dollar amount per household member that is subtracted from adjusted gross income in calculating taxable income.
  8. Federal Insurance Contributions
    A payroll tax levied on earned income by Act (FICA) tax the U.S. government to fund Social Security and Medicare. Stands for Federal Insurance Contributions Act tax.
  9. Filing status
    The household type, for tax filing purposes.
  10. Flexible spending account
    An account maintained by an employer in which the pretax earnings of an employee are set aside and can be used for reimburse- ment of qualified medical and child-care expenses.
  11. Gross income
    Income from all sources, including earned income, investment income, alimony, un- employment compensation, and retirement benefits.
  12. Gross taxable income
    Income from all sources, less allowed exclu- sions
  13. Internal Revenue Code
    A compilation of all statutes, regulations, and court decisions relating to U.S. income tax.
  14. Individual retirement
    A retirement account that allows the account (IRA) holder to subtract current contributions from taxable income and to defer income tax until withdrawal at retirement
  15. Internal Revenue Service (IRS)
    The U.S. government agency that is responsible for collecting federal income taxes and enforcing tax laws and regulations.
  16. IRS e-file
    A system that enables the electronic filing of federal tax returns.
  17. Itemized deductions
  18. An alternative to the standard deduction in which the taxpayer reports and deducts    actual expenses in certain allowed categories to arrive at taxable income.
  19. Marginal tax effect
    The change in taxes owed as a result of a   financial decision.
  20. Marginal tax rate
    Tax rate imposed on a taxpayer’s next dollar of income.
  21. Payroll withholding
    Money regularly withheld from employees’ pay by employers for payment of the employees’ taxes.
  22. Progressive tax
    A tax that requires higher-income taxpayers to pay proportionately more in taxes than other taxpayers, through either higher tax rates or other rules.
  23. Regressive tax
    A tax that places a disproportionate financial burden on low-income taxpayers.
  24. Roth IRA
    An individual retirement account to which contributions are made with after-tax dol- lars but in which investment earnings and withdrawals at retirement are tax free.
  25. Standard deduction
    A dollar amount based on filing status that is subtracted from adjusted gross income in calculating taxable income.
  26. Tax avoidance
    Strategic use of knowledge of tax rules to avoid overpayment of taxes.
  27. Tax bracket
    The range of income to which a particular marginal tax rate applies.
  28. Tax credit
    A reduction applied directly to taxes owed rather than to income that is subject to taxes.
  29. Tax evasion
    Deliberate nonpayment of taxes legally owed.
  30. Taxable income
    The amount of income that is subject to taxes under the law.
  31. Total income
    Gross income less certain exclusions al- lowed by the IRS.
  32. Unearned Income
    Income from investments, interest,           dividends, capital gains, net business income, rents, and royalties.

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