EA key terms

Gross income minus certain adjustments (such as IRA contributions, student loan interest, and self-employment tax) before subtracting standard or itemized deductions; it determines eligibility for many tax benefits.

An adjustment to gross income that reduces adjusted gross income and is available whether or not the taxpayer itemizes; examples include deductible IRA contributions and student loan interest.

A fixed deduction amount set by filing status and adjusted annually for inflation; it reduces taxable income and is used when greater than total itemized deductions.

Specified expenses such as mortgage interest, state and local taxes, charitable contributions, and medical costs that may be deducted instead of the standard deduction when total exceeds it.

A category (single, married filing jointly, married filing separately, head of household, qualifying surviving spouse) that determines tax rates, standard deduction, and eligibility for credits.

A dependent who meets relationship, age, residency, support, and joint-return tests; status can make a taxpayer eligible for head of household and certain credits.

Profit from selling a capital asset, generally taxed at preferential rates if long-term; short-term gains are taxed as ordinary income.

The length of time an asset is owned, which determines whether gain or loss is short-term (one year or less) or long-term (more than one year).

The minimum amount that must be withdrawn annually from most tax-deferred retirement accounts after a certain age; failure to withdraw triggers a penalty.

Periodic payments of tax made during the year when withholding is insufficient, generally required if a taxpayer expects to owe a threshold amount.

Rules that generally tax a child's unearned income above a threshold at the parents' marginal rate to discourage income shifting.

Social Security and Medicare taxes for self-employed individuals, calculated on net earnings from self-employment using Schedule SE; the taxpayer pays both employee and employer portions.

Form used by sole proprietors and single-member LLCs to report business income and expenses, which flows to the owner's individual return.

A deduction of up to 20 percent of a pass-through business's net income, subject to limitations based on W-2 wages and property.

The taxpayer's investment in property for tax purposes; it is used to measure gain or loss on sale and may be adjusted for improvements, depreciation, or distributions.

An annual deduction that allocates the cost of business property with a useful life beyond one year over a recovery period.

An election allowing a business to deduct the full cost of qualifying property in the year placed in service, subject to dollar and taxable income limits.

A corporation that elects pass-through taxation; income, deductions, and credits flow to shareholders, who generally are not subject to self-employment tax on their share.

A business entity with two or more owners that generally is not taxed itself; income and losses pass through to partners according to the partnership agreement.

The wages an S corporation must pay shareholder-employees for services before making distributions, reflecting fair market value for the work performed.

A worker who controls how work is performed and is not treated as an employee; payments generally are reported on Form 1099-NEC.

Taxes withheld from employees' wages for Social Security and Medicare, plus the employer's matching share, reported on employment tax returns.

A written authorization letting a representative act on behalf of a taxpayer before the IRS for specified tax matters.

Treasury regulations that govern practice before the IRS, setting professional duties, standards of conduct, and disciplinary rules for tax practitioners.

A tax practitioner authorized by the IRS to represent taxpayers in audits, appeals, and collection matters after passing a comprehensive examination or through experience.

An independent IRS office that helps taxpayers experiencing significant hardship or who have been unable to resolve problems through normal channels.

An agreement allowing a taxpayer to settle tax debt for less than the full amount owed when collection potential is doubtful or payment would cause hardship.

A hearing before IRS Appeals after a lien or levy notice, where the taxpayer may challenge collection actions and propose alternatives.

A limited confidentiality protection for certain noncriminal tax advice and communications between a taxpayer and a federally authorized tax practitioner.

The time period within which the IRS may assess tax or a taxpayer may claim a refund; generally three years from the return due date or filing date.

Additional time to file a return, not to pay tax; an extension generally moves the due date six months but interest and penalties may accrue.

A penalty generally based on a percentage of unpaid tax for each month a return is late, up to a maximum, with exceptions for reasonable cause.

A number used to identify a taxpayer on returns and statements, such as an SSN, EIN, ITIN, or ATIN.

A unique number that paid tax return preparers must include on returns they prepare; it must be renewed annually.

Withholding at a specified rate from certain payments when a payee fails to provide a correct TIN or certify exemption.

A form (such as Form 1099 or W-2) reporting payments or transactions to the IRS and the recipient; it is used for matching and compliance.