Reference

A form used to report miscellaneous income, such as rent, prizes, or payments made to non-employees during the tax year.

A simple budgeting guideline that suggests spending 50% of your income on needs, 30% on wants, and 20% on savings.

Your total gross income minus specific subtractions like student loan interest or retirement contributions. It is used as the starting point for calculating your final tax liability.

Adjusted Gross Income is your total yearly earnings from all sources minus specific deductions like contributions to a retirement plan, which is the final number the government uses to calculate your actual tax bill.

A supplemental income tax that sets a floor on the percentage of taxes that must be paid by certain high-income individuals. It ensures these taxpayers do not use excessive deductions to avoid paying a minimum amount of tax.

A parallel tax system designed to ensure that higher-income taxpayers who benefit from specific exclusions, deductions, and credits pay at least a baseline amount of tax. It recalculates income tax under a different set of rules with fewer allowable deductions.

A tax return filed on Form 1040-X to correct errors or report missed income or deductions from a previously submitted return.

Alternative Minimum Tax is a special tax calculation designed to ensure that wealthy individuals who use many tax breaks still pay at least a baseline amount of income tax to the government.

A financial product that pays out a fixed stream of payments to an individual, typically used as a primary source of income for retirees.

A set of laws and regulations designed to stop the practice of generating income through illegal actions.

American Opportunity Tax Credit is a tax benefit that helps students and their families cover the costs of the first four years of post-secondary education by reducing the amount of income tax they owe.

Government policies already in place that automatically help stabilize the economy without new legislation. Examples include progressive income taxes and unemployment insurance.

A financial plan where total expected income equals total expected expenses for a specific period.

A plan for spending and saving income over a specific period, used to track where money is going.

A situation where the amount of expenses exceeds the amount of income within a set timeframe.

A situation where the amount of income exceeds the amount of expenses within a set timeframe.

Costs incurred in the operation of a business that can be subtracted from gross income to arrive at taxable business profit.

A lender's assessment of a borrower's ability to repay a loan based on their income, employment history, and current financial obligations.

The ability to use net capital losses that exceed the annual limit to reduce taxable income in future years.

A metric used to estimate the potential rate of return on an investment property, calculated by dividing the net operating income by the property's asset value. It helps investors quickly compare the relative profitability of different real estate opportunities.

Cash on Cash Return — A rate of return often used in real estate transactions that calculates the cash income earned on the cash invested.

A rate of return often used in real estate transactions that calculates the cash income earned on the cash invested in a property.

A bankruptcy process that allows individuals with regular income to develop a plan to repay all or part of their debts over three to five years.

A bankruptcy proceeding that allows individuals with regular income to keep their property by creating a three-to-five-year repayment plan for their debts.

A trust that provides income to a person before donating the remainder to charity.

A federal program that provides financial assistance to low-income families to help them access child care services so that parents can work or attend training and educational programs.

A tax imposed by the government on the annual net profits of a corporation.

A record of all of a country's international transactions, including trade in goods and services, investment income, and cash transfers. It is one half of the balance of payments.

A broad measure of a nation's trade that includes its imports and exports of goods and services, as well as net income from abroad and transfer payments. It shows whether a nation is a net lender or borrower relative to the rest of the world.

An investment's annual income divided by the current price of the security.

The percentage of a borrower's gross monthly income that goes toward paying monthly debt obligations. Mortgage lenders use this figure to evaluate a buyer's ability to manage monthly mortgage payments.

The percentage of a borrower's monthly gross income that goes toward paying monthly debts.

A personal finance measure that compares an individual’s monthly debt payments to their monthly gross income.

An insurance contract that accumulates earnings and delays the start of income payments until a future date chosen by the owner.

Insurance that replaces a portion of your income if you become unable to work due to an illness or injury.

The amount of money an individual has available to spend or save after paying for taxes and all necessary living expenses.

The amount of money that a household has available for spending and saving after income taxes have been paid.

A withdrawal of funds or assets from a retirement account, which may be subject to income tax and potential penalties.

A refundable tax credit aimed at low- to moderate-income working individuals and couples, particularly those with qualifying children. It reduces the amount of tax owed and can result in a direct refund if the credit exceeds the tax liability.

The actual percentage of your total income that is paid in taxes after all deductions and adjustments are considered.

The Earned Income Tax Credit is a refundable tax break for low-to-moderate-income working individuals and couples, particularly those with children. It is designed to put extra money back into your pocket at tax time to help make ends meet.

The Employee Retirement Income Security Act is a federal law that protects your retirement savings and health benefits provided by your employer. It acts like a safety net, ensuring that the company manages your promised money responsibly so it is actually there when you need it.

Periodic payments of income tax required from individuals whose income is not subject to withholding, such as the self-employed.

A phase of the business cycle in which the economy moves from a trough to a peak. It is characterized by an increase in production, employment, and income.

The Foreign Earned Income Exclusion is a tax rule that allows Americans working in other countries to avoid paying U.S. taxes on a portion of the money they earn abroad. It is a way to prevent you from getting 'double-taxed' on the same paycheck by two different countries.

