Wednesday 23 August, 2017
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Useful Tax Glossary and Definitions

As a courtesy to our clients, we have compiled a comprehensive list of common tax terms and definitions for quick reference.

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M

Term Definition
Marital deduction

An estate tax and gift tax deduction for assets passing to a spouse. It allows estate and gift transfers completely free of tax.

Market discount

The difference between face value of a bond and lower market price, attributable to rising interest rates. On a sale, gain on the bond is generally taxed as ordinary income to the extent of the discount.

Married Filing Jointly

A married couple may file a joint return together. If your spouse died during the year, you may still file a joint return with that spouse for the year of death.

This information provided by the Internal Revenue Service: http://www.irs.gov/newsroom/article/0,,id=105098,00.html

Married Filing Separately

A married couple may elect to file their returns separately.

This information provided by the Internal Revenue Service: http://www.irs.gov/newsroom/article/0,,id=105098,00.html

Material participation tests

Rules for determining whether a person is active in a business activity for passive activity rule purposes. Unless the tests are met, passive loss limits apply.

Miscellaneous itemized deductions

Generally, itemized deductions for job and investment expenses subject to a 2% of adjusted gross income floor.

Modified ACRS (MACRS)

Depreciation methods applied to assets placed in service after 1986.

Modified adjusted gross income (MAGI)

This is generally adjusted gross income increased by certain items such as tax-free foreign earned income. MAGI usually is used to determine phaseouts of certain deductions and credits.

Mortgage interest

Fully deductible interest on up to two residences if acquisition debt secured by a home is $1 million or less, and home equity debt is $100,000 or less.