Earnings on investments such as savings accounts, certificates of deposit and seller-financed mortgages. Banks or other organizations or individuals who pay interest usually report it on Form 1099-INT.

Assists in processing tax return information between the ERO (or the taxpayer, in the case of online filing) and the Transmitter.

Includes taxable and tax-exempt interest, dividends, capital gains distributions, and rental income.

Special tax rules allow you to reduce your taxable income by your qualified contributions to your IRA. You pay tax when you make withdrawals from your IRA.

A type of savings acount for retirement. Some IRA options are: Deductible Traditional IRA, Nondeductible Traditional IRA, and Roth IRA.

Although you cannot reduce your income by the amount of your current nondeductible contributions, you do not pay tax on the earnings of your account until you make withdrawals.

You cannot deduct current contributions to a Roth IRA, but when you make qualified withdrawals from your account you will not be taxed on them.

The Internal Revenue Service.

Expenses that can be deducted to reduce your income after your adjusted gross income, before you calculate the tax you owe. Itemized deductions include medical expenses, taxes, deductible interest, charitable contributions, casualty and theft losses, unreimbursed employee expenses and miscellaneous deductions.

This is the taxpayer identification number for persons who do not qualify for a Socail Security number. It is usually assigned to aliens in the United States.

A tax return filed by a married couple using the Married Filing Jointly (MFJ) status. This combines the incomes and deductions of both spouses on the same tax return.

A pension or profit-sharing plan available to self-employed individuals and their employees.

A tax-deferred exchange of similar items you use in your business or hold for investment, not including securities and other indebtedness or interests such as stocks and bonds. The items must be the same type, but they do not need to be of the same grade or quality.

A person who represents the concerns or special interests of a particular group or organization in meetings with lawmakers. Lobbyists work to persuade lawmakers to change laws in the group's favor.

Your profit or loss from the sale of a capital asset that you held for more than 12 months.

A type of distribution from a pension plan, where you receive the entire balance within one tax year. This usually happens when you retire, and a lump-sum distribution can be rolled over into another plan.

A tax paid on expensive goods and services considered by the government to be nonessential.

Pronounced "MAKERS", this is a depreciation method used to figure the deductions you get over the life of a tangible property you began using on Jan. 1, 1987, or later.

An economic system based on private enterprise that rests upon three basic freedoms: freedom of the consumer to choose among competing products and services, freedom of the producer to start or expand a business, and freedom of the worker to choose a job and employer.

If you and your spouse are living together, you may choose this as your filing status. Your marital status on the last day of the tax year determines your status for the entire year, so if you got married Dec. 31, the Internal Revenue Service considers you as married that year. However, the reverse is not necessarily true. If your spouse died in during a tax year and you did not remarry, you are considered married for the whole year for filing purposes.

Just because you are married doesn't mean you have to file jointly. Some couples find that separately figuring taxes on each spouse's portion of their income and deductions is advantageous. Or they may just feel more comfortable keeping their tax situations separate. Separate filing by married couples, however, can be problematic. Some states view a married couple's income as split 50/50, regardless of which partner earned the money and require that even split to be used even when the spouses file separate returns. Also, many tax breaks and credits are not available when the married filing separately status is used. And when one spouse itemizes deductions the other spouse cannot claim the standard deduction, and therefore must itemize to claim their allowable deductions.

A broad tax that affects a majority of taxpayers.

A term defined by the IRS to determine if you worked and were involved in a business activity on a regular basis or if you were only an investor. If you materially participated in a business activity, you are allowed to deduct any losses from that activity against your ordinary income. See also: Active Participation.

Expenses that are deductible in your business may include meals and entertainment, such as the cost of taking a client to a restaurant and a sporting event. These expenses, however, are only partially deductible unless they meet certain exceptions.

Similar to an IRA, a medical savings account (MSA) is intended to help self-employed people and employees of certain small businesses to save for and pay their medical expenses that are not covered by health insurance.