Cruz_2025Release_PPT_Ch002_Accessible__2__2

Form 1040

The basic federal income tax form used to file an individual income tax return.

Adjusted Gross Income (AGI)

Gross income minus certain permitted deductions, used to determine many tax credits and deductions.

Taxable Income (IT)

The amount of income that is subject to tax, calculated as AGI minus deductions.

Tax liability

The total amount of tax owed to the IRS, calculated based on taxable income and applicable tax rates.

Standard deduction

A fixed dollar amount that reduces the income on which you are taxed, varying by filing status.

Married Filing Jointly (MFJ)

A filing status for married couples where they combine their income and deductions into one return.

Married Filing Separately (MFS)

A filing status where married couples choose to file individual tax returns.

Head of Household

A filing status for unmarried taxpayers who maintain a home for a qualifying person.

Qualifying Widow(er)

A filing status allowing a surviving spouse to use joint return rates for up to two years following the spouse's death.

Dependent

A qualifying child or relative who meets specific tests, impacting tax credits and filing status.

Dependent taxpayer test

A test which states that if a dependent can be claimed by another taxpayer, they cannot be claimed as a dependent.

Joint return test

A test stating that a dependent cannot file a joint tax return, with specific exceptions.

Gross income test

A test used to determine if a relative can be claimed as a dependent, based on their income.

Support test

A criterion that requires the taxpayer to provide more than half of the support for a dependent.

Tax credits

Amounts that reduce the tax liability dollar-for-dollar, which can be refundable or nonrefundable.