Income Tax Fundamentals|2023 LATEST UPDATE|GUARANTEED SUCCESS

tax liability Total amount of tax a person owes. estate tax Is tax collected on the value of a person's property at the time of his or her death. inheritance tax A tax collected on the property left to you by a person in his or her will. income tax Tax paid to the state, federal, and local governments based on income earned over the past year. income tax return A form on which a taxpayer reports how much money he or she received from work and other sources, and the exact taxes that are owed. exclusion Income that is not subject to taxes. adjusted gross income Gross income after calculating certain reductions to income. taxable income Income on which tax must be paid; total income minus exemptions and deductions. tax deduction An expense that you are allowed to subtract from your adjusted gross income to figure your taxable income. standard deduction An amount of money set by the IRS that is not taxed. itemized deduction A specific expense, such as medical expense, that you deduct from your adjusted gross income. exemption A deduction from adjusted gross income for the taxpayer, the spouse, and qualified dependents. tax credit An amount of money that can be subtracted directly from owed taxes. allowance An adjustment to the tax withheld from a paycheck. extension An extended deadline for filing an income tax return. tax audit A reveiw of a tax return by the IRS in which the taxpayer must show proof of all deductions, expenses, and income. excise tax A tax on specific goods and services (such as gasoline, air travel, and telephone service) collected by federal and state governments. dependent Someone you support financially. negligence The failure to take ordinary or reasonable care to prevent accidents from happening, a lack of attention. levy To use government authority to collect a tax.