| A | B |
|---|
| tax liability | the total amount of taxes owed |
| estate tax | a federal tax colledted on the value of a person's property at the time of his or her death |
| inheritance tax | a state tax collected on the property left by a person to his or her heirs in a will |
| income tax | tax on wages, salaries and self-employed earnings |
| income tax return | a form, such as 1040 or 1040EZ, on which a taxpayer reports how much money he or she received from working and other sources and the exact taxes that are owed |
| exclusion | income that is not subject to taxes, also called "tax-exempt income" |
| adjusted gross income | gross income after certain reductions are calculated |
| taxable income | adjusted gross income less any allowable tax deductions and exemptions |
| tax deduction | an expense that you can subtract from your adjusted gross income to figure your taxable income |
| standard deduction | an amount of money set by the IRS that is not taxed |
| itemized deduction | a specific expense, such as a medical expense, that you can deduct from your adjusted gross income |
| exemption | a deduction from adjusted gross income for the taxpayer, the spouse and qualified dependents |
| tax credit | an amount of money that can be subtracted directly from taxes you owe |
| allowance | an adjustment to the tax withheld from your paycheck, based on your marital status and whether you have dependents |
| extension | an extended deadline for filing an income tax return |
| tax audit | a detailed examination of your tax return by the IRS |
