Publication 929 |
2003 Tax Year |
Glossary
This is archived information that pertains only to the 2003 Tax Year. If you are looking for information for the current tax year, go to the Tax Prep Help Area.
The definitions in this glossary are the meanings of the terms as used in this publication. The same term used in another
publication may have a slightly different meaning.
- 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 $3,000 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 ($3,000 for 2002) 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, later, and Investment income defined, earlier, under Step 1. Figuring the Child's Net Investment
Income (Form 8615, Part I).
- 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 2002, 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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