FL Tax Law Specialist key terms

Total income minus above-the-line adjustments such as IRA contributions, student loan interest, and one-half self-employment tax. It is the starting point for itemized deductions and most credit phase-outs.

An adjustment that reduces gross income before AGI is computed, available whether or not the taxpayer itemizes. Examples include educator expenses, health savings account contributions, and alimony paid under pre-2019 divorce instruments.

A fixed deduction amount set by filing status and indexed annually, claimed instead of itemizing. Additional amounts apply for age 65 or older and for blindness, and dependents face a limited amount.

The category a taxpayer uses to report income and compute tax: single, married filing jointly, married filing separately, head of household, or qualifying surviving spouse. It controls brackets, deduction amounts, and credit eligibility.

A favorable status for an unmarried or considered-unmarried taxpayer who pays more than half the cost of keeping up a home for a qualifying person for over half the year. It carries a larger standard deduction and wider brackets.

A status allowing a widow or widower with a dependent child to use joint return rates for up to two years after the year of the spouse's death, if the household cost test is met.

A refundable credit for low- and moderate-income workers, computed from earned income and the number of qualifying children. It requires a valid Social Security number and is subject to strict due-diligence rules.

A credit that can reduce tax below zero and generate a refund payment. Common examples include the earned income credit, additional child tax credit, and American Opportunity credit in part.

A credit limited to the taxpayer's tax liability, so any excess is generally lost unless a specific carryforward rule applies. The child and dependent care credit and foreign tax credit are examples.

The preparer's obligation to ask questions, obtain records, and complete knowledge checks before claiming credits such as the EITC or child tax credit. Failure can trigger preparer penalties.

An expense-based deduction taken in place of the standard deduction, including medical expenses above a floor, state and local taxes within a cap, mortgage interest, charitable gifts, and casualty losses from federally declared disasters.

A deduction of up to 20 percent of qualified business income from a pass-through entity, limited by W-2 wages and property basis for higher-income taxpayers and restricted for specified service businesses.

A business whose income is taxed to its owners rather than at the entity level, such as a partnership, S corporation, or sole proprietorship. Owners report their share on individual returns.

An election under subchapter S that lets a qualifying corporation pass income through to shareholders while retaining limited liability. Limits apply on shareholder count, shareholder type, and a single class of stock.

The wages an S corporation must pay a shareholder-employee for services before distributing remaining profit. Underpaying wages can invite reclassification of distributions as wages plus payroll taxes and penalties.

Payments of cash or property from a corporation or partnership to its owners. Tax treatment depends on earnings and profits, basis, and whether the payment is a dividend, return of capital, or gain.

The owner's invested amount in an asset or entity interest, used to measure gain, loss, and the taxability of distributions. It increases with contributions and income allocations and decreases with losses and distributions.

Limits that restrict a taxpayer from deducting losses beyond the amount economically at risk in an activity. Disallowed amounts are suspended and carried forward to later years.

Rules that disallow current deductions for losses from rental or business activities in which the taxpayer does not materially participate. Suspended losses are released on a fully taxable disposition.

A test set of seven objective standards, such as more than 500 hours of involvement, that determines whether a taxpayer's activity is passive. Meeting any one test makes the activity nonpassive.

A category including health, law, accounting, consulting, and similar fields where the owner's reputation drives income. It is excluded from the qualified business income deduction above an income threshold.

The period in which the IRS may assess tax, generally three years from the return filing date, extended to six years for substantial omissions and unlimited for fraud or failure to file.

The formal recording of a taxpayer's liability on IRS books, which starts collection authority and the collection statute. It follows a self-assessed return or a deficiency determined after examination.

A formal IRS letter determining a tax deficiency and giving the taxpayer 90 days (150 if outside the country) to petition the Tax Court before assessment and collection proceed.

An administrative appeal before an independent IRS appeals officer after a lien or levy notice, allowing the taxpayer to challenge the action, propose a collection alternative, or raise spousal defenses.

An agreement allowing a taxpayer to settle a tax debt for less than the full amount based on doubt as to collectibility, doubt as to liability, or effective tax administration.

A payment plan permitting a taxpayer to pay an outstanding balance over time. The IRS evaluates filing compliance, ability to pay, and the amount owed before approving terms.

A legal seizure of a taxpayer's property or rights to property, such as wages or bank accounts, to satisfy a tax debt. Notice and a right to a hearing generally precede it.

A statutory claim against all property and rights to property belonging to a taxpayer who owes an assessed tax. It arises automatically and can be released once the liability is satisfied.

Treasury regulations governing practice before the IRS, covering who may represent taxpayers, duties of competence and due diligence, and sanctions for misconduct.

A form authorizing a representative to act for a taxpayer before the IRS, including receiving confidential information and signing certain documents. It must specify the acts authorized.

A federally licensed tax practitioner who has passed a comprehensive examination or worked for the IRS, authorized to represent any taxpayer before the IRS on any tax matter.

A state tax imposed on corporations and certain other entities doing business in Florida, computed from federal taxable income with Florida-specific adjustments and apportionment.

The formula allocating a multistate taxpayer's income among states. Florida uses a single sales factor, so the in-state sales percentage generally determines the taxable share.

The connection between a taxpayer and a state that gives the state authority to impose a tax. It may arise from physical presence, economic thresholds, or registration.

Tax jurisdiction created by a threshold volume of sales or transactions into a state, even without physical presence. Florida applies it to sales and use tax and to corporate income tax.

A state tax on retail sales of tangible personal property and specified services, collected by the dealer from the customer and remitted to the Department of Revenue.

A companion tax on the storage, use, or consumption of taxable property or services in Florida when no sales tax was collected, such as purchases from out-of-state sellers.

An entity that facilitates retail sales through a platform and is required to collect and remit Florida sales tax on those sales, relieving individual sellers of that duty.

A document a purchaser gives a dealer to buy taxable goods for resale without paying sales tax. The certificate must include the purchaser's registration number and be taken in good faith.

A Florida excise tax on recorded documents and written obligations, including deeds, mortgages, promissory notes, and leases, at rates that vary by document type.

A written instrument transferring an interest in real property. In Florida it is subject to documentary stamp tax on the consideration paid, with a minimum tax on nominal consideration.

A written promise to pay a sum of money. Florida imposes documentary stamp tax on notes at a per-hundred-dollar rate based on the face amount.

A tax that once applied to stocks, bonds, and similar intangible assets. It was repealed for most taxpayers, so candidates should know its historical scope and current inapplicability.

A written statement issued by the Florida Department of Revenue to a taxpayer on the tax effect of specific facts. It binds the Department only to that taxpayer and situation.

A taxpayer's written challenge to a Florida assessment or denial, filed within the statutory period. It preserves the right to an administrative or judicial review of the decision.

The state agency that administers and enforces Florida taxes, issues rules and advisements, conducts audits, and handles collections and administrative appeals.