Archive for March 8th, 2010
Term Taxes – Bilingual glossary of terms
Gross income 1.Adjusted AGI – Adjusted Gross Income: Refers to the gross receipts that can be adjusted with allowable deductions. Usually this amount is subtracted reductions or additional revenues are added as appropriate. It is a term applicable to the annual tax return personal or family (if the couple filing jointly) as the template in the 1040 series shown on the first page. It is what is known as income “above the fold” before turning the page.
2.Alimony Payments – Payments of support rights on divorce: These are payments made by a former spouse to the other according to the instructions given by the divorce decree issued by a court. These should be included as additional income and adjusted gross income of the taxpayer when received and decreased gross income of the spouse who pays it. These payments are not the same as the contributions of child support that are issued or received for minor children after divorce.
3.Amendent return – Amended Declaration or Declaration Revised: Typically made with the 1040X form that replaces a statement made on time but that must be corrected or changed to obtain new information that affects the outcome of the original statement. Therefore used to correct an error or to add an additional deduction not taken into account, add additional income which was not included, and so on. This form can also be used if the time of the declaration was ignored any credit applicable in the year and can not be taken in the next.
4.Alternative Minimun Tax – Alternative Minimum Tax: A formula that calculates taxes in an alternative which was created to prevent high-income people could abuse the many deductions, exemptions and credits to reduce the amount of taxable and tax end up leaving to pay its assessed tax liability. The form used to calculate whether a taxpayer is going beyond that limit deductions and credits is called Form 6251. When a family or person making the declaration should be disaggregated or detailed calculations to make sure it is not misapplied the tax tables instead of AMT taxable.
5.Basis of stock – cost basis for shares of stock: Refers to the purchase price of a share of stock, including all acquisition costs to be used to determine the gain or loss from when sold. If the shares are received as a gift, the cost basis of this action is used at the time of the sale can be the base cost of the operation that used by the former owner of the share or the market value thereof at the time gift. If action is acquired through inheritance, using the market value on the date of death of the person who gives it as his legacy.
6.Credits – Tax credits: They are tax advantages that reduce the amount of cumulative tax liability in the year. For example are education tax credits that reduce the total tax liability by investing in the education of the taxpayer or their dependents. Some credits are refundable (refundable) and others not. The refundable credits are those that the IRS issued to the taxpayer and their tax liability is zero, ie, add money to the amount of reimbursement of overpaid taxes. The credits are not refundable once the tax liability is zero, do not affect the tax refund (tax refund).
7.Casualty loss – Loss on accidents: A “casualty” or accidental loss in circumstances which ultimately and unexpectedly deteriorates physical properties such as a house or a vehicle such as due to a natural disaster or accident caused by man. These losses can be deducted from personal taxes when you have certain conditions and after deducting any compensation received from insurance. It uses the form Form 4684 call: Losses casualty (unforeseen), Disasters, and Thefts (from personal use property) in English Casualties and Thefts.
8.Capital gains or losses – Gains or losses securities: Are the gains or losses realized on the sale of securities (stocks, bonds, mutual funds, etc.).. To describe the transactions and their results using the enclosed form or Schedule D: Capital Gains and Losses and the amount obtained is transferred to the corresponding line in the Form 1040. Applicable tax rates depend on whether the investment is long or short term and is often less than the tax rate for ordinary income. When losses occur, there is a maximum amount deductible each year and if these losses exceed this limit, drag the portion of those credits to subsequent years until the cumulative loss is consumed.
9.Charitable contributions – Charitable Contributions: Donations, gifts or contributions to qualified charities by the IRS as nonprofit entities, and can be used to deduct the amount of tax liability by using a spreadsheet in which breakdown all these tax deductions. Donations are specified on the form or attached Schedule A: Itemized Deductions (Itemized deductions or itemized).
10.Child and Dependent Care Credit – Credit for Child and Dependent Care: This is a tax credit that adjusts the amount of annual tax liability of a person or family for the money used to pay the care of their children or dependent child or dependent care for disabled (blind or sick in any situation). The credit is usually between 20% and 35% of the cost of contracted services during the year and has no age restrictions for dependents and limiting the annual amount for the case of Dependents in general. The credit is calculated and reported in the form Form 2441 (for IRS Form 1040 or 1040A) Child and Dependent Care Expenses.
