Adjusted gross income (or AGI) is your gross income minus any tax deductions (like work expenses and charitable donations) or any adjustments. For example, if you make $100 but spend $2 on a stapler for work and give $5 to charity, your AGI is $93. This is the income that the IRS generally looks at when they determine your taxes.
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Adjusted Gross Income is…
Thursday, July 30th, 2009Property Tax is..
Thursday, July 30th, 2009Property tax is a yearly fee that you pay to your local government on any real estate, automobiles, and boats that you own. When people talk about paying a property tax, they most likely are referring to the one on their homes – it’s the most common form.
Tax Incidence is…
Thursday, July 30th, 2009Tax incidence is an economics concept that describes how the burden of paying a tax on a good is shared – the burden can fall on the buyer, the seller, or both. Taxes on retail goods are an example where the tax burden falls on both the buyer and the seller. Often, tax incidence can mean who ends up paying the tax. If consumers are paying the entire tax, then the tax incidence falls on them.
A Standard Deduction is…
Wednesday, July 29th, 2009A standard deduction is a predetermined reduction in the amount of income taxes you have to pay. The value of your standard deduction is determined by your filing status, your age, whether or not you are blind, and whether anyone can claim you as a dependent.
A Credit Record is…
Wednesday, July 29th, 2009A credit record is a history of how you’ve borrowed and repaid debts, especially credit card debts. Your credit record is used by credit bureaus to put together your credit score or rating. This rating helps determine how easy it will be for you to get a loan. So be aware, it’s important to make payments on time!
Tax-Exempt Income is…
Wednesday, July 29th, 2009Tax-exempt income is that portion of your income which is not subject to taxation. Examples of the types of income which are (generally) tax-exempt include tax refunds, interest on municipal bonds, some scholarships, welfare benefits, and much more.
A Traveler’s Check is…
Monday, July 27th, 2009A traveler’s check is a a pre-printed check issued by a financial institution (the first was American Express) that serves the same purpose as cash, but is not accepted at every store (unlike cash). People often use these when traveling because, unlike cash, they can be replaced if lost or stolen.
Form 1040 is…
Friday, July 24th, 2009Form 1040 is an individual income tax return form every qualifying taxpayer has to fill out annually and submit to the IRS. You only have to file form 1040 if you make more than a certain amount of money in a year.
What kind of taxpayer are you?
Friday, July 24th, 2009You have a different filing status (taxpayer type) depending on your living situation. Your filing status helps determine your eligibility for certain credits and deductions and how much those deductions are worth, how you should submit tax information to the government, and how much you need to pay in income taxes. There are five main filing statuses, each generally designating a different level of financial dependence or independence.
“Single” is basically the square one of filing statuses: it means you’re only responsible for yourself.
If you’re married, you and your spouse can choose either the “married filing jointly” or “married filing separately” statuses. If you file separately, you’re basically treated as two “single” individuals, while joint tax returns make the two of you more like one entity.
If you file as “head of household,” it means that you have at least one dependent. A dependent is someone who has someone else (you, in this case) provide at least half of his or her income. Children and elderly or retired parents are the most common dependents, but you can claim anyone who fits this description as your dependent. When you file as head of household, you’re saying that you’re responsible for supporting at least one other person, so in return you have to pay less in taxes yourself. Lastly, you can file as qualifying widow/widower with dependent child; this status also decreases your taxes because you have a dependent to support and you’ve lost a source of income with the death of your spouse.