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Individual TaxTax Glossary
What Is a “Nonrefundable tax credit”?
A nonrefundable tax credit is a tax incentive that allows you to reduce your federal income tax liability down to...
Individual TaxTax Glossary
What Is a “Refundable tax credit”?
A refundable tax credit is a type of tax benefit that can reduce your tax liability to zero and allow...
Individual TaxTax Glossary
What Is a Tax Credit?
A tax credit is a dollar-for-dollar reduction of the actual income tax you owe to the IRS. Unlike a deduction,...
Individual TaxTax Glossary
What Is “Tax deduction”?
A tax deduction is an eligible expense or a government-approved dollar amount that you can subtract from your gross income...
Individual TaxTax Glossary
What Is “Adjustment to income”?
An adjustment to income is an expense you can subtract directly from your total gross income to calculate your Adjusted...
Individual TaxTax Glossary
What Is “Above-the-line deduction”?
An above-the-line deduction is a tax deduction you can claim to lower your Adjusted Gross Income (AGI) before you choose...
Individual TaxTax Glossary
What Is “Itemized deductions”?
Itemized deductions are eligible personal expenses that the IRS allows you to list individually on your tax return to reduce...
Individual TaxTax Glossary
What Is “Standard deduction”?
The standard deduction is a fixed dollar amount that the IRS allows you to subtract from your income to reduce...
Individual TaxTax Glossary
What Is “Progressive tax system”?
A progressive tax system is a tax structure where the tax rate increases as a taxpayer’s taxable income increases. Under...
Individual TaxTax Glossary
What Is “Effective tax rate”?
Your effective tax rate is the actual average percentage of your income that you pay in taxes. It is calculated...