Definitions
Adjusted Gross Income
Your total income after certain adjustments and before deductions and credits.
Standard Deduction
A fixed amount that reduces your taxable income without needing to itemize expenses.
Itemized Deduction
Specific deductible expenses that can be claimed instead of the standard deduction.
Dependent
A person you support who may qualify you for certain tax benefits.
Tax Credit
A dollar-for-dollar reduction of your tax liability.
Tax Deduction
An expense or adjustment that reduces taxable income.
Refund
Money returned to you when your tax payments exceed your actual tax liability.
Withholding
Taxes taken out of your paycheck or other income throughout the year.
Capital Gain
Profit from selling an asset for more than its cost.
Capital Loss
Loss from selling an asset for less than its cost.
Cost Basis
Generally what you paid for an asset, adjusted for certain items.
Schedule C
The form used to report income and expenses from a sole proprietorship.
Definitions (Continued)
Self-Employment Tax
Social Security and Medicare taxes paid by self-employed individuals.