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Don't Mess With Taxes

Translating taxes into money-saving English

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Tax Glossary F through J

NOTE: The Tax Glossary, which debuted in this form on Dictionary Day 2015, has five sections. If a term you think should be here isn't, or you can add to or clarify a definition that is here, let me know via Twitter or Facebook.

One of the hardest things about filing your taxes is trying to decipher the forms. You practically have to learn a new, tax-specific language.

Dictionary_3_1 Unfortunately, IRS-speak is a native tongue for very few folks.

And it's not easy to decipher. In fact, reading tax documents makes that dang VCR manual (yes, a few of us still use those antiquated devices!) seem almost coherent!

To help out, Don't Mess With Taxes has gathered some common tax terms and phrases and their plain English meanings in this Tax Glossary (and the Tax Glossary's precursor, a mini tax dictionary, if you will, that was a blog post back in 2007). Yes, I've been working on this for a while! 

As you can imagine, the IRS dictionary gives Merriam-Webster a run for its money, so I've broken the Don't Mess With Taxes glossary into several sections for ease of page loading. Terms in the second group, F through J, are below.

You can check out the other sections by clicking the links below:

  • A through E
  • K through O
  • P through T
  • U through Z

And since tax laws are continually changing (thank you, Congress ... Not!), this is an ongoing list. I'll do my best to keep it updated, but if you find a tax word that's got you stumped, e-mail it to me and I'll to make sure it and its definition is added. The same goes for any tax term I've overlooked.

 

Alphabet_F 401(k) plan -- An employer-sponsored retirement savings program in which employees contribute part of their salary to a tax-deferred investment account. Salary put in the plan is not taxed until it is later withdrawn. Employers often match part or all of employees' contributions. Penalties usually apply to pre-retirement age withdrawals. Most plans, however, allow employees to borrow limited amounts tax- and penalty-free from their accounts.

Fair market value -- The price at which property or the right to use property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy, sell, or transfer property or the right to use property, and both having reasonable knowledge of relevant facts.

Federal Insurance Contributions Act (FICA) tax -- These taxes go toward Social Security and Medicare to provide benefits for retired workers and their dependents as well as for disabled workers and their dependents. It typically is referred to by its FICA acronym. The combined FICA tax rate is 15.3 percent. The current tax rate for the Social Security portion is is 6.2 percent for both the worker and his/her employer, or 12.4 percent total. The current rate for Medicare is 1.45 percent for the employee and employer, or 2.9 percent total.

Federal Unemployment Tax Act (FUTA) -- Taxes collected under FUTA fund unemployment benefits.

Filing status -- Determines the rate at which income is taxed. The five filing statuses are single, married filing a joint return, married filing a separate return, head of household, and qualifying widow(er) with dependent child. Qualifying widow/widower also is sometime referred to as surviving spouse with dependent child.

Flat tax -- In its most basic form, a flat tax applies a single tax rate to individual income. Depending on the specific proposal, a base exemption may be allowed to exclude low-income families from the tax. Some flat tax proponents also retain certain deductions to determine the amount subject to tax.

Flexible spending account (FSA) -- With this workplace account, an employee can divert some salary to a special account that is used to reimburse medical or child-care expenses. There are maximum contribution limits and in the case of medical FSAs, the money might be forfeited if not used within a specific time period.

Foreign Account Tax Compliance Act (FATCA) -- This law took effect in March 2010. FATCA targets tax non-compliance by U.S. taxpayers with foreign accounts. It focuses on reporting by U.S. taxpayers of certain foreign financial accounts and offshore assets, as well as reporting by foreign financial institutions about financial accounts held by U.S. taxpayers or foreign entities in which U.S. taxpayers hold a substantial ownership interest. Individual taxpayers must report information about certain foreign financial accounts and offshore assets on Form 8938 and attach it to their income tax return, if the total asset value exceeds the appropriate reporting threshold. Form 8938 reporting is in addition to Foreign Bank Account Report (see below) reporting.

