Publication 929 |
2001 Tax Year |
Glossary
Adjusted gross income.
Gross income (defined
later) minus adjustments to income (defined next).
Adjustments to income.
Deductions that are subtracted from gross income in figuring
adjusted gross income. They include deductions for moving expenses,
alimony paid, a penalty on early withdrawal of savings, and
contributions to an individual retirement arrangement (IRA).
Adjustments to income can be taken even if itemized deductions
(defined later) are not claimed.
Alternative minimum tax.
A tax designed to collect at least a minimum amount of tax from
taxpayers who benefit from the tax laws that give special treatment to
certain kinds of income and allow deductions and credits for certain
kinds of expenses.
Capital gain distribution.
An allocated amount paid to, or treated as paid to, a shareholder
by a mutual fund, regulated investment company, or real estate
investment trust from its net realized long-term capital gains. This
amount is in addition to any ordinary dividend paid to the
shareholder. You will receive a statement from the payer if this
applies to you.
Dependent.
A person, other than the taxpayer or the taxpayer's spouse, for
whom an exemption (defined later) can be claimed. You can generally
claim an exemption for a dependent if the dependent:
- Lives with or is related to you,
- Is a U.S. citizen, a U.S. resident, or a resident of Canada
or Mexico,
- Does not file a joint return,
- Does not have $2,900 or more of gross (total) income (does
not apply to your child if under age 19 or a student under age 24),
and
- Is supported (generally more than 50%) by you.
For more information, see Exemptions for Dependents
in Publication 501.
Earned income.
Salaries, wages, tips, professional fees, and other amounts
received as pay for work actually done.
For purposes of determining a dependent's standard deduction,
earned income also includes any part of a scholarship or fellowship
grant that the dependent must include in his or her gross income.
Exemption.
An amount ($2,900 for 2001) that can be subtracted from income in
figuring how much income will be taxed. Exemptions generally are
allowed for the taxpayer, the taxpayer's spouse, and qualifying
dependents.
Gross income.
All income from all sources (other than tax-exempt income) that
must be included on your tax return.
Investment income.
See Unearned income.
Itemized deductions.
Deductions allowed on Schedule A (Form 1040) for medical and dental
expenses, taxes, interest, charitable contributions, casualty and
theft losses, and miscellaneous deductions. They are subtracted from
adjusted gross income in figuring taxable income. Itemized deductions
cannot be claimed if the standard deduction is chosen.
Net capital gain.
The excess of net long-term capital gain over any net short-term
capital loss. For 2001, this is the smaller of the gain on line 16 or
the gain on line 17 of Schedule D (Form 1040), Capital Gains and
Losses. If Schedule D is not required, net capital gain is the
amount of capital gain distributions on Form 1040, line 13, or Form
1040A, line 10.
Net investment income.
The total of all investment income (other than tax-exempt income)
reduced by the sum of the following: adjustments to income related to
the investment income, plus the larger of:
- $750 plus itemized deductions directly connected with
producing the investment income, or
- $1,500.
Standard deduction.
An amount (based on filing status, age, and blindness) that can be
subtracted from adjusted gross income in figuring taxable income. The
standard deduction of a dependent is subject to a limit based on
earned income. The standard deduction is not used if itemized
deductions are claimed.
Tax year.
The time period covered by a tax return. Usually this is January 1
to December 31, a calendar year, but taxpayers can elect a fiscal tax
year with different beginning and ending dates.
Taxable income.
Gross income minus any adjustments to income, any allowable
exemptions, and either itemized deductions or the standard deduction.
Unearned income.
Income other than earned income. This is investment-type income and
includes interest, dividends, and capital gains. Distributions of
interest, dividends, capital gains, and other unearned income from a
trust are also unearned income to a beneficiary of the trust.
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