Tax terminology all students should know
By Emily Ness
on February 24, 2014
1» Gross income amount – This is your income before taking deductions and taxes into account.
2» Adjusted gross income (AGI) – Your AGI is adjusted from your gross income to include deductions and credits. It’s used to calculate the taxes you owe.
3» W-4 – This is the first tax form you will fill out when you start a job. It will determine how much is withheld from your paycheck. You can write “exempt” on this form if you earn less than $800 a year.
4» W-2 - At the end of the year, your employer will provide this form for you to report all your earnings that year to the IRS. It will also show federal and state taxes and Social Security withheld. You need this form when you file your tax return.
5» 1040 EZ – Nicknamed “the easy form,” it’s a simplified form for filers who claim no dependents and have a taxable income less than $100,000.
6» Standard deduction – An amount the government allows you to subtract from your adjusted gross income, which then reduces the amount of taxes you owe. The standard deduction varies, depending on your filing status.
7» Tax return – A tax return is not the same as a tax refund. In a return, you report your earnings and relevant financial information to the IRS, which is used to figure out your tax liability, the amount you actually owe.
8» Tax refund – You are given a tax refund if your tax liability is less than the amount you paid.
By Emily Ness|
February 24, 2014