Foreign Bank Account Report (FBAR) -- If you have a financial interest in or signature authority over a foreign financial account exceeding certain thresholds, the Bank Secrecy Act may require you to report the account yearly to the Department of Treasury by electronically filing a Financial Crimes Enforcement Network (FinCEN) 114, Report of Foreign Bank and Financial Accounts (FBAR). Failure to do so carries stiff penalties.

 

Alphabet_G Gift tax -- This tax is levied on an individual who gives more than a certain amount, adjusted annually for inflation, each year to another individual. When the gift exceeds the gift exclusion level, a return detailing the amount must be filed.

Gross dividends -- The total dividends you received. Your gross dividends are the sum of any ordinary dividends, capital gains distributions and nontaxable distributions you received during the tax year.

Gross income -- All the money, goods and property you receive during the year before you reduce it by using adjustments, deductions or exemptions. People who use the barter system have to include the value of whatever they've received in exchanged for services as part of their gross income.

Gross income test -- One of five tests a person must meet for you to claim him or her as a dependent so that you can take an exemption. It generally is the amount of the tax year's standard deduction amount for a single taxpayer. If this person is your child under 19 years old, or a full-time student under 24 years old, he or she does not need to meet this test.

 

Alphabet_H Head of Household -- An unmarried taxpayer who provides more than half of the cost of keeping up a home that was the main residence, for more than six months, for the taxpayer and a qualifying relative can use this filing status. Head of household provides a larger standard deduction and more generous tax brackets than the single status. Similarly, some tax breaks are more favorable for head of household filers than for singles.

Health savings account (HSA) -- A special account tied to a high-deductible health insurance policy. Earnings inside the HSA are tax deferred. HSA money can be used tax- and penalty-free to pay the insurance policy deductible, co-payments and any other qualifying medical expenses. Money left in the account at the end of a year can be rolled over to the next year. A 20 percent penalty is assessed for withdrawing HSA funds for non-qualifying purposes before age 65. After age 65, you cannot contribute to an HSA and non-qualifying withdrawals are taxed but not penalized.

Hobby loss -- Loss from a hobby or other activity you do not pursue for profit, i.e., something you do for fun and earn a little money versus a business activity. You cannot claim expenses from a hobby that exceed the amount of income that you report. For example, if you had a part-time job and made $10,000 and spent $12,000 on rebuilding an antique auto as a hobby, you cannot claim the hobby loss because it would mean you would have no earned income for tax purposes. 

Holding period -- The length of time you hold an asset. Your holding period determines the maximum tax rate you will pay on a gain from the sale of a capital asset. The capital gains tax on assets held for longer periods are usually taxed at lower rates.

Home equity debt -- Debt secured by your home. Home equity interest usually is deductible as an itemized deduction.

Home office -- A part of your home or other structure on your property that you use exclusively and regularly to conduct business. Doing so might qualify you to take a deduction for the home office's use. 

Homestead exemption -- A dollar amount that is not counted by state or county tax officials when determining the value of your primary residential real estate for property tax calculation purposes.

 

Alphabet_I

Income tax -- Finally! A tax term we all know (and hate). The main source of revenue for the federal government and many states. The tax is based on your earned and unearned income. You are allowed certain deductions, allowances, exclusions and credits to reduce your tax.

Independent contractor -- A worker whose employer has the right to control or direct only the result of the work done, This is the status of freelancers and sole proprietors. On the business side, independent contractors are treated as non-employees for employment tax purposes. From the contractors' standpoint, the worker is responsible for all income and self-employment taxes due on earnings.

Individual Retirement Arrangement (IRA) -- Yes, arrangement is the official IRS term, although most of us call them Individual Retirement Accounts or IRAs for short. This type of savings account offers tax benefits for money designated for withdrawal in retirement. There are a variety of IRA options, including a traditional IRA (deductible and nondeductible) and a Roth IRA.

Individual Taxpayer Identification Number (ITIN) -- The taxpayer identification number for persons who do not qualify for a Social Security number. It is usually assigned to aliens in the United States.

