The concept that taxpayers should have a tax liability consistent with their income level.

Also called an adjustment to income. A type of deduction that you may take without having to itemize.

An illegal series of transactions designed to hide taxable income from the IRS.

The original value of a piece of property plus the value of improvements and minus depreciation. The adjusted basis is used to figure your gain or loss on a sale.

Your gross income reduced by adjustments to income, before exemptions and deductions are applied.

Also called an above-the-line deduction. A type of deduction that you may take without having to itemize.

Regular payments made to an ex-spouse or to a legally separated spouse. Alimony is considered income for the payee and is tax deductible for the payer.

A number on your Form W-4 used by your employer to calculate how much income tax to withhold from your pay. The greater the number of allowances, the less income tax will be withheld.

A special tax system which was originally intended to prevent wealthy taxpayers from taking advantage of so many tax breaks that they end up paying little or no taxes. The AMT affects more and more mi [..]

A corrected tax return (using Form 1040X) filed to revise a previous year's tax return.