Tax Glossary

There is a new field next to spouse's occupation at the bottom of Form 1040 labeled Identity Protection PIN. This is designed to help prevent refunds from being issued to an identity thief. It the taxpayer has been a victim of identity theft, verify the special PIN (6 digit IPPIN) is correct using CP01A Notice or see Form 1040 Instructions for more information.

Taxes on income, both earned (for example, salaries, wages, tips, commissions) and unearned (for example, interest and dividends). Income taxes can be levied both on individuals (personal income tax) and businesses (business and corporate income taxes).

People who are in an independent trade, business, or profession in which they offer their services to the general public are generally independent contractors. The general rule is that an individual is an independent contractor if the payer has the right to control or direct only the result of the work and not what will be done and how it will be done. The earnings of a person who is working as an independent contractor are subject to self-employment tax.

A tax-sheltered retirement savings plan set up by the taxpayer.

Income a person receives from certain financial accounts or from lending money to someone else.

A provision of tax law that allows a taxpayer to get back his or her share of a joint overpayment when the overpayment was used to pay one spouse's past-due federal tax, state income tax, child support, spousal support, or federal non-tax debt, such as a student loan.

A provision of tax law that allows a taxpayer to be relieved of responsibility for paying tax, interest, and penalties if the taxpayer's spouse (or former spouse) improperly reported items or omitted items on a joint tax return.

Form 13614-C used to conduct the initial interview and screen the taxpayer.

Income a person receives from certain financial accounts or from lending money to someone else.

Investment Income includes taxable interest and dividends, tax-exempt interest, capital gain net income, net income from rents and royalties not derived from a trade or business, and net income from passive activities

Individual Retirement Arrangement - A tax-sheltered savings plan set up by the taxpayer, generally for retirement income.

Itemized deductions allow taxpayers to reduce their taxable income based on specific personal expenses. If the total itemized deductions are greater than the standard deduction, it will result in a lower taxable income and lower tax.

Individual taxpayer identification number, issued by the IRS to individuals who are not eligible for a social security number.