Definitions Flashcards
Tax Return
A tax return is a form or forms filed with a tax authority that reports income, expenses, and other pertinent tax information. Tax returns allow taxpayers to calculate their tax liability, schedule tax payments, or request refunds for the overpayment of taxes.
Form 1040
Form used by INDIVIDUALS to file tax returns with US IRS.
Form 1099
Form used by INDIVIDUALS to report non-employment income sources.
Filing status
Filing status is a category that defines the type of tax return form a taxpayer must use when filing their taxes. Filing status is closely tied to marital status.
Deductible
For tax purposes, a deductible is an expense that an individual taxpayer or a business can subtract from adjusted gross income while completing a tax form. The deductible expense reduces taxable income and, therefore, the amount of income taxes owed
Gross Income
Gross income includes your wages, dividends, capital gains, business income, retirement distributions as well as other income.
AGI
Adjusted Gross Income (AGI) is defined as gross income minus adjustments to income. This is the amount used to calculate tax owed/to be retrieved.
Adjustments to Income
Adjustments to Income include such items as Educator expenses, Student loan interest, Alimony payments or contributions to a retirement account.
Tax Liability
The amount owed by an individual to the tax authority.
Deferred tax liability
The amount owed to the tax authority but not due yet.
Tax Asset
The amount owed by the tax filing authority back to the individual, due to overpayment of taxes.
Effective Tax Rate
Percentage of income that an individual pays in tax.
It is the average tax rate applicable on the total income, not the straight tax rate as seen in the tax bracket.
Property Tax
Tax levied by local authority on property owned by individual or corporation. It is based on assessed values of the owned property.
