Taxes, explained simply.

A 1099 form reports various types of non-employment income paid to individuals, including freelance earnings, dividends, and retirement distributions. Recipients use it to report income on their tax return.

Adjusted gross income is your total income minus specific above-the-line deductions. It is the key figure on your tax return that determines eligibility for many credits, deductions, and financial programs.

The Alternative Minimum Tax is a parallel tax system designed to ensure high earners pay at least a minimum amount of tax regardless of deductions and credits. It recalculates income under stricter rules and applies a flat rate.

Capital gains tax applies to profits from selling assets like stocks, real estate, or collectibles. The rate depends on how long you held the asset and your total income.

A charitable deduction allows taxpayers who itemize to deduct donations made to qualifying nonprofit organizations. The deduction reduces taxable income and provides a tax incentive for generosity.

The Child Tax Credit provides up to $2,000 per qualifying child under 17, partially refundable for lower-income families. It is one of the most widely claimed credits in the U.S. tax code.

Depreciation is a tax deduction that allows business owners and investors to recover the cost of certain assets over time. It reflects the wear and tear on property used to generate income.

The Earned Income Tax Credit is a refundable federal tax credit for low-to-moderate income workers that can significantly reduce or eliminate tax owed. It is one of the largest anti-poverty programs in the U.S. tax code.

The federal estate tax applies to the transfer of wealth from a deceased person's estate to heirs when the estate's value exceeds a high exemption threshold. Most estates owe no federal estate tax.

Estimated taxes are quarterly tax payments made to the IRS by individuals whose income is not subject to withholding. They are required for the self-employed, investors, and others who expect to owe at least $1,000 at filing.

Form 1040 is the standard federal income tax return form used by U.S. individuals to report annual income, claim deductions, and calculate their tax liability.

Form W-4 tells your employer how much federal income tax to withhold from your paycheck, based on your filing status, dependents, and other adjustments.

The federal gift tax applies to transfers of money or property to another person when you receive nothing or less than full value in return. An annual exclusion lets you give up to a set amount per recipient each year tax-free.

An IRS installment agreement lets you pay off a tax debt in monthly payments over time instead of in a single lump sum.

An IRS payment plan allows taxpayers who cannot pay their full tax bill immediately to make monthly installments. Setting one up avoids enforced collection actions like liens and levies.

Itemized deductions let you list specific qualifying expenses to reduce taxable income instead of taking the standard deduction. They benefit taxpayers with large mortgage interest, medical bills, or charitable contributions.

The kiddie tax taxes a child's unearned income above a threshold at the parent's higher tax rate, preventing families from shifting investment income to children.

A non-qualified (ordinary) dividend is taxed at your regular income tax rate rather than the lower capital gains rate applied to qualified dividends.

Payroll taxes fund Social Security and Medicare and are split between employers and employees. Understanding payroll taxes helps clarify the true cost of employment on both sides of the relationship.

Property tax is an annual tax levied by local governments on the assessed value of real estate and, in some jurisdictions, personal property like vehicles. It is a primary funding source for schools and public services.

A qualified dividend is taxed at the lower long-term capital gains rate rather than ordinary income rates, provided holding period and other requirements are met.

Quarterly taxes are estimated tax payments made four times per year by self-employed individuals, freelancers, and others whose income is not subject to employer withholding.

A Roth conversion moves money from a traditional IRA or 401(k) into a Roth IRA, triggering taxes now in exchange for tax-free withdrawals in retirement.

Sales tax is a consumption tax collected by retailers at the point of sale and remitted to state and local governments. Rates and taxable goods vary by state and locality.

The SALT deduction lets you deduct state and local taxes — income, sales, and property taxes — from your federal taxable income, currently capped at $10,000.

Section 179 allows businesses to deduct the full purchase price of qualifying equipment and software in the year of purchase instead of depreciating it over time.

A 529 plan is a tax-advantaged savings account for education expenses, offering tax-free growth and withdrawals when used for qualified costs like tuition and room and board.

Self-employment tax covers Social Security and Medicare contributions for self-employed individuals who do not have an employer withholding these taxes. The current combined rate is 15.3%.

The standard deduction is a fixed dollar amount that reduces your taxable income without requiring you to list individual expenses. Most Americans claim it instead of itemizing.

A tax audit is an IRS review of your tax return and supporting records to verify that you reported income and claimed deductions correctly. Most audits are resolved by mail with minimal disruption.

Tax brackets are the income ranges at which different marginal rates apply under the U.S. progressive tax system. Only income within each bracket is taxed at that bracket's rate.

A tax credit directly reduces your tax bill dollar-for-dollar, making it more valuable than a deduction of the same amount. Credits can be refundable, nonrefundable, or partially refundable.

A tax deduction reduces your taxable income, lowering the amount of income subject to tax. The actual tax savings depend on your marginal tax bracket.

Your tax filing status determines your tax bracket thresholds, standard deduction amount, and eligibility for various credits and deductions. Choosing the correct status is one of the most impactful decisions in tax planning.

A tax professional is a qualified expert — CPA, enrolled agent, or tax attorney — who helps individuals and businesses with tax preparation, planning, and compliance.

A tax refund is money the IRS returns to you when your total tax payments — through withholding or estimated payments — exceed your actual tax liability for the year.

A tax shelter is any legal strategy that reduces taxable income, often through investments or business structures that generate deductions or credits. Abusive shelters that exist solely to evade taxes are illegal.

A tax treaty is an agreement between two countries that reduces or eliminates double taxation on income earned across borders.

A tax-advantaged account offers special tax benefits — either tax-deferred growth or tax-free withdrawals — to encourage saving for retirement, healthcare, or education.

Tax-deferred means taxes on investment earnings or contributions are postponed until a future date — usually retirement — allowing compounding to work on pre-tax dollars in the meantime.

Tax-exempt refers to income, organizations, or investments that are not subject to taxation. Common examples include municipal bond interest, Roth IRA withdrawals, and nonprofit organizations.

Tax-loss harvesting is the practice of selling investments at a loss to offset capital gains and reduce your tax bill. It is a key strategy in taxable investment accounts.

A W-2 form reports an employee's annual wages and the taxes withheld by their employer. Employers must send W-2s by January 31 each year for use in filing federal and state tax returns.

The wash sale rule prevents investors from claiming a tax loss on a security if they repurchase the same or a substantially identical security within 30 days.

Withholding is the portion of your paycheck your employer sends directly to the IRS and state tax authorities on your behalf throughout the year. It serves as a pay-as-you-go mechanism for income taxes.