A government-backed mortgage insured by the Federal Housing Administration, designed for low-to-moderate-income borrowers.

FICA stands for Federal Insurance Contributions Act, which is the tax taken out of your paycheck to fund Social Security and Medicare. Think of it as a mandatory community pot that everyone contributes to so that seniors and the disabled have a guaranteed safety net for income and healthcare.

A tax system that applies the same tax rate to every taxpayer regardless of their income level.

A non-refundable tax credit used to reduce the tax liability of individuals who have paid taxes to a foreign country. It is designed to help prevent the double taxation of income earned abroad.

The standard federal income tax form used by individual taxpayers to report their annual income and calculate their taxes.

The official IRS form used to apply for an automatic six-month extension to file a federal individual income tax return.

A statistical measure used to represent the income or wealth inequality within a nation. A score of zero represents perfect equality, while a score of one represents perfect inequality.

Grantor Retained Annuity Trust is a legal arrangement where you transfer assets into a trust for a set time while keeping an income stream, which helps minimize taxes when passing wealth to heirs. It is essentially a way to move your investments to your children while locking in current tax values to avoid future gift tax hits.

The total amount of money earned from all sources before taxes or other deductions are taken out.

The total annual rental income of a property divided by the property's purchase price and expressed as a percentage.

A federal program that provides comprehensive early childhood education, health, and nutrition services to low-income children and their families.

A summary measure of average achievement in key dimensions of human development, including life expectancy, education, and per capita income. It provides a broader view of a nation's well-being than GDP alone.

An insurance product purchased with a single payment that begins paying out income to the owner almost immediately.

Money received, especially on a regular basis, for work or through investments.

A plan for federal student loans where monthly payments are adjusted based on the borrower's income and family size.

A federal plan that sets a monthly student loan payment based on the borrower's income and family size.

A federal student loan repayment plan that sets monthly payments based on a borrower's income and family size. After a certain period, any remaining balance may be forgiven.

Specific expenses such as medical bills or mortgage interest that you list individually to reduce your total taxable income.

Specific expenses allowed by the IRS that can be subtracted from your adjusted gross income to reduce your tax bill.

Joint and Survivor Annuity — A payment option that provides income for life to the retiree and continues to provide payments to a surviving spouse after the retiree's death.

A tax applied to the unearned income of children, usually calculated using the parents' higher tax rates to prevent income shifting.

Low Income Home Energy Assistance Program: This is a federal program that provides financial help to families who struggle to pay their heating and cooling bills. It acts as a safety net to ensure that vulnerable households can keep their homes at a safe, comfortable temperature during extreme weather.

Student Loan Interest Deduction — A deduction that allows you to reduce your taxable income by the amount of interest paid on qualified student loans during the year.

Profit earned from the sale of an asset held for more than one year, typically taxed at lower rates than ordinary income.

Insurance that provides income replacement for an extended period, potentially until retirement, if a person remains unable to work.

The financial risk that a person will outlive their retirement savings and be left without sufficient income.

A federal initiative that provides grants to states to assist low-income households in meeting their immediate home energy needs, such as heating or cooling bills.

A federally funded program that assists low-income households with their home heating and cooling energy costs. The program also provides emergency assistance during weather-related crises and funding for minor energy-related home repairs.

Modified Adjusted Gross Income: This is essentially your total income after certain tax deductions have been subtracted, which the government uses to decide if you qualify for specific tax breaks or benefits. You can think of it as your 'official' income level for tax purposes, adjusted for things like student loan interest or retirement contributions.

The tax rate applied to the last dollar of your income, corresponding to the highest tier your income reaches.

A joint federal and state program that provides health coverage to people with low income, including families, seniors, and people with disabilities.

Master Limited Partnership: This is a type of business structure that is traded on public stock exchanges but is taxed like a partnership, often used by energy companies like those moving oil or gas. It is designed to pass profits directly to investors without the company itself paying a corporate income tax first.

An itemized deduction that allows homeowners to subtract the interest paid on a home loan from their taxable income.

The concept that an initial injection of spending into the economy leads to a larger overall increase in national income. This occurs because the initial spending becomes income for others, who then spend it again.

A situation where your monthly expenses exceed your monthly income, leading to a decrease in cash or an increase in debt.

Often called take-home pay, this is the amount of money you actually receive after taxes and other deductions are subtracted from your gross pay.

The total income generated from a property minus all necessary operating expenses.

Net Investment Income Tax: This is an extra tax that high-earning individuals pay on income they generate from investments, such as dividends, rental income, or selling stocks for a profit. It is essentially an additional surcharge on top of regular taxes specifically for people with significant investment earnings.

Net Operating Income is the money a rental property earns after paying for regular expenses like taxes and maintenance, but before paying any mortgage or income taxes. Think of it as the profit your building generates from being open for business.

Net Unrealized Appreciation is a tax break that allows you to pay lower tax rates on company stock you take out of your 401(k) when you retire. It turns the growth on that stock into a lower-taxed investment gain rather than regular income.

A business structure where the income is not taxed at the entity level but is instead reported on the owners' personal tax returns.

