A fuller guide to this term is on the way. In the meantime, the related terms below explain the ideas around it.
Related MoneyPedia terms
- Tax CreditA dollar-for-dollar reduction of the tax you owe, making it more valuable than a deduction of the same size.
- DependentA qualifying child or relative you support financially, which can unlock deductions and credits on your return.
- Earned Income Tax Credit (EITC)A refundable credit for low-to-moderate income workers that grows with earnings up to a limit, then phases out.
- Filing StatusA category based on your marital and household situation that affects your tax rates, deductions, and eligibility.
- Adjusted Gross Income (AGI)Your total income minus certain adjustments, used as the starting point for figuring out how much tax you owe.
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Plain-English education — not personalized legal, tax, or investment advice.