Plain-English definitions for the terms you'll encounter on your financial journey.
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.
A person who evaluates an insurance claim to determine the insurer's liability and the amount of money to be paid to the claimant.
A court order that releases a debtor from personal liability for certain specified types of debts.
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.
A claim, lien, or liability attached to a property that may lessen its value or restrict its use. Common examples include easements for utilities or outstanding property tax liens.
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.
A tax benefit that allows taxpayers to reduce their U.S. tax liability by the amount of taxes paid to a foreign government.
A policy that combines various personal insurance protections, including losses to a home and its contents, and liability for injuries on the property.
A debt or financial obligation for which an individual or company is responsible.
Insurance that protects the policyholder if they are legally responsible for causing injury to others or damaging their property.
Limited Liability Company: This is a popular business structure that protects the personal belongings of the owners from the company's debts or legal troubles. If the business is sued or fails, the owner's personal car or house is generally safe from being taken to pay the business's bills.
A tax benefit that can reduce your tax liability to zero but will not result in a payment if it exceeds what you owe.
An agreement between a taxpayer and the government that settles a tax liability for less than the full amount owed.
A tax benefit that can reduce your tax liability below zero, resulting in the government paying the difference back to you.
A policy that protects the personal belongings of a tenant in a rented residence and provides liability coverage for accidents in that space.
A country or jurisdiction that offers foreign individuals and businesses little or no tax liability in a politically and economically stable environment.
The total amount of tax debt that an individual or business owes to a government authority for a specific period.
The practice of selling securities at a loss to offset a capital gains tax liability.
Excess liability insurance that provides additional protection beyond the limits of basic auto or homeowners policies.