An intermediate step in calculating taxable income, AGI is the amount used for computing deductions based on, or limited by, a percentage of income, such as medical expenses, charitable contributions, and miscellaneous itemized deductions. This amount is determined by subtracting from gross income any business expenses and other deductions, such as KEOGH payments, alimony payments, and IRA contributions.
Bunching refers to the concentration of gross income, deductions, or credits in one or more taxable years to maximize tax benefits.
Carryover refers to the process by which deductions and credits of one taxable year that cannot be used to reduce tax liability in that year are applied against tax liability in subsequent years.
Cash Basis or Cash Method is an accounting method primarily used by individual taxpayers, wherein income and deductions are recognized when money is received or paid.
The conduit approach allows income or deductions to flow through to another entity, such as a partnership or trust, enabling tax liabilities to be managed at the beneficiary or partner level.
Deductions from Gross Income refer to the allowable reductions from an individual's gross income to arrive at their taxable income, applicable within the framework of personal income tax.
A U.S. tax form used by partnerships and joint ventures for reporting income, deductions, gains, losses, and informational items.
Gross earnings refer to an employee's salary or wages before any deductions for taxes, Social Security, and employee benefit contributions are made.
Gross Income refers to the total earnings from all sources before any deductions or taxes. It encompasses income from employment, self-employment, rental property, alimony, child support, public assistance payments, and retirement benefits.
A direct tax on an individual’s income, generally levied at progressive rates, with income classified under various headings as per UK tax legislation.
The Loss Denial Rule, often referred to in tax contexts, precludes taxpayers from claiming deductions for expenses or losses associated with activities not engaged in for profit, commonly referenced as 'hobby losses.'
Net denotes an amount remaining after specific deductions have been made. Net profit before taxation, for instance, is the profit made by an organization after the deduction of all business expenditure but before the deduction of the taxation charge.
Net Estate is the portion of a decedent's estate that is subject to estate tax after all allowable deductions such as debts, funeral expenses, and administration costs have been subtracted from the gross estate.
A paycheck is a check used to pay an employee's wages, containing net wages after deductions for federal and state income taxes, Social Security, union dues, and other benefit adjustments.
Payroll withholding is the process by which employers deduct a portion of an employee's earnings to pay for taxes and other mandatory deductions. This system ensures that the employees' tax obligations are met throughout the year.
A tax refund is the reimbursement issued by the government to a taxpayer when they have overpaid their taxes throughout the year. This typically occurs due to over-withholding, overestimating income, or underestimating deductions, exemptions, and credits.
Withholding refers to the portion of an employee's wages retained by the employer for the purpose of paying various taxes, insurance plans, pension plans, union dues, and other deductions.