Innocent Spouse Rule -- The IRS usually holds both signers of a joint return liable for the entire tax due plus penalties and interest. That means that when you sign a joint return you are liable for the entire tax due, even if you later divorce your spouse, did not earn the income that generated the tax or did not know about the omission of income or claiming of erroneous deductions. Under the innocent spouse rule, a spouse may claim not to be jointly liable if he or she did not know about the errors and did not benefit from them.

Internal Revenue Service (IRS) -- And here's another tax term we all know (and hate). The IRS is the federal agency that collects income taxes in the United States. 

Itemized deductions -- Allowable expenses that are reported on Schedule A and help reduce a taxpayer's amount of adjusted gross income. 

Investment income -- Includes taxable and tax-exempt interest, dividends, capital gains net income, certain rent and royalty income, and net passive activity income. The IRS generally views investment income as unearned income. The distinction comes into play in determining application of some tax breaks.

 

Alphabet_j Job search expenses -- The costs of looking for a new job in your same line of work are deductible. Qualifying expenses include employment agency fees, printing and mailing resumes, and travel expenses for interviews, including transportation, lodging and some food if your job hunting takes you away from home overnight.

Joint return -- A tax return filed by a married couple using the Married Filing Jointly status. Here the couple combines the income and deductions of both spouses on the same tax return and shares the deductions and credits.

Joint return test -- One of the five tests a person must pass to qualify as a dependent. To meet this test, the person must not file a joint tax return with his or her spouse for the tax year in which you claim the person as a dependent. This test does not apply if the person is not required to file a return, files only to receive a refund and would have no tax liability for either spouse if they filed separate returns.

 

Continue alphabetically to more tax terms in
Tax Glossary K through O.

As with any language, terms are added and eliminated over the years, or the course of a Congressional session. Check back regularly for new tax terms.

Today's Tax Tip

  • What the one big tax bill could mean for you — It’s official. The One Big Beautiful Bill Act is law, signed at a White House July 4th ceremony. Taxes are a major part of the nearly 1,000-page measure. Here’s a collection of articles on what the new tax (and more) law could mean for your tax planning and ultimate Internal Revenue Service bill. (July 5, 2025)


  • Tax Tip; click pencil for all tax tip links

  • The 2025 Tax Tips offer ways to file your annual return, along with post-filing advice, important tax news and, of course, ways to cut your current tax year bill. You'll find the monthly assemblages on their own respective pages: January, February, March, April, May, June, July, August, September, October, November and December. Remember, tax tasks and tips don't stop after you file your annual return!

All About Kay

  • OK, some about Kay
    Open sign
    Kay Bell — Native Texan
    (the blog title totally makes sense now, right?). Professional journalist. Tax geek.
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My Other Accounts

Tick ... Tick ... Tick

  • Tax Year 2025 Continues!

    We made it. Tax Day 2025 is finally over. For most of us. When the filing season started on Jan. 27, the IRS said it expected more than 140 million individual tax returns for tax year 2024 to be filed by April 15. When the month started, the agency was around 39 million short of that number. While many taxpayers no doubt got their 1040s in by Tax Day, million every year get an extension to file. That's fine.

    In fact, the Internal Revenue Service appreciates some of us spreading out our tax submissions. It gives the agency time to process the surge of returns that arrive en masse on April 15.

    But enough about Uncle Sam's tax collection issues. The focus now is on all y'all who filed for extensions, giving you another six months to complete your return. Let's get started on meeting that new Oct. 15 deadline. It will be here before you know it.

    The monthly tips and reminders a little further down this column can help you finish up your extended Form 1040. There also will be tax tidbits each month that make sure you meet other tax deadlines. And, of course, you'll find advice on ways to cut your 2025 tax bill.

    The monthly tips and reminders a little further down this column can help you finish up your extended Form 1040. There also will be tax tidbits each month that make sure you meet other tax deadlines. And, of course, you'll find advice on ways to cut your 2025 tax bill.
    Note: I'm in the Central Time Zone, so adjust accordingly for where you live.


