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AGI is your gross income minus adjustments. It determines your eligibility for certain tax credits and deductions.

A fixed dollar amount that reduces the income you're taxed on, varying by filing status. For 2021, it is $12,550 for single filers and$25,100 for married filing jointly.

Tax-deductible expenses which can be enumerated individually. You can choose this option if it gives you a larger deduction than the standard deduction.

The amount of income used to calculate an individual's or a company's income tax due. It is the gross income minus deductions and exemptions.

An amount that taxpayers can subtract directly from taxes owed to the government. They are more beneficial than deductions because they reduce your tax bill dollar-for-dollar.

A reduction in taxable income, available under various conditions and depending on the taxpayer's filing status, business expenditures, and other factors.

A category that defines the type of tax return form a taxpayer must use. It is influenced by marital status and family situation. Examples include Single, Married Filing Jointly, or Head of Household.

The range of taxable income that is taxed at a particular rate within the tax system. U.S. federal tax brackets are progressive, meaning rates increase with income.

A tax levied on profit from the sale of property or an investment. Short-term capital gains are taxed as ordinary income, while long-term gains have lower tax rates.

A refundable tax credit for low- to moderate-income working individuals and families, particularly those with children.

A tax credit that is available for taxpayers for each qualifying dependent child. It is designed to help offset the tremendous costs of raising children.

Tax consisting of Social Security and Medicare taxes primarily for individuals who work for themselves, calculated as a percentage of net earnings from self-employment.

A parallel tax system designed to ensure that high-income individuals, corporations, trusts, and estates pay at least the minimum level of taxes, regardless of deductions, credits, or exemptions.

Quarterly payments made by individuals and businesses on income that is not subject to withholding, including earnings from self-employment, interest, dividends, rent, and alimony.

The 12-month period for which tax returns are prepared. For most individual taxpayers, the tax year is synonymous with the calendar year.

Dividend payments made by a corporation to its shareholders that are eligible to be taxed at the capital gains tax rates, which are typically lower than ordinary income tax rates.

The portion of an employee's wages that is not included in their take-home pay because it is sent directly to the federal, state, or local tax authorities.

Permission granted by the IRS to individual taxpayers or businesses requiring additional time to file their tax returns. The standard extension is six months.

The Internal Revenue Service, a U.S. government agency responsible for the collection of taxes and enforcement of tax laws.