1031 Exchange
A tax-deferral strategy allowing real estate investors to defer capital gains by reinvesting sale proceeds into a like-kind property.
AGI
Total income minus above-the-line deductions, used to determine tax liability and eligibility for credits.
After-Tax Return
The net investment return remaining after paying applicable income or capital gains taxes.
AMT
A parallel tax system that ensures high-income taxpayers pay at least a minimum amount of federal tax.
Backdoor Roth
A strategy allowing high-income earners to contribute to a Roth IRA by first making a non-deductible traditional IRA contribution and then converting it.
Basis Step-Up
The reset of an inherited asset's cost basis to its fair market value on the date of the original owner's death.
Capital Gains Tax
US tax on profit from selling a capital asset, with lower rates for assets held over one year.
Capital Gains
The profit realized when selling an investment or asset for more than its original purchase price.
Loss Carryforward
Excess capital losses beyond the annual $3,000 limit that are applied against income in future tax years.
Charitable Deduction
A tax deduction for donations to qualified nonprofit organizations, reducing taxable income for itemizers.
Child Tax Credit
A U.S. federal tax credit that reduces the income tax owed by families with qualifying children, up to $2,000 per child in 2024–2025.
Cost Basis
The original value of an asset for tax purposes, used to calculate capital gain or loss upon sale.
Dividend Tax
The tax levied on income received from corporate dividend distributions to shareholders.
Double Taxation
A tax situation where the same income is subject to tax at two separate levels.
EITC
A refundable federal tax credit for low-to-moderate income workers that reduces tax liability.
Estate Tax
A federal tax on the transfer of wealth from a deceased person's estate to their heirs.
Excise Tax
A government levy on specific goods, activities, or services, often embedded in the product price.
Federal Income Tax
Estimated US federal income tax owed for 2025 using progressive tax brackets and standard deduction.
Filing Status
An IRS classification that determines a taxpayer's tax brackets, standard deduction, and eligibility for certain credits.
Flat Tax
A tax system that applies a single uniform rate to all taxpayers regardless of income level.
Form 1040
The primary IRS form used by U.S. individuals to file their annual federal income tax return.
Gift Tax
A federal tax on the transfer of money or property from one person to another without receiving fair value in return.
Head of Household
An IRS filing status for unmarried taxpayers supporting a qualifying dependent, offering a larger standard deduction than Single.
Home Office Deduction
A tax deduction for self-employed individuals that allows a portion of home expenses to be deducted for space used exclusively and regularly for business.
Imputed Income
The fair market value of non-cash employer benefits that the IRS treats as taxable compensation.
Inflation-Adjusted Value
The real purchasing-power equivalent of a future dollar amount in today's dollars.
Inheritance Tax
A state-level tax paid by the beneficiary on assets received from a deceased person's estate.
IRS Audit
An IRS review of a taxpayer's financial information to verify that income, deductions, and credits are accurately reported.
Itemized Deductions
Eligible expenses listed individually on Schedule A to reduce taxable income instead of claiming the standard deduction.
Kiddie Tax
IRS rules that tax a child's unearned income above a threshold at the parent's marginal tax rate.
Long-Term Capital Gains
Profits from selling assets held for more than one year, taxed at preferential rates of 0%, 15%, or 20%.
Marginal Tax Rate
The tax rate applied to the last dollar of income earned — the rate on income in the highest bracket reached.
Medicare Tax
A federal payroll tax that funds the Medicare health insurance program for people aged 65 and older.
NIIT
A 3.8% federal surtax on net investment income for high-income taxpayers above IRS thresholds.
NOL Carryforward
The ability to apply a net operating loss from one year against taxable income in future tax years.
Ordinary Income
Income taxed at regular income tax rates, including wages, salaries, interest, and short-term capital gains.
Pass-Through Entity
A business structure where income and losses flow to the owners' personal tax returns rather than being taxed at the entity level.
Payroll Tax
Taxes withheld from wages and matched by employers to fund Social Security and Medicare.
Progressive Tax
A tax system where the rate increases as the taxable amount increases, so higher earners pay a larger percentage of income.
QBI
Net income from a qualified pass-through business potentially eligible for the 20% Section 199A deduction.
Qualified Dividend
A dividend that meets IRS criteria to be taxed at the lower long-term capital gains rate rather than ordinary income rates.
Opportunity Zone
A designated low-income community offering capital gains tax deferral and exclusion for long-term investors.
QSBS
C-corporation stock that may qualify for up to 100% federal capital gains exclusion under IRC Section 1202.
Regressive Tax
A tax structure where lower-income earners pay a higher percentage of their income than higher-income earners.
RMD Penalty
The IRS excise tax imposed when a taxpayer fails to take the required minimum distribution from a retirement account.
Roth Conversion
The process of moving funds from a traditional pre-tax retirement account to a Roth IRA, paying income tax on the converted amount.
Sales Tax
A state and local consumption tax levied as a percentage of the retail price of goods and certain services.
SE Tax
The combined Social Security and Medicare tax paid by self-employed individuals at a combined rate of 15.3%.
Short-Term Capital Gains
Profits from selling assets held for one year or less, taxed at ordinary income rates.
Social Security Tax
A federal payroll tax that funds Social Security retirement, disability, and survivor benefits.
Standard Deduction
A flat dollar amount that reduces taxable income for taxpayers who do not itemize deductions.
State Income Tax
A tax levied by U.S. state governments on the income of residents and non-residents who earn income within the state.
Step-Up in Basis
The reset of an inherited asset's cost basis to its fair market value at the date of the original owner's death.
Tax-Advantaged Account
An account offering tax benefits such as tax-deferred growth, tax-free growth, or deductible contributions.
Tax Bracket
An income range to which a specific tax rate applies under a progressive tax system.
Tax Credit
A dollar-for-dollar reduction in the amount of tax owed, more valuable than a deduction of the same amount.
Tax Deduction
An expense that reduces taxable income, lowering the amount of tax owed.
Tax Deferral
The postponement of tax obligations from the current period to a future date, allowing investments to grow without immediate taxation.
Tax-Efficient Investing
Strategies that minimize taxes on investment returns, improving after-tax portfolio performance.
Tax-Exempt Bond
A bond whose interest payments are exempt from federal income tax, and often state and local tax for in-state holders.
Tax Filing Deadline
The IRS-mandated date by which individuals and businesses must file their tax returns or request an extension.
Form 1099
An IRS information return that reports income paid to individuals outside of regular employment.
W-2 Form
An IRS form issued by employers to employees reporting annual wages and taxes withheld.
Tax Haven
A country or jurisdiction offering very low taxes and financial secrecy to attract foreign businesses and wealthy individuals.
Tax Lien
The government's legal claim against a taxpayer's property when they fail to pay a tax debt.
Tax-Loss Harvesting
Selling investments at a loss to offset capital gains and reduce taxable income.
Tax-Sheltered Account
An investment account that provides tax advantages by reducing, deferring, or eliminating taxes on contributions or growth.
IRA Deduction
The above-the-line tax deduction available to eligible taxpayers who contribute to a traditional IRA.
Transfer Pricing
The prices set for transactions between related entities of the same multinational corporation across different tax jurisdictions.
Transfer Tax
A tax imposed on the transfer of property or assets from one person or entity to another.
Unearned Income
Income derived from investments and passive sources rather than wages or active work.
Wash-Sale Rule
An IRS rule that disallows a tax loss if a substantially identical security is purchased within 30 days before or after the sale.
Withholding Tax
Income tax deducted directly from wages or payments at the source, before the recipient receives the funds.