Time for Tax Tasks


  • monthly tax moves


  • Welcome July!
    🗽 USA 🎆 Birthday 🎉 Time! 🦅


    This first full month of summer really knows how to get the season started: Fireworks across the country on July 4!
    Or, if your neighborhood is annoyingly like mine, fireworks from July 1 through July whenever the pyrotechnics are all boomed!

    Even more exciting, tax-related sparklers continue through the month. In fact, as the calendar of tax tasks below notes, they started before the wicks on any official Independence Day firecrackers were lit.

    toddler with flag background
    Click on the image for some fireworks safety tips and warnings from the U.S. Consumer Product Safety Commission.

    I know, you're feeling like the youngster above, not quite ready yet to hear about taxes. But when you do take your hands off your ears to hear — or rather, scroll down to read — you’ll find some tax information to note and tax moves to make in July.

  • July 1: The majority of state individual and corporate income tax policy changes follow the calendar year and take effect each Jan. 1. But, notes the Tax Foundation, many sales and excise tax changes take effect today, July 1, which is the beginning of the fiscal year for all states except Alabama, Michigan, New York, and Texas. That’s why that notable tax changes will take effect in several states today.

    July 4: Happy 249th Birthday, America!

    Most of us will never be totally independent of taxes, but we can celebrate fewer tax hassles by paying attention to what we might owe and how we can reduce that amount throughout the year. As for that owed amount, if you meet most of your annual tax federal obligation via paycheck withholding, now is a good time to review that amount. If you need to adjust your withholding, the amounts will be less noticeable by being spread across 2025’s remaining six months.

    July 10: If your job is as a server at a restaurant or at any other establishment where gratuities from customers are part of your compensation, I hope you get all the tips you deserve for doing your job well. Remember, though, that those tips are taxable income.

    restaurant check tip iStock
    Whether you're dining at your favorite eatery or getting food, groceries and/or prepared meals, delivered to your home, if a tip isn't included on your restaurant or delivery bill, click the image above to calculate how much to tip the person who brought it to you.

    If you got at least $20 in gratuities in June for your extraordinary services as a food server or hair stylist or parking valet or whatever job where tipping is common, you must report that amount by today. Use Form 4070 to let your employer know the total tips you took in last month.

    July 11: Today kicks off the first of the annual summer state sales tax holidays. During these special shopping events, usually touted as back-to-school tax holidays, certain items are exempt from the states’ and usually the local sales taxes. Announced July sales tax holidays are (so far) in —
    Mississippi from July 11 to 13;
    Alabama from July 18 to 20;
    New Mexico from July 25 to 27, and
    Tennessee from July 25 to 27.

    July 18: If back in April you got an extension to file your 2025 tax return, you don’t have to wait until the final Oct. 15 deadline to do so. You can get this tax task out of the way so you don’t have to think about it for the rest of the summer. You also might be able to file electronically at no cost if your adjusted gross income (AGI), regardless of your filing status, is $84,000 or less by using the official IRS.gov Free File website.

    IRS Free File; click image for details

    Eight software companies are part of this year’s IRS-Free File Alliance partnership option at IRS.gov. They will be available through the Oct. 15 extension deadline, but again, you don’t have to wait. And if your income is too high, you still can file for free by using Free File's Fillable Forms option.

    July 24: Millions of us head to the beach to beat summer’s heat. But when the waters heat up, too, they can feed tropical systems. So far, the 2025 Atlantic (and Gulf of Mexico) hurricane season, which runs through Nov.  30, hasn’t been that bad. But federal forecasters say just wait. They once again are forecasting a more active than usual hurricane season. Before another tropical system forms, now is the time to get ready.

    Hurricane satellite image

    Uncle Sam's official forecasters at the National Oceanic and Atmospheric Administration (NOAA) Climate Prediction Center say we could get 13 to 19 total named storms, which are those with winds of 39 mph or higher. Of those, six to 10 are forecast to become hurricanes, meaning winds of 74 mph or higher. Three to five of the storms this season could become major hurricanes; that’s category 3, 4 or 5, with winds of 111 mph or higher.



