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Allowances
A number on your Form W-4 used by your employer to calculate how much income tax to withhold from your pay. The greater the number of allowances, the less income tax will be withheld.
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Alimony
Regular payments made to an ex-spouse or to a legally separated spouse. Alimony is considered income for the payee and is tax deductible for the payer.
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Adjustment to Income
Also called an above-the-line deduction. A type of deduction that you may take without having to itemize.
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Adjusted Gross Income (AGI)
Your gross income reduced by adjustments to income, before exemptions and deductions are applied.
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Adjusted Basis
The original value of a piece of property plus the value of improvements and minus depreciation. The adjusted basis is used to figure your gain or loss on a sale.
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Abusive Tax Scheme
An illegal series of transactions designed to hide taxable income from the IRS.
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Above-the-Line Deduction
Also called an adjustment to income. A type of deduction that you may take without having to itemize.
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Ability to Pay
He concept that taxpayers should have a tax liability consistent with their income level.
