Tax Glossary
Plain-language definitions of common tax terms.
A
Adjusted Gross Income AGI
What Is Adjusted Gross Income (AGI)? Adjusted Gross Income, commonly known as AGI, is your total gross income for the […]
Alternative Minimum Tax AMT
Alternative Minimum Tax Amount (AMT) The Alternative Minimum Tax Amount is a separate federal tax calculation that runs parallel to […]
Amended Return
Amended Return An amended return is a revised tax return filed to correct errors or omissions on a previously submitted […]
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Earned Income Tax Credit EITC
Earned Income Tax Credit (EITC) The Earned Income Tax Credit (EITC) is a refundable federal tax credit designed to provide […]
Effective Tax Rate
Effective Tax Rate The effective tax rate is the actual percentage of your total income that you pay in taxes, […]
Estate Tax
Estate Tax Estate tax is a federal (and sometimes state-level) tax levied on the total value of a deceased person’s […]
Estimated Tax
Estimated Tax Estimated tax is a method of paying income tax on earnings that are not subject to automatic withholding, […]
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Payroll Tax
Payroll Tax A payroll tax is a tax levied on wages and salaries, typically split between employees and employers, and […]
Personal Exemption
Personal Exemption A personal exemption is a fixed dollar amount that taxpayers were generally allowed to subtract from their adjusted […]
Progressive Tax
Progressive Tax A progressive tax is a tax system in which the tax rate increases as the taxable amount increases, […]
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Self Employment Tax
Self-Employment Tax Self-employment tax is a federal tax that covers Social Security and Medicare contributions for individuals who work for […]
Standard Deduction
Standard Deduction The standard deduction is a fixed dollar amount that the IRS allows taxpayers to subtract from their adjusted […]
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Tax Audit
Tax Audit A tax audit is an official review conducted by the IRS (or a state tax agency) to verify […]
Tax Bracket
Tax Bracket A tax bracket is a range of income that is taxed at a specific rate under a progressive […]
Tax Credit
What Is a Tax Credit? A tax credit is a dollar-for-dollar reduction of the actual tax you owe, directly lowering […]
Tax Deduction
Tax Deduction A tax deduction is an expense or amount that reduces your taxable income, which in turn lowers the […]
Tax Extension
Tax Extension A tax extension is an official request filed with the IRS that gives taxpayers additional time to submit […]
Tax Withholding
Tax Withholding Tax withholding is the process by which an employer (or other payer) automatically deducts a portion of an […]
Taxable Income
What Is Taxable Income? Taxable income is the portion of your total earnings that the federal government actually uses to […]