Tax glossary

Employer retirement plan; traditional vs. Roth; contribution limits annually indexed.

Total income minus specific adjustments (above-the-line deductions) before standard/itemized deductions.

Parallel tax system that limits certain deductions; higher of regular tax or AMT applies.

Correct a filed return—statute limits on refunds generally within 3 years.

Generally 3 years from filing; 6 years for substantial understatement; unlimited in fraud cases.

Additional first-year depreciation for qualifying property—percentage varies by year.

Credit for qualifying children—phase-out by income; partially refundable.

Amount used to compute gain/loss on sale—may be adjusted for splits, ESPP, and fees.

IRS notice proposing tax changes when income/docs don’t match third-party reports.

IRS letter asking for clarification—often precursor to CP2000.

Digital assets are property—taxable on sale/exchange/staking per IRS guidance.

Refundable credit for low-to-moderate earners; investment income limits.

Discounted stock purchase; bargain element may affect ordinary vs. capital treatment.

Quarterly payments for income not subject to withholding (self-employment, investments).

Reporting regime for foreign accounts; ties to Form 8938 and FBAR.

Report of foreign bank accounts if aggregate balance exceeds threshold—separate from 1040.

Tax withheld from paychecks and estimated payments credited on Form 1040.

Credit for foreign taxes on income—Form 1116; reduces double taxation.

Triple tax advantage for HDHP enrollees; contribution and catch-up limits.

May trigger AMT on bargain element; holding periods for qualifying disposition.

Examination of return—correspondence, office, or field; burden of proof varies.

Schedule A: SALT (capped), mortgage interest, charitable gifts, medical (floor).

Pass-through items from partnerships/S-corps/trusts—passive activity rules may apply.

Real property swaps defer gain—strict timing and identification rules.

Assets held more than one year—preferential rates via qualified dividends/LTCG worksheet.

Rental and business asset recovery—Schedule E line 18 / Form 4562.

Rate on the next dollar of ordinary income—differs from effective rate.

AGI with certain add-backs—used for IRA, premium tax credit, and other phase-outs.

3.8% surtax on investment income above MAGI thresholds.

Treated as collectibles or property depending on facts—capital gain/ordinary possibilities.

Ordinary income at exercise generally; basis in stock for later sale.

Non-qualified dividends taxed at ordinary rates.

APTC reconciliation on Form 8962 for marketplace health coverage.

Section 199A deduction for eligible pass-through and rental income, subject to limits.

Eligible for lower LTCG rates—holding period and payer requirements.

Equity comp taxed at vest typically as wages; subsequent sale is capital gain/loss.

After-tax contributions; qualified distributions tax-free; MAGI limits on contributions.

$10,000 cap on state and local tax deduction for federal itemized returns (pre-TCJA rules differ).

Credit for retirement contributions for eligible lower-income taxpayers.

Profit or loss from business (sole prop); feeds QBI and SE tax.

Capital gains and losses; ties to Form 8949 and 1099-B.

Supplemental income—rentals, royalties, partnerships, S-corps (some flows).

Self-employment tax on net earnings from self-employment.

Expense certain business property immediately subject to limits.

Social Security and Medicare on SE earnings—half deductible above the line.

Federal individual mandate penalty reduced to $0; state mandates may still apply.

Assets held one year or less—taxed as ordinary income.

Fixed deduction by filing status; alternative to itemizing.

Deductibility depends on MAGI and workplace plan coverage; RMD rules apply at RMD age.

Form 2210 when withholding and estimates don’t meet safe harbors.

Employee compensation reported on Form W-2; federal and state withholding in boxes 2 and 17.

Loss disallowed when substantially identical stock/securities repurchased within 30 days.