A

Amend: Re-filing a tax return due to a change in filing status, error in reported income, or missed deductions or credits.

Audit: An in-depth investigation conducted by the Internal Revenue Service (IRS) where additional information is obtained concerning an individual’s or business’s financial records or systems.

B

Bankruptcy: Legal status of an individual or business that is unable to pay debts owed to creditors.

D

Debt Forgiveness: Relief from the total debt owed.

Decedent: A person who has died.

Deduction (or Tax Deduction): Reduction in taxable income based on various criteria that may lessen an individual’s tax liability.

Dependent: For income tax purposes, a person who relies on a taxpayer for more than half of their financial support and whom the taxpayer can claim on their taxes.

E

E-File: A safe, quick, and easy way to submit a tax return online.

Escrow: An account used to pay taxes and insurance, funded by a homeowner and held by the lender.

Estimated Taxes Paid: Taxes paid on amounts not subject to withholding, such as self-employment, interest, and alimony.

F

Fair Market Value (FMV): The normal selling price of a home in the open market, agreed upon by the buyer and seller.

Foreclosure: The process in which property is seized from a homeowner unable to make mortgage payments.

Form 656: Form submitted to the IRS to apply for an offer in compromise.

Form 1040NR: Filed by nonresident aliens engaged in U.S. trade or business, representatives of deceased persons needing to file, or estates or trusts that must file.

Form 1040X: Used to make changes to a previously submitted tax return.

Form 1098: Document reporting mortgage interest of $600 or more paid by the taxpayer during the year.

Form 1099 Series: Includes several forms reporting various types of income:

1099-B: Reports sales of stocks, mutual funds, bonds, and other securities.

1099-DIV: Reports on dividends or capital gains distributions.

1099-G: Reports taxable unemployment compensation, state/local income tax refunds, and other payments.

1099-INT: Reports interest income.

1099-MISC: Filed for royalties, rents, prizes, medical payments, and other specific payments.

1099-NEC: Reports $600+ payments to non-employees for services.

1099-R: Reports distributions from retirement accounts.

Form SS-5: Used to apply for a new/replacement Social Security card or update information.

Form SSA-1099 (or RRB-1099): Reports Social Security benefits received during the year.

I

Improvements: Expenditures that prolong a home’s life, such as a total roof replacement.

M

Married Filing Jointly (MFJ): Filing status for married couples reporting total income, exemptions, deductions, and credits on one return.

N

Nontaxable Income: Income not taxed by the IRS, such as life insurance money and certain veteran’s benefits.

O

Offer in Compromise: Allows a taxpayer to settle a tax debt for less than owed, typically due to financial hardship.

P

Points: Charges at closing by a lender, deductible on a tax return.

R

Repairs: Expenditures maintaining a home, such as interior painting.

Retirement Savings Contributions Credit: A non-refundable credit for eligible individuals contributing to retirement plans.

S

Sale of Business Assets: Items of a business sold to determine gain or loss.

Schedule C: Used to report income or loss from a sole proprietorship business.

Self-Employment Income and Expenses: Income earned and expenses incurred by individuals working for themselves.

Short-Sale: Sale of property to repay less than owed, as an alternative to foreclosure.

Substitute Return: Filed by the IRS on behalf of a taxpayer who fails to file their own.

T

Taxable Income: Income subject to IRS taxation, including wages, jury duty fees, and rental property income.

W

W-2: Issued by employers, stating an individual’s income for the year.

W-4: Completed by employees to ensure correct federal income tax withholding.