Few things in life are as complicated as taxes. Whether you are a single parent or a small business owner, it is important to get your taxes right the first time. Understanding some common tax law terms can help.

Tax Terms

Your attorney has your best interest and will ensure proper documentation for everything at the end of the day. The following terms are most common in this area of law. These definitions come from Findlaw and TaxAct.

Adjusted Gross Income (AGI)

A person’s gross income after deductions and exemptions allowed by the IRS.

Capital Gains Tax

A tax on income from the sale of a capital asset, such as stock or real estate.

Charitable Contribution

Property or money donated to a qualified non-profit organization.

Deduction

An expense that is subtracted from income to lower taxable income and the amount of tax due.

Earned Income Tax Credit

A credit to reduce taxes for low to moderate-income workers, particularly those with children.

Estimated Tax

A quarterly tax is paid on income that is not subject to automatic tax withholding, such as self-employment income.

Exemption

Similar to a deduction, a dollar amount is subtracted from income to reduce taxable income and the amount of tax due.

Itemized Deductions

Expenses subtracted from adjusted gross income to reduce that income and the tax owed on it.

Married Filing Jointly

The filing status of married couples combining all of their income, deductions. For example, one tax return.

Married Filing Separately

The filing status of a married couple who files their tax returns separately.

Self-Employment Tax

Social Security and Medicare tax paid by self-employed individuals.

Standard Deduction

A set dollar amount subtracted from income to lower that income and the tax owed.

Taxable Income

Income (salaries, wages, tips, bonuses, commissions, and more) received for services rendered and used to determine taxes owed.

These are just some of many tax matter terms.  If you have tax questions or need help with your taxes, contact us today.  We also offer several services and are standing by to assist with any tax issue.