Confused by the tax lingo? Get easy-to-understand definitions for commonly used tax terms and phrases right here!
Adjusted gross income (AGI): Your income after subtracting adjustments. Check last year’s 1040 to estimate this year’s amount.
Adjustment (above-the-line deduction): Anyone who qualifies can claim one, without itemizing.
Itemized deductions: Expense amounts that you subtract from your income.
Standard deduction: A fixed amount that you’re allowed to deduct in lieu of itemized deductions.
Tax credit: A direct reduction in the amount of tax you owe.