A Glossary Of Tax-Related Terms
For the purpose of quick and smooth communication, every industry has its own language and terms. These words and phrases can be confusing to anyone who is not part of the daily operations of a specific industry, and the tax business is no exception.
To help you understand the terms, acronyms, and phrases regularly used when availing of tax preparation services, Speedy Tax Preparation & Bookkeeping Service has created this handy reference guide. Here you’ll find valuable information allowing you to comprehend and communicate your tax requirements effectively.
Adjusted gross income (AGI)
It is the gross income minus allowable reductions.
Child and Dependent Care Credit
It is a tax credit in the amount of a percentage of the amount expended on the child or dependent care by an employed individual.
Dependent
It refers to a person who meets the five tests of dependency and thereby qualifies to be claimed as a dependent for tax purposes.
Depreciation
It is a deduction for the wear and tear of an item used for business.
Estimated tax
It is what the taxpayer expects to owe in taxes over the course of the year, generally paid quarterly with vouchers.
Home office expense
It refers to the expenses arising from operating a business in a qualified manner in your home.
Itemized deductions
It refers to the expenditures that the tax code deems appropriate for reducing adjusted gross income.
Non-taxable income
It is the income that is not taxed.
Self-employed
It refers to a person who individually decides when and where to work and pays their own expenses. Self-employed individuals must pay self-employment taxes.
Taxable income
It is the adjusted gross income minus deductions and exemptions.
Acks
It is when the IRS or State acknowledges that the tax return has been received.
Efile
It refers to electronically filing IRS or State returns.
1099-MISC/NEC
It is a form received by self-employed individuals for work performed. If over $400, it is taxable income.
Exemption
It is a reduction of income that would otherwise be taxed.
Foster child
It refers to a child other than a natural or adopted child who lived with the taxpayer for the entire year and whom the taxpayer treated as their own child.
If you’re looking for more information about taxes, reach out to Speedy Tax Preparation & Bookkeeping Service. I am a tax preparer and bookkeeper catering to clients across Elizabethtown, Salemburg, Roseboro, Clinton, Garland, Harrells, Whiteville, Lake Waccamaw, Tar Heel, Bladenboro, Atkinson, Brunswick County, and the surrounding areas. I treat all my clients as individuals and not just another number on a list. My clients are important to my business, and I make sure that they are aware of this by serving them to the best of my ability. Even if I do not have the solutions to the problems they are facing, I make sure to connect them with the professionals that do.
View my full list of services here, or get in touch with me here to learn more.