Tax words, in plain English.

A

Adjusted gross income (AGI)

Your total income minus certain adjustments. Many credits and limits are based on it.Example: $60,000 wages minus a $2,000 IRA contribution = $58,000 AGI.

Amended return

A corrected return (Form 1040-X) filed after the original.Example: You forgot a 1099 and fix it with an amended return.

Audit

A review by the IRS or state to check that your return is correct.Example: The IRS asks for receipts for your car expenses.

B

Balance due

Tax you still owe after payments and credits.Example: Tax $5,000, paid $4,200: balance due $800.

C

Tax credit

Reduces your tax dollar for dollar.Example: A $1,000 credit cuts $1,000 off your tax.

D

Deduction

Reduces the income you are taxed on.Example: A $1,000 deduction in the 12% bracket saves $120.

Dependent

A child or relative you support who can be claimed on your return.Example: Your 10-year-old son who lives with you.

Direct deposit

Your refund sent straight to your bank account; the fastest way.

E

E-file

Filing your return electronically instead of by mail.

EIN

Employer Identification Number, a tax ID for a business.Example: Your LLC uses its EIN to open a bank account.

Earned income tax credit (EITC)

A refundable credit for low to moderate-income workers.

Estimated taxes

Quarterly payments by people with no withholding, like 1099 workers.Example: A driver pays every April, June, September and January.

Extension

Extra time to file (to October 15), not extra time to pay.

F

Filing status

Single, married filing jointly, married filing separately, head of household, or qualifying surviving spouse.

Form 1040

The main federal individual income tax return.

I

IT-201

New York State’s resident income tax return; also covers NYC tax for city residents.

ITIN

A tax ID number from the IRS for people who need to file but can’t get an SSN.

Itemized deductions

Adding up specific expenses (mortgage interest, state taxes, charity) instead of taking the standard deduction.

M

Marginal tax rate

The rate on your last dollar of income; your bracket.Example: Ali’s marginal rate is 12%.

P

Penalty

An extra charge for filing or paying late, or underpaying.

R

Refund

Money returned when you paid more than your tax.

Refundable credit

A credit that can be paid to you even if it’s more than your tax.

S

Schedule C

The form for business profit or loss for sole proprietors and 1099 workers.

Self-employment tax

15.3% Social Security and Medicare tax paid by self-employed people.

SSN

Social Security number, your main tax ID as an individual.

Standard deduction

A fixed amount subtracted from income: $16,100 for single filers in 2026.

T

Taxable income

Income after deductions; the amount tax is figured on.Example: $60,000 − $16,100 = $43,900.

Tax transcript

The IRS’s summary of your return or account.Example: A bank asks for one for your mortgage.

W

W-2

Wage statement from your employer showing pay and tax withheld.

W-4

The form telling your employer how much federal tax to withhold.

Withholding

Tax taken out of your paycheck during the year.

1

1099

A form reporting non-wage income, like contractor pay or app payments.

Sources: IRS: Publication 501 (filing status, dependents, standard deduction) · IRS: Tax year 2026 inflation adjustments · IRS: Self-employment tax · IRS: About Form 1099-NEC · IRS: About Form W-2 · IRS: About Form W-4 · IRS: Where’s My Amended Return · IRS: Transcript types · IRS: Employer Identification Number · IRS: Estimated tax · NY Tax Dept: Check your refund status