    The countdown clock above can help you keep track of how many more days you have to worry about tracking any size or type of tropical storms. You also might want to check out the ol' blog's Storm Warnings collection of special pages with posts offer tax advice on preparing for, recovering from and helping those who sustain damages from the many ways that that weather goes wild.

    July 31: Summer is a great time to make home improvements. And there’s some added urgency this year if you’re relying on tax credits to help cover the cost of energy-efficient residential upgrades. Congress has targeted green energy tax breaks in its massive One Big Beautiful Bill. Many of the tax breaks will expire sooner than originally scheduled, so get your home improvements — and other environmentally friendly moves, like buying an electric vehicle — in under the tax law change wire.

    Small Business Tax Calendar: If you run your own company, you know there are myriad important filing, deposit, and record keeping dates throughout the year that your company needs to meet. You also can track key business and individual tax deadlines in IRS Pub. 509.

State Tax Help

  • Don't forget your state taxes!
    Forty-two states and D.C. collect personal income taxes. But even if you live in of the eight states without any income levy, you still face other state (and local) taxes.

    State Tax Departments provides links to your state's Web page. The companion page, Tax Tidbits, is the compilation of blurbs about each state's tax laws. And for more state tax news, check out all our state tax bloggings.

Tax Forms


  • Tax Forms
    Thanks to our increased use of tax preparers and computer software, many of us don't see our tax forms until we sign and file them. But knowing what's on these documents, either in paper or digital form, and why the IRS wants it is key to understanding our tax system. And knowledge definitely is power, especially when it comes to tax savings. Find this valuable information in the ol' blog's special Tax Forms 2025 page.

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    You also might enjoy these other tax tips from some of my tax-writing colleagues:

  • J.K. Lasser 2025 Taxes
    J.K. Lasser 2025 Taxes

  • Tax Savvy for Small Business 2025
    Tax Savvy for Small Business 2025

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I gotta tell ya ...

  • AKA Disclaimer:

    I am a professional journalist who has been covering tax issues since 1999. I am not a professional tax preparer.

    The content on Don't Mess With Taxes is my personal interpretation and opinion based on my study and understanding of tax laws, policies, and regulations. It is provided for your private, noncommercial, educational, and informational purposes only. While I work to ensure each post's accuracy, the items are not recommendations of any specific tax action(s) you should or should not take. Similarly, mentions of commercial tax products or services are not endorsements.

    In other words, my ramblings on the ol' tax blog are free advice, and you know what they say about getting what you pay for. That's why when it is time for you to file your own taxes, I urge you to get additional, professional, paid-for guidance from an accountant, Enrolled Agent, or other reputable, qualified tax preparer who is familiar with your individual tax circumstances.

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COVID-19 & Taxes

  • COVID-19
    Coronavirus has wreaked havoc
    on the 2020 and 2021 tax seasons.
    These five Coronavirus (COVID-19) and Taxes pages have details:
    March-July 2020
    August-December 2020
    January-December 2021
    January-December 2022
    …and so it continues into 2023
    …and, alas, into 2024
    It is 2025 and, yes, it's still an issue
    You can find medical coronavirus resource links in the next section.

COVID-19 Resources

  • COVID-19
    Need help finding a coronavirus vaccine in the United States?
    Call 1-800-232-0233
    or TTY 1-888-720-7489.
    More information and resources at:
    CDC Vaccines
    CDC Booster Shots
    HHS Combat COVID
    USA.Gov COVID Info

July 2025

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6 7 8 9 10 11 12
13 14 15 16 17 18 19
20 21 22 23 24 25 26
27 28 29 30 31    

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  • Uncle Sam representation on vintage postcard
    Uncle Sam on vintage postcard.
    ...............................................

Tell it to the Hill

  • DMWT Politics Posts
  • While it's easy to rail at the IRS, for the most part we can thank — or blame — Congress and the White House for our tax laws. So if you have an issue with tax legislation or want a tax bill passed, you need to let your federal legislators and the White House occupant know of your concerns. You can find out who in Washington, D.C., to contact (and how), as well as get information on your local lawmakers for matters, tax or otherwise, closer to home, at USA Gov.
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