IRS Tax Glossary

With the new year comes a new tax season, and for those who are new to filing taxes, there may be some terms and abbreviations that, while commonly used, aren’t yet in your lexicon. For example, AGI comes up frequently in tax calculations, and while knowing that it stands for Adjusted Gross Income is one thing, understanding what AGI actually is and how it’s calculated is quite another.

I’ve assembled here a few of some of the more important terms you may encounter when it comes to completing your tax return, in alphabetical order. Feel free to bookmark this page as a later reference.

Tax Filing Important Dates

For the 2019 tax season (covering your return for the 2018 tax year), filing opens on January 28, despite the government shutdown in effect at the time of this publication. Filing closes on April 15, unless you’re a resident of Maine or Massachusetts. The 15th is Patriot’s Day, a holiday in those states, so you’ll have to April 17 to file.

Note that tax preparers and tax preparation software may allow you to complete your return prior to January 28, but your return won’t be actually filed until the season opens.

Tax Glossary

Adjusted Gross Income (AGI): Your gross income minus certain deductions. This is an amount that commonly impacts the deductions and credits you can claim to determine your taxable income. Contributions to retirement accounts such as a traditional IRA are deducted from your gross income, for example, to establish your AGI, so you’re not taxed on those contributions.

Amount Due: When the tax you owe exceeds the amount you’ve already paid through payroll deductions, you have an amount due, the opposite of a refund, and you’re required to pay this difference prior to the tax deadline.

Dependent: A child or relative that meets qualifying standards for whom you can claim dependency exemptions, additional tax breaks that reflect your financial support for that person.

E-file: A paperless method of submitting your tax return to the IRS, using telephones or computers. You can use the E-file system if you use approved tax preparation software, or if you use a tax preparer who offers E-file services.

Filing status: You can choose one of five statuses when completing your taxes, each of which may have benefits for certain situations. These statuses are: Single, Married Filing a Joint Return, Married Filing a Separate Return, Head of Household, and Qualifying Widow(er) with Dependent Child.

Form W-4: The Employee’s Withholding Allowance Certificate, completed by you when you’re an employee to establish how much tax is withheld from your paychecks. You can file a new W-4 when needed to adjust this amount.

Gross Income: The total of all money, goods and services you earn within a tax year, including unemployment benefits and some scholarships. Items such as welfare benefits are usually not included.

Non-refundable Credit: A credit that can reduce your tax owing to zero, but which cannot generate a refundable amount.

Payroll Taxes: As well as personal income withholding tax, amounts for Social Security and Medicare are also deducted from your income. Collectively, these are called payroll taxes.

Refund: When you’ve paid more tax through the year than you’re required after all credits and deductions, the surplus is returned to you as a tax refund.

Refundable Credit: A credit that not only reduces the tax you owe to zero, it can create an amount that, depending on the remainder of your tax situation, could be returned to you in the form of a refund.

For a complete list of terms related to taxes, visit the Understanding Taxes page on the IRS website. It also contains links with much more detail on many of the important tax terms.

About Paul Gaulkin

Paul Gaulkin is enrolled with the US Treasury to practice before the IRS. Mr. Gaulkin possesses technical knowledge in the process of securing relief for taxpayers in need of tax help. With an accounting degree from Florida International University, he is able to transform complex tax and accounting problems into easy to understand solutions.

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