The first step toward learning more about taxes is to get a clear understanding of some key terms. That’ why today we bring you nine concepts that will help you navigate with confidence the world of income tax.
Adjusted Gross Income (AGI)
This is your gross income (see below) minus adjustments such as education expenses, student loan interest, or contributions to retirement account.
Direct Deposit
This is considered the best and fastest way for taxpayers to get their refunds. This way, the money is electronically deposited into their financial accounts for free. Direct deposit is fast, simple, safe, and secure.
Electronic Tax Preparation
This term refers to the use of dedicated software to complete tax returns. In addition to being fast, electronic preparation is also more precise, as it helps avoid errors.
To File a Return
To transmit by mail or electronically to the IRS taxpayer’s information about income and tax liability.
Filing Status
This is a category that determines the rate at which your income is taxed. There are five filing statuses:
- Single
- Married filing jointly
- Married filing separately
- Head of household
- Qualifying widow(er) with dependent child
Read this previous post to learn more about tax filing statuses.
Gross Income
All of your income (wages, capital gains, business income, and others) before subtractions, deductions, and exemptions.
Independent Contractor
A self-employed worker that performs services for others. The people who receive these services do not control the means of methods the independent contractor uses to perform the work, but they do decide whether the work is of acceptable quality.
Refund
This is the money that the IRS owes you when the amount of tax you pay is greater than the total tax.
Refundable Credit
When the amount of a tax credit is greater than the tax owed, then you can receive a “refund” for some of the unused credit.
Learn More About Taxes
These are some previous posts with useful tips to help you navigate with confidence the world of taxes:
- How to start preparing your 2020 tax return
- Do you know what is your tax filing status?
- 4 Tax-related scams to avoid
- Expecting a tax refund? Here’s everything you need to know
- Remember this important thing when you get your Economic Impact Payment
Contact the Tax Experts at Delgado’s Insurance
If you are looking for assistance with your 2020 tax return in Bloomington or Riverside, at Delgado’s Insurance our mission is to help you make sense of your options to reduce your liability and maximize your deductions while staying compliant with all relevant laws and regulations.
We have locations in Riverside, California, and Bloomington, California. Contact us today by telephone (951-361-0084, 909-421-9003), email (mail@delgadosinsurance.com), or through our social media accounts (Facebook, Twitter) to get a free quote and learn more about our wide array of services.
