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A
Additional Child Tax Credit (ACTC)
The refundable part of the Child Tax Credit. Refunds that claim it can take longer to process.
Adjusted gross income (AGI)
Your total income minus certain adjustments, such as deductible traditional IRA contributions, HSA contributions and half of self-employment tax. Many limits and credits are based on AGI.
Amended return
A corrected tax return filed on Form 1040-X after you have already filed. See how to amend a return.
Audit defense
A paid add-on from some tax software providers that offers representation or help if the IRS examines your return.
C
Capital gain
Profit from selling an asset such as stock, a fund or crypto for more than you paid. Reported on Schedule D.
Child Tax Credit
A federal credit for each qualifying child, part of which may be refundable.
Credit (tax credit)
An amount that reduces your tax bill dollar for dollar. Refundable credits can produce a refund even if you owe no tax.
D
Deduction
An amount subtracted from your income before tax is calculated, such as the standard deduction or itemized deductions.
Direct deposit
Having your refund paid electronically into a bank account. The IRS encourages it and is phasing out paper refund checks.
E
E-file
Filing your tax return electronically through IRS-authorized software or a tax professional. Faster and more accurate than paper.
Earned Income Tax Credit (EITC)
A refundable federal credit for low- to moderate-income workers. By law, refunds that include it are held until mid-February.
Effective tax rate
Your total tax divided by your income. It is lower than your marginal rate because brackets apply in layers.
Employer Identification Number (EIN)
A nine-digit number the IRS issues to identify a business. It is free from irs.gov.
Estimated tax
Tax paid during the year on income without withholding, such as self-employment income, usually in four payments.
Extension (Form 4868)
An automatic six-month extension of time to file your federal return. It does not extend the time to pay. See how to file an extension.
F
Filing status
The category that sets your brackets and standard deduction: single, married filing jointly, married filing separately, head of household or qualifying surviving spouse.
Form 1040
The main US federal individual income tax return.
Form 1095-A
The statement from the Health Insurance Marketplace used to reconcile the premium tax credit.
Form 1098
A statement of mortgage interest you paid during the year.
Form 1099-B
A statement of proceeds from selling stocks, funds or other securities through a broker.
Form 1099-INT and 1099-DIV
Statements of interest and dividend income.
Form 1099-K
A statement of payments received through payment apps and online marketplaces above the reporting threshold.
Form 1099-NEC
A statement of nonemployee compensation, such as freelance or contract pay.
Form W-2
Your employer's statement of wages paid and taxes withheld for the year.
Form W-4
The form you give your employer to set how much federal income tax is withheld from your pay.
Free File
An IRS partnership that offers free guided tax software to eligible filers, plus Free File Fillable Forms for any income. See how to file free.
H
Head of household
A filing status for unmarried people who pay more than half the cost of keeping up a home for a qualifying person. It has a larger standard deduction than single.
I
Identity Protection PIN (IP PIN)
A six-digit number from the IRS that helps prevent someone else from filing a return with your Social Security number.
Itemized deductions
Specific expenses you can deduct instead of the standard deduction, such as mortgage interest, state and local taxes and charitable gifts. Reported on Schedule A.
M
Marginal tax rate
The rate that applies to your last dollar of taxable income. See 2026 tax brackets.
Married filing jointly
A filing status for married couples who combine income and deductions on one return.
Married filing separately
A filing status for married people who each file their own return.
Modified adjusted gross income (MAGI)
AGI with certain amounts added back. Used for several limits and phase-outs.
N
Net 30
Vendor terms that let a business pay an invoice within 30 days. See business credit basics.
P
Payroll taxes
Social Security and Medicare taxes withheld from wages, also called FICA.
Phase-out
An income range over which a deduction or credit is gradually reduced.
Q
Qualified business income (QBI) deduction
A deduction of up to 20% of qualified business income for many self-employed people and owners of pass-through businesses, subject to limits.
R
Refund advance
A loan from some tax preparers against your expected refund. It is not a faster IRS refund.
Refundable credit
A credit that can be paid to you as a refund even if it is more than the tax you owe.
S
Safe harbor
A rule that lets you avoid an estimated tax penalty by paying a set share of this year's or last year's tax.
SALT deduction
The itemized deduction for state and local taxes, subject to a cap.
Schedule C
The form for reporting profit or loss from a business you run as a sole proprietor.
Schedule SE
The form for calculating self-employment tax.
Self-employment tax
Social Security and Medicare tax paid by self-employed people: 15.3% on 92.35% of net earnings. See the calculator.
Standard deduction
A fixed amount most filers subtract from income instead of itemizing. For the 2026 tax year it is $16,100 for single filers and $32,200 for married couples filing jointly.
State return
A separate income tax return for your state, if it has an income tax. Tax software usually charges for it separately. See state tax guides.
T
Tax bracket
A range of taxable income taxed at a particular rate.
Tax Day
The usual deadline for federal individual returns. For 2026 returns it is April 15, 2027.
Taxable income
Income after deductions, to which the tax brackets apply.
W
Withholding
Income tax your employer takes from each paycheck and sends to the IRS on your behalf.
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