Tax Glossary

Tax Glossary

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There are 43 names in this directory beginning with the letter a.
The act of voluntarily and permanently giving up possession and use of property with the intention of ending ownership without transferring ownership to another person.

The taxpayer's home, habitation, residence, domicile, or place of dwelling.

Academic Period
A semester, trimester, quarter, or other period of study (such as a summer school session) as reasonably determined by an educational institution.

Accelerated Cost Recovery System (ACRS)
The name given to tax rules relating to recovering, through depreciation deductions, the cost of property used in a trade or business to produce income. ACRS applies to property first used before 1987.

Accelerated Death Benefits
Any amounts paid under a life insurance contract, prior to death, for an individual who is terminally or chronically ill.

Accountable Plan
A reimbursement or allowance arrangement that requires an employee to account to their employer for their business expenses within a reasonable time.

Accounting Method
The way a taxpayer accounts for income and expenses.

Active Conduct of Trade or Business
Generally, to participate meaningfully in the management or operations of a trade or business.

Active Participation
Participation in a rental real estate activity in which the taxpayer owns at least 10% of the rental property and makes significant and bona fide management decisions, such as approving new tenants, deciding on rental terms, and approving expenditures.

A unit for performing a specific function that generates taxable income, such as a business entity.

Actual Expense Method
A method used to determine the deductible amount of the expenses of operating a vehicle (including a car, van, pickup, or panel truck) for business, charitable, medical, or moving purposes. This method is based on the actual costs incurred and the percentage of business use.

Additional Child Tax Credit
A refundable credit for certain individuals who get less than the full amount of the Child Tax Credit.

Adjusted Basis
The basis in property (usually its cost) increased or decreased by various events, such as improvements, depreciation, and casualty losses.

Adjusted Gross Income (AGI)
The amount of income that remains after certain adjustments to income are subtracted from the taxpayer's gross income.

Adjustment to Income
Certain subtractions allowed directly against a taxpayer's gross income.

Adopted Child
An individual adopted by the taxpayer or placed by an authorized placement agency for adoption by the taxpayer. This child is considered a child of the taxpayer by blood.

Adoption Assistance Program
A written plan set up by an employer to provide adoption assistance to its employees.

Adoption Taxpayer Identification Number (ATIN)
A temporary nine-digit number issued by the IRS for a U.S. citizen or resident alien child being adopted when the adoptive parents cannot get a Social Security number for the child in time to file their tax return.

Advance Earned Income Credit
Advance payments of the Earned Income Credit paid to the taxpayer throughout the year in their paychecks.

Advance Rent
Any rent received before the period that it covers.

After-Tax Contribution
A voluntary contribution subject to income tax.

An individual who is not a U.S. citizen

A payment to or from a spouse or former spouse under a divorce or separation instrument.

Allocated Tips
Tips that an employer assigns an employee. These tips are in addition to tips the employee reported to the employer for the year.

Alternative Depreciation System (ADS)
The slower of the two depreciation systems under the Modified Accelerated Cost Recovery System.

Alternative Minimum Tax (AMT)
An additional tax a taxpayer may have to pay if they benefit from special tax treatment for some types of income, deductions, and expenses.

Alternative Minimum Taxable Income (AMTI)
The basis for calculating the alternative minimum tax exemption amount and the tentative minimum tax.

Amended Return
Forms completed to correct a tax return that was filed previously.

A method of recovering (deducting) certain capital costs in equal amounts over a period of 60 months or more.

Amount Realized
The total value of all money and the fair market value of all property or services the seller received from a sale or exchange of a property, less expenses of sale. The amount realized also includes any of the seller's liabilities or any liabilities (assumed by the buyer) to which the transferred property is subject.

Amount Recognized
The amount of gain or loss realized from the sale or exchange of property that is included in or deducted from gross income for tax purposes.

A person from whom an individual descended. For example, an individual's great grandmother and great grandfather are their ancestors.

Annual Additions
The total of all contributions (not including rollovers) for the year to an individual participant's retirement plan account plus forfeitures allocated to that account.

Annual Benefits
The annual payment of a straight-life annuity (with no extra benefits) under a plan without employee contributions or rollovers.

A person entitled to receive benefits from an annuity.

A contract for a series of fixed or variable payments made at regular intervals over a period of more than one full year.

Annuity Starting Date
The first day of the first period for which an individual should receive a plan payment or, if after that day, the date the plan's obligations became fixed.

A legal order declaring that a valid marriage never existed.

An item of value or usefulness.

At risk
The amount a taxpayer could actually lose in an activity.

Authorized IRS e-file Provider
A tax professional or business that is accepted to participate in the IRS e-file program.

Authorized Placement Agency
Any person, state, or local government agency, tax-exempt organization licensed by a state, or court authorized by state law to place children for legal adoption or in foster care.

Away From Home
The status of an individual when their job requires them to travel away from their tax home longer than an ordinary workday and they need to sleep or rest before they can continue working.