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TAX 4001 - Final Exam Vocab (Chp 14, 15, 16) (1).
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TAX 4001 - Final Exam Vocab (Chp 14, 15, 16) (1).
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TAX 4001 - Final Exam Vocab (Chp 14, 15,16)
Above-the-line deduction - ANS-An allowable deduction for an individual taxpayer that
can be subtracted from total income to compute AGI
Adjusted Gross Income (AGI) - ANS-Total income less adjustments as computed on
page 1, Form 1040. AGI is an intermediate step in the calculation of individual taxable
income
Bunching - ANS-a tax planning technique to concentrate itemized deductions into one
year so that the total exceeds the standard deduction for the year
Child Credit - ANS-A credit based on both the number of dependent children under the
age of 17, as well as other non-child dependents of the taxpayer
Dependent - ANS-A member of a taxpayer's family or household who receives more
than half of his or her financial support from the taxpayer
Dependent care credit - ANS-a credit based on the taxpayer's cost of caring for
dependents either under age 13 or physically or mentally incapable of caring for
themselves
Earned income credit - ANS-A refundable income tax credit that offsets the impact of
the payroll tax on low-income workers
Estimated tax payments - ANS-quarterly installment payments of estimated current year
tax liability required of both corporate and individual taxpayers
excess social security tax withholding credit - ANS-An overpayment of employee Social
Security tax allowed as a credit against income tax
Filing status - ANS-a classification for individual taxpayers reflecting marital and family
situation and determining the rate schedule for the computation of tax liability
Head of household - ANS-filing status for an unmarried individual who maintains a
home for a child or dependent family member
, Itemized deduction - ANS-an allowable deduction for an individual taxpayer that cannot
be subtracted in the calculation of AGI
Joint and several liability - ANS-Each spouse on a joint tax return is individually liable for
the entire tax for the year
Joint return - ANS-a return filed by husband and wife reflecting their combined activities
for the year
Kiddie tax - ANS-The tax on a child's unearned income based on the tax rate applicable
to estates and trusts
Qualified business income (QBI) - ANS-Active trade or business income from
nonservice businesses eligible for the Section 199A deduction
Qualifying child - ANS-A child (or specified family member) who has the same principal
residence as the taxpayer, who does not provide more than one-half of his or her own
financial support, and who is younger than 19 years old or a student younger than 24
years old
Qualifying relative - ANS-a specified family member or member of the taxpayer's
household who receives more than one-half of his or her financial support from the
taxpayer and whose annual gross income is less than an amount prescribed by
Congress (indexed annually for inflation)
Safe-harbor estiamte - ANS-Estimated current year tax payments based on the
preceding year's tax liability that protect the taxpayer from the underpayment penalty
Separate return - ANS-A return filed by a married individual reflecting his or her
independent activity and tax liability for the year. The tax liability is based on the married
filing separately rate schedule
Single taxpayer - ANS-an unmarried individual who is neither a surviving spouse nor a
head of household
Standard deduction - ANS-A deduction from AGI based on filing status. The standard
deduction amounts are indexed annually for inflation
Surviving spouse - ANS-filing status that permits a widow or widower to use the married
filing jointly rate schedule for two taxable years following the death of a spouse
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