📖 Glossary

500 money, math, and health terms explained in plain English — each with an example and a free calculator.

47 terms found in Taxes. Clear filters

A

Additional Medicare Tax The Additional Medicare Tax is a 0.9% US tax on wages and self-employment income above certain thresholds… Adjusted Gross Income (AGI) Adjusted gross income (AGI) is a US tax measure equal to gross income minus certain specific adjustments… Alternative Minimum Tax (AMT) The alternative minimum tax (AMT) is a separate US federal income tax calculation designed to ensure that…

C

Capital Gains Tax Capital gains tax is a tax on the profit made from selling an asset, such as stocks, bonds, or property, for… Capital Loss A capital loss occurs when an asset is sold for less than its cost basis. In the United States, capital… Child Tax Credit The Child Tax Credit is a US federal tax credit for taxpayers with qualifying children under 17. It directly… Cost Basis Cost basis is the original value of an asset for tax purposes, generally its purchase price plus certain…

D

Dependent (Tax) For tax purposes, a dependent is a qualifying child or qualifying relative whom a taxpayer can claim on their… Depreciation Depreciation is the process of spreading the cost of a long-lasting asset — such as equipment, vehicles, or…

E

Earned Income Tax Credit (EITC) The Earned Income Tax Credit (EITC) is a US federal tax credit for workers with low to moderate earned… Effective Tax Rate An effective tax rate is the share of income actually paid in tax, calculated as total tax divided by total… Estate Tax Estate tax is a tax on the transfer of a deceased person’s assets, calculated on the value of the estate… Estimated Taxes Estimated taxes are periodic payments of income tax, and for the self-employed also self-employment tax, made… Excise Tax An excise tax is a tax on a specific good or activity, such as gasoline, alcohol, tobacco, or airline…

F

FICA Tax FICA (Federal Insurance Contributions Act) tax is the US payroll tax that funds Social Security and Medicare… Filing Status Filing status is the category a US taxpayer uses on their federal return, based mainly on marital status and… Flat Tax A flat tax is a tax system that applies a single rate to all taxable income, regardless of how much a person… Form 1099 Form 1099 is a family of US information returns that report income other than wages. Form 1099-NEC reports… Form W-2 Form W-2, the Wage and Tax Statement, is the form a US employer issues to each employee after the year ends… Form W-4 Form W-4 is the US form employees give their employer to indicate how much federal income tax to withhold…

G

Gift Tax Gift tax is a tax on transfers of money or property to another person without receiving full value in return…

I

Inheritance Tax Inheritance tax is a tax paid by a person who receives money or property from someone who has died. Rates and… Itemized Deductions Itemized deductions are specific eligible expenses that US taxpayers can list and subtract from adjusted…

L

Long-Term Capital Gain A long-term capital gain is profit from selling an asset held for more than one year. In the United States…

M

Marginal Tax Rate A marginal tax rate is the rate of tax applied to the next unit of income, which is the rate of the highest…

N

Net Investment Income Tax (NIIT) The Net Investment Income Tax (NIIT) is a 3.8% US federal tax on certain investment income — such as…

P

Payroll Tax Payroll taxes are taxes calculated on wages and paid by employees, employers, or both. In the United States… Pre-Tax Deduction A pre-tax deduction is an amount taken from an employee's gross pay before certain taxes are calculated… Progressive Tax A progressive tax is a tax in which the rate rises as the taxable amount rises, so higher incomes pay a…

Q

Qualified Business Income (QBI) Deduction The qualified business income (QBI) deduction, under Section 199A of the US tax code, lets many owners of…

S

Sales Tax Sales tax is a tax added to the price of goods and some services at the point of sale and collected by the… Schedule C Schedule C is the US federal tax form sole proprietors and single-member LLC owners use to report business… Self-Employment Tax Self-employment tax is the Social Security and Medicare tax paid by people who work for themselves in the… Short-Term Capital Gain A short-term capital gain is profit from selling an asset held for one year or less. In the United States… Social Security Wage Base The Social Security wage base is the maximum amount of earnings each year subject to the 6.2% Social Security… Standard Deduction The standard deduction is a fixed amount that US taxpayers can subtract from their income before federal… State Income Tax State income tax is a tax that most US states levy on the income of residents and of non-residents who earn…

T

Tax Audit A tax audit is a review by a tax authority, such as the IRS in the US, of a tax return and the records behind… Tax Avoidance vs. Tax Evasion Tax avoidance means legally reducing taxes by using provisions the law allows, such as deductions, credits… Tax Bracket A tax bracket is a range of taxable income that is taxed at a specific rate. In a progressive system such as… Tax Credit A tax credit is an amount subtracted directly from the tax owed, rather than from income. A 1,000 credit… Tax Deduction A tax deduction is an amount subtracted from income before tax is calculated, which lowers taxable income… Tax Extension A tax extension gives a taxpayer more time to file a tax return. In the US, individuals can request an… Tax Refund A tax refund is money returned to a taxpayer when the tax paid during the year, through withholding or… Tax Withholding Tax withholding is income tax that an employer deducts from an employee's pay and sends to the government… Taxable Income Taxable income is the portion of income on which income tax is actually calculated, after subtracting…

V

Value-Added Tax (VAT) Value-added tax (VAT) is a consumption tax charged at each stage of production and sale, on the value added…
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Definitions are for general educational purposes only and are not financial, tax, legal, or medical advice.