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A reduction in taxable income for certain expenses, which lowers the amount of tax owed. Examples: mortgage interest, charitable donations.

The amount of income used to calculate how much tax an individual or a company owes to the government in a given tax year. Examples: Wages, bonuses, investment income.

A consumption tax placed on a product whenever value is added at each stage of the supply chain, from production to the point of sale. Examples: Goods and services in many European countries.

A tax imposed on the net income of the company. Examples: Federal corporate income tax, state corporate taxes.

A fixed dollar amount that reduces the income you're taxed on, which varies by filing status. Examples: For the 2022 tax year, it's $12,950 for single filers,$25,900 for married filing jointly.

A tax consisting of Social Security and Medicare taxes primarily for individuals who work for themselves. Examples: Freelancers, small business owners.

Tax on the transfer of the estate of a deceased person. Examples: Real estate, investment accounts, other assets transferred through inheritance.

Income derived from investments and other sources not related to employment. Examples: Dividends, interest, rent, royalties.

An allowance granted by the IRS to file income tax after the regular deadline. Examples: IRS Form 4868, additional six months to file.

A category that defines the type of tax return form an individual will use. Examples: Single, Married Filing Jointly, Married Filing Separately, Head of Household, Qualifying Widow(er).

Using legal methods to minimize tax liability. Examples: Tax deductions, tax credits, strategic investment decisions.

A federal tax that applies to individuals that give something of value to another person. Examples: Property, money, or assets given with nothing received in return.

Tax deductions that individuals can claim for specific expenditures in place of the standard deduction. Examples: Medical expenses, state taxes paid, and real estate taxes.

A tax that takes a larger percentage from high-income earners than from low-income individuals. Examples: The U.S. federal income tax system.

The U.S. individual income tax return form. Examples: Used to file annual income tax returns with the IRS.

A range of incomes that are taxed at a particular rate. Examples: 10%, 12%, 22%, 24%, 32%, 35%, and 37% for different income ranges in the U.S. federal tax system.

A parallel tax system designed to ensure that certain taxpayers pay at least a minimum amount of tax. Examples: Affects high-income earners who have large numbers of deductions.

A form used by employers to report wage and salary information for employees. Examples: Reported to the IRS, includes total wages and taxes withheld.

An accounting method of allocating the cost of a tangible asset over its useful life. Examples: Vehicles, machinery, office equipment.

The amount that the government returns to a taxpayer if they have overpaid their taxes. Examples: Result of withholding or estimated tax payments exceeding the tax liability.

A review of a taxpayer's accounts and financial information to ensure information is reported correctly according to the tax laws. Examples: Random audits, audits due to discrepancies.

Any method used to decrease taxable income, such as deductions, exemptions, and investments. Examples: Retirement accounts, investments in loss-generating enterprises.

Taxes imposed on employers and employees, usually calculated as a percentage of the salaries that employers pay their staff. Examples: Social Security, Medicare taxes.

The illegal act of not paying taxes owed. Examples: Underreporting income, inflating deductions, or hiding money in offshore accounts.

The total amount of tax debt owed by an individual, corporation, or other entity to a taxing authority. Examples: Federal income tax owed, state income tax, property taxes.

Income generated by working, including wages, salaries, tips, and other taxable employee compensation. Examples: Hourly wages, annual salaries, bonuses.

A monetary exemption that reduces taxable income. Examples: Personal exemption, exemption for dependents.

Regular payments of the estimated tax due, typically by self-employed individuals or those without sufficient withholding. Examples: Quarterly payments to the IRS.

A series of documents the Internal Revenue Service (IRS) refers to as "information returns". Examples: 1099-INT for interest, 1099-DIV for dividends, 1099-MISC for miscellaneous income.

A tax that governments impose on financial income generated by all entities within their jurisdiction. Examples: Federal income tax, state income tax.

Tax on the profit from the sale of property or an investment. Examples: selling stocks, real estate, or a business.

All income from any source before any deductions or taxes. Examples: Salary, wages, dividends, interest, rents.

An amount that taxpayers can subtract from taxes owed to the government. Examples: Child Tax Credit, Earned Income Tax Credit.

The 12-month period for which tax returns are prepared. Examples: January 1, 2022, to December 31, 2022, for the 2022 tax year.

A tax imposed so that the tax rate is fixed with no change as the taxable base amount increases or decreases. Examples: Flat tax, some state income taxes.

Income tax withheld from employees' wages and paid directly to the government by the employer. Examples: Federal income tax, state income tax, Social Security, and Medicare taxes.

Taxes paid when purchases are made on a specific good, often included in the price of the product. Examples: Fuel, alcohol, tobacco.

A country or jurisdiction with low or no taxes for foreign individuals and businesses. Examples: Cayman Islands, Bermuda, Switzerland.

A tax form used by sole proprietors to report business income and expenses. Examples: Used for Profit or Loss from Business (Sole Proprietorship) reporting.