The 50 Accounting & Tax Terms Every Taxpayer Should Know

Jeremy Springer
6 hours ago
3 min read

Whether you file a simple return or run a growing business, a shared vocabulary makes taxes and money decisions faster, clearer, and less stressful. Below is a quick-read glossary—plain English, no fluff—covering both personal and small-business concepts you’ll see on returns, in bookkeeping, and in everyday decisions.

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Adjusted Gross Income (AGI) — Your total income minus certain adjustments (e.g., HSA, IRA).
Taxable Income — The income that’s actually taxed after deductions.
Standard Deduction — Fixed amount that reduces taxable income without receipts.
Itemized Deductions — Listed expenses (mortgage interest, charity, etc.) instead of the standard deduction.
Tax Credit — Direct, dollar-for-dollar cut to your tax bill.
Deduction — Lowers the income that’s subject to tax.
Marginal Tax Rate — The rate applied to your next dollar of income.
Effective Tax Rate — Total tax divided by total income.
Tax Bracket — Income range taxed at a specific percentage.
Withholding — Taxes taken from your paycheck during the year.
Estimated Tax Payments — Quarterly prepayments for income without withholding.
Filing Status — Your tax category (single, married, head of household, etc.).
Dependent — Qualifying person you support who can reduce your tax.
Capital Gain/Loss — Profit or loss from selling investments or property.
Basis (Cost Basis) — What you paid (plus certain adjustments); used to compute gain/loss.
W-2 — Reports employee wages and taxes withheld.
W-4 — Tells your employer how much tax to withhold.
1099 forms (INT/DIV/MISC) — Report interest, dividends, and other non-wage income.
1099-NEC — Reports payments to independent contractors.
1099-K — Reports payment-platform or card-processed transactions.
IRAs (Traditional & Roth) — Tax-favored retirement accounts with different timing of taxes.
401(k) — Employer retirement plan with pre-tax or Roth contributions.
HSA — Triple-tax-advantaged account for qualified medical costs.
Extension — Extra time to file, not extra time to pay.
Audit — IRS or state review checking your return’s accuracy.

Business entities & small-business taxes

Sole Proprietorship — Unincorporated business owned by one person.
Partnership — Business owned by two or more; profits pass through to owners.
Limited Liability Company (LLC) — Liability protection; tax treatment can be flexible.
S Corporation (S-corp) — Pass-through corporation meeting IRS eligibility rules.
C Corporation (C-corp) — Separate taxable entity; pays corporate income tax.
Schedule C — Reports income and expenses for a sole proprietor.
Schedule K-1 — Shows each owner’s share of pass-through income, deductions, credits.
Qualified Business Income (QBI) Deduction — Potential deduction on certain pass-through profits.
Payroll Taxes (FICA/FUTA) — Social Security/Medicare and federal unemployment taxes on wages.
Sales & Use Tax — Taxes on purchases; use tax applies when sales tax wasn’t collected.
Nexus — Connection to a state that creates tax collection or filing duties.
Section 179 Expensing — Immediate write-off of qualifying equipment up to limits.
Bonus Depreciation — Extra first-year deduction for qualifying property.

Accounting & financial statements

Revenue — Money your business earns before costs.
Cost of Goods Sold (COGS) — Direct costs to produce or buy what you sell.
Gross Profit — Revenue minus COGS.
Net Income (Profit) — What’s left after all expenses and taxes.
Accounts Receivable (AR) — Customers’ unpaid invoices owed to you.
Accounts Payable (AP) — Bills your business owes to others.
Cash vs Accrual Accounting — Record when cash moves vs. when earned/incurred.
Depreciation — Spreading an asset’s cost over its useful life.
Inventory — Items held for sale or used in production.
Balance Sheet — Snapshot of assets, liabilities, and equity at a point in time.
Income Statement — Shows revenue, expenses, and profit over a period.
Cash Flow Statement — Tracks cash in and out from operations, investing, and financing.

So what do I do with this new-found accounting and tax term knowledge?

Bookmark it. When a form, email, or report mentions one of these, match it here first—then decide whether to DIY, ask your bookkeeper, or loop in your CPA. Knowing the terms turns “tax season” into “tax strategy.”

Legal Disclaimer: This post contains general information for taxpayers and should not be relied upon as the only source of authority. Taxpayers should seek professional tax advice for more information. This information was current at time of posting; we are not responsible for updating this or any blog post/article for subsequent changes in the law or its interpretation.