11.Custodial Parent – Custodial Parent: The parent with whom a child lives for more than half the year, whether or not parents are legally divorced, filing jointly or separately.
12.Dependents – Servants: These are individuals who have a family relationship or of some kind that allows the taxpayer can claim a personal exemption under the tax return and that person alone can not make the statement itself. The term dependent means that it is a qualified child or an individual who qualifies to be dependent and whether “qualified” must obey three rules completely: tax dependency test, the test can not make a declaration on their or jointly with another person and proof of residence or nationality.
13.Deductions depending on filing status or Standard deductions – Declarations with standard deduction: Depending on the marital status of the person making the statement, the IRS allows a reduction for each person being included in the declaration, both the taxpayer and each a dependent tax – an amount that varies each year from taxable income. For example, in 2009 is $ 5700.00 for a person who is declaring individually or as a single. The sum of each of these amounts is the standard deduction or standard deduction. If the taxpayer is over 65 personal amount increases slightly. If you are also legally blind, one additional amount that increases the standard deduction this year. The same applies to all dependents, are older or 65 and legally blind.
14.Detailed deductions – statements with itemized deductions: When the sum of personal allowances is greater than the sum of itemized deductions is more convenient for taxpayers to use the standard deduction, but when deductions can be applied more than just personal ones, has sense to list all allowable deductions and this is called a statement with itemized deductions. All allowable itemized deductions are listed in the Annex or Schedule A that goes with a 1040. Deductions that are usually included in Annex A and detailed are: donations, medical expenses greater than 7% of gross income, housing mortgage principal, property taxes or state and others.
15.EITC – Earned Income Tax Credit (EITC): The Earned Income Tax Credit is a tax credit for certain people who work and receive less than a certain amount of income in the year and whose limits vary from year to year and according how to declare or civil status of the taxpayer. A tax credit means more money for the taxpayer by reducing the amount of tax they must pay. This is a refundable credit, ie, increase the amount of reimbursement. The earned income credit does not affect certain social welfare payments. To claim the earned income credit, several rules must be met, so it is recommended to do the calculations with the tool provided by the IRS, in Spanish, here: http://apps.irs.gov/app/eitc2007/SetLanguage . do? lang = en.
16.Exemption – Personal exemption: This is the amount per person that is dependent on the taxpayer to be exempt from paying taxes. For example, in 2009 the personal exemption is $ 3650.00 per person dependent (including the taxpayer). If a family has 4 people, this means that the total family income (4x $ 3,650 = $ 14,000) $ 14,600 will pay no taxes that year. The amount of personal exemptions also may be subject to a maximum income a year.
17.Federal Income Tax withheld – Retention of federal income tax: Are the deductions made during the fiscal year of income, salary or wages of the taxpayer to continue paying taxes as they generate revenue. This amount will be adjusted with the annual tax return and if greater than the tax liability of the year will generate a refund to the taxpayer or apply that amount as a credit for next year, as decided and directed by the taxpayer. When deductions during the year are less than the tax liability will generate a tax bill to be over a certain annual amount generated by fines and penalties not paid on time during the year.
18.Filing status – Marital status for tax returns: The way taxes are reported is determined by the status of the taxpayer. This may be as a bachelor, which does not include other dependent, the taxpayer. Are couples filing jointly (Married Filing Jointly) and if they declare each separately (married filing separatelly). Unmarried persons who have no dependents must be declared as unmarried, there are two forms: as a Chief or Head of Household (Head of Household) when you have dependents or a widow (er) qualified (Qualifiying widow), provided you have dependents and is recently widowed. Each civil status has criteria to follow and influence the standard deduction amount that is eligible for that year.
19.Hope Credit – Hope Credit: This is a tax credit – will reduce the amount of fiscal responsibility and how much it must pay tax – which applies based on the expenses incurred in tuition and other educational expenses of the taxpayer or their dependents, in the first two years of higher education. While the final amount of the loan may vary from family income, the maximum credit in 2009 increased to $ 2500.00. There are other educational loans called Credit or Lifetime Learning Credit of perpetual learning, which can not be used while for the same student during the same fiscal year. The template used for these calculations is the Form 8863 Education Credits
20.Gross Income – Gross Income: The total income received during the year worldwide – not only generated in the U.S. – Before reducing or withholding tax, whether received in the form of money, property, services or securities may be subject to paying taxes.
