Common Tax Terms
One of the most difficult things about filing taxes is trying to understand all the complex IRS tax terms. There’s plenty of tax lingo to be learned, and you need to know it so you can provide the correct information on your tax return. For starters, let’s cover a few basic tax terms you’ll need to know:
- Adjusted Gross Income (AGI): Your gross income (wages, dividends, capital gains, business income, etc.) minus adjustments (student loan interest, contributions to an IRS account, etc.).
- Deductions: A tax incentive that allows you to subtract certain expenses from your taxable income.
- Dependents: Individuals who rely on you as a primary source of income. Typically, this refers to your children.
- Credits: A tax incentive that allows you to reduce your tax bill by subtracting from you tax bill.
- Refund: Money that is returned to you after completing your taxes because you overpaid throughout the year.
- Tax Bracket: The rates at which your income is taxed. There are currently seven federal tax brackets.
- Tax Liability: The amount of tax you are required to pay to the government.
IRS terminology is vast, but Community Tax can help you understand all the tax terms and definitions you need to complete your annual tax return. We provide the resources you need to help you grasp everything from IRS forms to specific tax meanings. If you have other questions or need further clarification, you can also contact our expert tax professionals today—we have a comprehensive knowledge of all things taxes and can help you resolve any of your tax needs.