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Income earned from working, which includes wages, salaries, tips, and self-employment income.

Total income earned before any deductions or exemptions are applied, including all taxable income from any source.

The standard Internal Revenue Service (IRS) form that individuals use to file their annual income tax return.

A deduction reduces your taxable income. Common deductions include mortgage interest, charitable contributions, and certain business expenses.

Expenses that can be subtracted from AGI if they exceed the standard deduction. Includes medical expenses and property taxes among others.

A tax consisting of Social Security and Medicare taxes primarily for individuals who work for themselves. It is similar to the FICA that is withheld from wages of most wage earners.

An agreement between two countries that outlines how they tax income that is earned within their borders. It helps to resolve issues of double taxation for individuals and companies.

A form used by employers to determine the correct amount of tax withholding to deduct from an employee's wages.

Any occurrence which affects the liability of a person or business to tax, such as selling stock for a profit or receiving a dividend payment.

AGI is your gross income minus any allowable adjustments. It's important because it determines your eligibility for certain tax benefits.

Taxes imposed on employers or employees, and are usually calculated as a percentage of the salaries that employers pay their staff.

A tax on an individual or entity's income which is progressive, meaning rates increase as income increases.

A flat amount that reduces taxable income, offered to all taxpayers who do not itemize their deductions. It varies based on filing status.

A tax on the value of property owned by an individual or business. It's usually imposed by local governments and depends on the property's value.

Government policy that attempts to influence the direction of the economy through changes in government spending or taxes.

A form(s) filed with a taxing authority that reports income, expenses, and other pertinent tax information. It determines if additional taxes are owed or if a refund is due.

A tax on the transfer of the estate of a deceased person. It's applied to the amount of the estate that exceeds a specific exemption threshold.

A tax on the transfer of property by one individual to another while receiving nothing, or less than full value, in return. There are annual and lifetime exclusions.

The portion of your income that is subject to income tax after all deductions and exemptions are applied.

A person who relies on the taxpayer for financial support and qualifies the taxpayer for certain tax benefits, such as exemptions and credits.

Quarterly payments made by self-employed individuals or those who do not have enough income tax withheld, to cover taxes like income tax and self-employment tax.

A credit directly reduces your tax liability, dollar-for-dollar. Examples include the Earned Income Tax Credit and the Child Tax Credit.

An exemption reduces taxable income. It's typically allotted for the taxpayer and each dependent. The Tax Cuts and Jobs Act of 2017 suspended personal exemptions until 2025.

The total amounts received from all sources without subtracting any costs or expenses. It's often used to determine the taxability of a company.

Income received from rental property, limited partnerships or other enterprises in which the individual is not actively involved.

A tax on the profit earned from the sale of an asset that has increased in value. The rate depends on how long you held the asset and your income level.

Tax withheld from employees' wages and paid directly to the government by the employer. It's a way to collect income tax in advance.

The 12-month period for which tax returns are prepared, often coinciding with the calendar year. Different from a fiscal year which a company may use for accounting purposes.

A tax on sales or on the receipts from sales. It is usually a certain percentage of the retail price and is collected by the seller at the point of sale.

Taxes paid when purchases are made on a specific good, such as gasoline. They are often included in the price of the product.

The illegal act of not paying taxes that are owed, often by underreporting income or inflating deductions. Can result in penalties or imprisonment.

A tax on the profits of a corporation. The rates can vary widely by country, and the tax can have significant effects on business planning and strategy.

The form that an employer must send to an employee and the IRS at the end of the year, which reports an employee's annual wages and the amount of taxes withheld.

Range of incomes taxed at a particular rate under a progressive tax system. Your top dollar is taxed according to your bracket, not your entire income.

A parallel tax system designed to ensure that high-income individuals and corporations pay a minimum amount of tax, regardless of deductions, credits, or exemptions.

An examination of an individual's or organization's accounts and financial information to ensure information is reported correctly according to the tax laws and to verify the reported amount of tax is correct.

The legal use of the tax regime to one's own advantage, to reduce the amount of tax that is payable by means that are within the law.