21.Independent contractor – Independent Contractors: It is said the taxpayer who is hired to do work or perform a service according to their own working methods, which is not subject to supervision or control of the daily performance of the work but is only subject to the approval of the final result of it. An employee, by contrast is one that is subject to supervision by the employer and the methods used to perform work under the control of the employer, usually the employer provides the resources to carry out the work and monitors the performance end.
22.Legally blind – Legally Blind: It is said of a taxpayer or dependent child whose vision is 20/200 in either eye, even with corrective lenses or your field of vision is less than 20 degrees. The fiscal conditions of these individuals may be affected if they are considered legally blind or not.
23.Lifetime Learning Credit – Perpetual Learning Credit: A tax credit is applied to the amount of fiscal responsibility that is used to reduce the costs incurred by the college or technical training to improve work activity of either the taxpayer or his dependents. It can be used simultaneously with the Hope tax credit for the same student in the same fiscal year. The rules and FAQ to apply this credit as opposed to the Hope Credit can be read here: http://www.irs.gov/faqs/faq/0,, id = 199,792.00. Html.
24.Mileage Rate – Rate of expenses for mileage: When a taxpayer makes a detailed tax return may include certain costs related services donations or volunteer work or the performance of their own business. These deductions may decide to break down the costs of using their car either by joining all costs incurred in the year or approximate value these costs using the amount of miles driven for the purpose of the services provided (voluntary or business) during the year . In that amount of miles driven annually is applied to a standard determined by the cost of living, inflation and the amount accepted by the IRS. For example, in 2004 the amount per mile traveled was 37 ½ cents per mile for business expenses. In 2008, it was 50 ½ cents per mile of business travel expenses. If it’s miles to volunteer or charity services are calculated at 14 cents a mile traveled by the medical services of 19 cents.
25.Nonrefundable credits – nonrefundable credits: The tax credits can reduce the tax liability of the taxpayer. Some credits allow whether liability is zero, yet the declarant receives this amount of credit as a refund, while tax credits are not refundable or they will not go beyond the taxpayer’s tax liability.
26.Passive Income and losses – income and passive losses: refers to gains or losses which the taxpayer does not actively participate to generate them. For example, interest would be passive income, while passive income would be no wages. Passive losses can be generated by activities in which the taxpayer has no equity, as income from rentals (except where the taxpayer is a real estate professional).
27.Qualifiying Charitable Organizations – Charitable Organizations qualified: For a donation is tax deductible, the recipient organization or entity that should be considered a qualified charitable organization by the U.S. Treasury Department, this is not achieved automatically being a particular entity as a nonprofit, or because it provides a public service, but must be specifically designated as qualified.
28.Tax Bracket – Ranges tax: is a table of tax rates applied to income generated in an ordinary way (by job, salary, wages or other ordinary income) which varies the amount of income. For example, will pay 10% income taxpayers earning less than $ 16 thousand per year (NOTE: This range is illustrative, not indicate that these amounts are accurate since they vary from year to year). Those earning between $ 16 thousand and $ 69 billion will pay 15%, and so on.
29.Tax liability – tax liability is the amount of money a taxpayer must pay the IRS during a given fiscal year once included all revenues generated are adjusted to deduct those items these permitted, apply personal exemptions allowed , reducing credit applicable to each case. It is the amount resulting from the calculation of the annual statement which will apply the tax tables and will pay the amount of taxes that year. A tax liability is subtracted from any payment of taxes made to date (withholding taxes withheld during the year or tax, estimated payments or credits additionally sent from other previous years) and is what gives the final result of the declaration: a refund for the taxpayer has paid more taxes if your tax liability or an invoice for payment if prepayments in the year were lower than fiscal responsibility.
30.Taxable income – taxable income: Used to differentiate revenue to be used in calculating tax liability and those that are tax exempt, as would a comparison of salaries or wages that are taxable and must be used to calculate taxes those from a gift, they are not normally taxable.
Related daily news :
