A
Adjusted Gross Income (AGI)
Adjusted Gross Income is your total income for the year minus a specific set of "above-the-line" adjustments the IRS lets you take before anything else. It's one of the most important numbers on your return because so many other tax breaks are measured against it.
Alternative Minimum Tax (AMT)
The AMT is a parallel tax system that ensures higher-income taxpayers pay a minimum amount, by disallowing certain deductions.
Amended Return (Form 1040-X)
Form 1040-X corrects a return you already filed — to fix income, add a missed deduction or credit, or change your filing status.
C
C Corporation
A C corporation is a standard corporation that pays its own income tax at a flat 21% federal rate, separate from its owners.
Capital Gains
A capital gain is the profit when you sell an asset — stock, crypto, a house, a collectible — for more than you paid for it.
Capital Loss & Tax-Loss Harvesting
A capital loss is what you have when you sell an asset for less than you paid. Used deliberately, losses can lower your tax bill.
Certified Public Accountant (CPA)
A CPA is a state-licensed accountant who has passed the CPA exam and met education and experience requirements.
Child Tax Credit
The Child Tax Credit is worth up to $2,000 per qualifying child under 17, and part of it is refundable.
Cost Basis
Cost basis is what you originally paid for an asset, plus certain add-on costs. It's the number you subtract from the sale price to figure your gain or loss.
E
Earned Income Tax Credit (EITC)
The EITC is a refundable credit for low-to-moderate-income workers, and it's worth more the more qualifying children you have.
Effective Tax Rate
Your effective tax rate is the total tax you paid divided by your total income — your real, blended average. It's the honest answer to "what percentage did I actually pay?"
Employer Identification Number (EIN)
An EIN is a nine-digit federal tax ID for a business — essentially a Social Security number for your company.
Enrolled Agent (EA)
An Enrolled Agent is a tax specialist licensed directly by the IRS, with unlimited rights to represent taxpayers.
Estimated Taxes
Estimated taxes are quarterly payments you make directly to the IRS on income that has no withholding — freelance profit, business income, investment gains.
F
Filing Status
Your filing status sets your tax brackets, your standard deduction, and your eligibility for various credits. Picking the right one matters.
Form 1065
Form 1065 is the informational return a partnership or multi-member LLC files to report business income and each partner's share.
Form 1099
The 1099 is a whole family of forms that report income you received that isn't wages — contractor pay, interest, dividends, retirement distributions, and more.
Form 1099-DIV
The 1099-DIV reports dividends and capital-gain distributions paid to you, usually from stocks and mutual funds in a taxable account.
Form 1099-INT
The 1099-INT reports interest income of $10 or more — typically from a bank, credit union, or brokerage.
Form 1099-K
The 1099-K reports money you received through payment cards and third-party platforms like PayPal, Venmo for business, Etsy, and other marketplaces.
Form 1099-MISC
The 1099-MISC reports miscellaneous income that isn't wages or contractor pay — think rent, royalties, prizes, and certain other payments.
Form 1099-NEC
The 1099-NEC reports "nonemployee compensation" — money paid to independent contractors and freelancers. If you're self-employed, this is the form clients send you.
Form 1120
Form 1120 is the income tax return a C corporation files to report its income and pay the flat 21% federal corporate tax.
Form 1120-S
Form 1120-S is the annual return an S corporation files to report income and each shareholder's share of it.
Form W-2
The W-2 is the wage statement your employer sends you and the IRS each January. It's the master record of what you were paid and what was withheld.
Form W-4
The W-4 is the short form you hand your employer to control how much federal tax comes out of your pay. It's the steering wheel for your withholding.
Form W-9
A W-9 is the form a business asks you to fill out so it has your legal name and taxpayer ID on file before it pays you. It never goes to the IRS itself.
H
Head of Household
Head of household is a favorable filing status for unmarried people who support a qualifying dependent and keep up a home for them.
Health Savings Account (HSA)
An HSA is a tax-advantaged account for people on high-deductible health plans, with a rare triple tax benefit.
Home Office Deduction
The home office deduction lets self-employed people write off the part of their home used regularly and exclusively for business.
I
Individual Retirement Account (IRA)
An IRA is a personal retirement account you open yourself, independent of any employer.
Itemized Deductions
Itemized deductions are specific expenses the tax code lets you write off one by one, instead of taking the flat standard deduction. You itemize only when they add up to more than the standard amount.
M
Marginal Tax Rate
Your marginal tax rate is the rate charged on your next dollar of income — the bracket your last dollar lands in. It's the number that matters for decisions, not your average rate.
Modified Adjusted Gross Income (MAGI)
MAGI is your AGI with certain deductions added back. It's the income figure that controls many phase-outs.
P
Pass-Through Entity
A pass-through entity is a business that doesn't pay income tax itself — the profits "pass through" to the owners, who report them on their personal returns.
PTIN
A PTIN is the Preparer Tax Identification Number that anyone paid to prepare federal returns must put on those returns.
R
S
S Corporation
An S corporation is a corporation (or LLC) that elects to pass its income through to shareholders, sidestepping corporate-level tax.
Safe Harbor (Estimated Taxes)
The safe harbor is a rule that protects you from underpayment penalties as long as you prepay a set minimum during the year.
Schedule B
Schedule B lists your interest and ordinary dividends in detail once the totals get large enough to require it — generally over $1,500 of either.
Schedule C
Schedule C is where a sole proprietor or single-member LLC reports the income and expenses of their business, right alongside their personal 1040.
Schedule D
Schedule D summarizes your capital gains and losses from selling investments and other assets, split between short-term and long-term.
Schedule E
Schedule E reports income and expenses from rentals, royalties, and pass-through entities like partnerships and S corporations.
Schedule SE
Schedule SE calculates the self-employment tax — the Social Security and Medicare you owe on business profit, since no employer is splitting it with you.
Section 179 Deduction
Section 179 lets a business deduct the full cost of qualifying equipment in the year you buy it, instead of depreciating it slowly over years.
Standard Deduction
The standard deduction is a flat amount you can subtract from your income without itemizing or keeping receipts. It's the simplest, and for most people the biggest, deduction on the return.
Standard Mileage Deduction
The standard mileage deduction lets you write off business driving at a set per-mile rate instead of tracking every actual vehicle cost.
T
Tax Audit
An audit is an IRS review of your return to verify that the income, deductions, and credits you reported are accurate.
Tax Bracket
A tax bracket is a band of income taxed at a particular rate. The federal system has seven of them, and your income can span several at once.
Tax Credit
A tax credit reduces your tax bill dollar for dollar. It's the most powerful kind of tax break there is.
Tax Deduction
A deduction lowers the income you're taxed on. Its value depends on your bracket — it saves you the rate, not the full amount.
Tax Extension (Form 4868)
Filing Form 4868 buys individuals six extra months to file a return — moving the deadline to mid-October. It does not give you more time to pay.
Tax Liability
Your tax liability is the total tax you owe for the year, before counting what you've already paid in.
Tax Refund
A refund is money returned to you when your payments during the year came out larger than your actual tax.
Tax Withholding
Withholding is the tax your employer pulls out of every paycheck and forwards to the IRS on your behalf, as a running prepayment toward your year-end bill.
Taxable Income
Taxable income is the slice of your income the tax brackets are actually applied to — what's left after you've taken your deductions. It's almost always lower than what you earned.