A fund into which an employer makes regular contributions to provide a guaranteed monthly income for an employee after they retire.

The gradual reduction of a tax deduction or benefit as a taxpayer's income increases beyond a certain level.

Money added to a retirement account after income taxes have already been paid, allowing for potential tax-free withdrawals later.

Money added to a retirement account before income taxes are calculated, which reduces the individual's current taxable income.

A tax system where the tax rate increases as the taxable amount or the individual's income level rises.

A Qualified Charitable Distribution is a way for people over 70 and a half to send money directly from their retirement account to a charity. Because the money never touches your personal bank account, you do not have to pay income taxes on that donation.

A Qualified Longevity Annuity Contract is a type of retirement insurance policy that you buy now to provide a guaranteed monthly income starting when you reach a very old age, like 85. It acts like a financial safety net to ensure you do not run out of money if you live much longer than expected.

A Qualified Terminable Interest Property trust is a legal arrangement that allows a person to provide income to their spouse after they pass away, while still controlling who eventually gets the remaining assets later. It is commonly used in estate planning to support a surviving spouse while ensuring that children from a previous marriage eventually inherit the property.

A trust designed to provide income for a surviving spouse while allowing the grantor to control the final distribution of assets.

A company that owns, operates, or finances income-generating real estate across various property sectors. These trusts allow individual investors to earn dividends from real estate portfolios without having to directly buy or manage physical properties.

A company that owns, operates, or finances income-generating real estate properties. It allows individual investors to earn dividends from real estate investments without having to buy or manage properties themselves.

A tax applied uniformly that takes a larger percentage of income from low-income earners than from high-income earners.

A type of corporation that avoids double taxation by passing income and losses directly to shareholders' personal tax returns.

A type of corporation that chooses to pass corporate income and losses through to its shareholders for federal tax purposes.

An itemized deduction that allows taxpayers to subtract certain state and local taxes from their federal taxable income.

An economic principle stating that the production of goods creates its own demand. It suggests that as long as people produce things, they will have the income to buy other things.

Section 8 Housing Choice Voucher Program — A government initiative that assists low-income families, the elderly, and the disabled by paying a portion of their rent to private landlords.

A federal program that provides housing choice vouchers to help low-income families and individuals afford safe housing in the private market.

A federal assistance program that provides financial subsidies to low-income families, the elderly, and the disabled to help them afford decent, safe, and sanitary housing in the private market.

A federal program that assists low-income families, the elderly, and the disabled in affording decent, safe, and sanitary housing in the private market.

Insurance that replaces a portion of your income for a limited time if you are unable to work due to a temporary illness or injury.

Supplemental Nutrition Assistance Program is a government program, commonly known as food stamps, that provides eligible low-income families with a debit card to buy groceries and healthy food items.

A government program that provides food-purchasing assistance to low-income individuals and families via electronic benefit transfer cards.

A federal program that provides monthly income to individuals who are unable to work due to a significant medical impairment that is expected to last at least one year or result in death.

Supplemental Security Income is a federal program that provides monthly payments to help elderly, blind, or disabled people who have very little income or assets, regardless of their work history.

A flat dollar amount that reduces the amount of income on which you are taxed, available to all taxpayers who do not itemize.

A federal assistance program that provides low-income individuals and families with electronic benefits to purchase eligible food items at authorized grocery stores and retailers.

A government program that provides monthly payments to adults and children with a disability or blindness who have income and resources below specific financial limits.

Temporary Assistance for Needy Families is a government program that provides financial aid and support services, like job training or childcare, to very low-income families with children for a limited time.

A federal grant program that provides states with funds to offer time-limited financial assistance and support services to low-income families with children. The program focuses on helping families move toward self-sufficiency through employment and job training.

A range of incomes taxed at a specific rate, which increases as an individual's income rises in a progressive tax system.

A dollar-for-dollar reduction in the actual amount of income tax you owe to the government.

An expense that can be subtracted from a taxpayer's gross income to reduce the amount of income subject to taxation.

The illegal non-payment or underpayment of taxes through deliberate deception or concealment of income.

A legal provision that allows certain income or organizations to be free from the obligation of paying taxes.

The strategy of selling investments that have experienced a decline in value to offset realized capital gains from other investments. Any remaining net losses can also be used, up to an annual limit, to offset regular income taxes.

Interest income that is not subject to federal income tax, often earned from municipal bonds.

The amount of income that is actually subject to tax after all allowable deductions and exemptions have been subtracted.

A state-run federal program that provides temporary financial assistance and support services to low-income families with children while encouraging employment and marriage.

A federal grant program that provides states with funding to help low-income families with children achieve self-sufficiency through monthly cash payments and work support services.

A needs-based benefit paid to wartime veterans who meet certain age or disability requirements and have limited income.

The percentage of a retirement portfolio's total value that is taken out each year to provide income.

An exemption claimed by an employee on tax paperwork, such as Form W-4, that directs an employer on the amount of tax to subtract from a paycheck. The more allowances or adjustments claimed, the less income tax is withheld throughout the year.

A method of budgeting where every dollar of your income is assigned a specific purpose, leaving you with a balance of zero at the end of the month.