Glossary
Tax & accounting glossary.
Plain-English definitions for the terms you'll see across our site, your tax return, and your business.
- Adjusted Gross Income (AGI)
- Your total income minus specific above-the-line deductions. AGI determines eligibility for many credits, deductions, and phaseouts.
- Bonus Depreciation
- An accelerated depreciation deduction allowing businesses to expense a large percentage of qualifying assets in the year they are placed in service.
- Cost Segregation
- An engineering-based study that reclassifies real estate components into shorter-life property, accelerating depreciation deductions.
- Defined Benefit Plan
- A retirement plan that promises a specific benefit at retirement; contributions are actuarially determined and can far exceed 401(k) limits.
- Enrolled Agent (EA)
- A federally licensed tax practitioner with unlimited rights to represent taxpayers before the IRS.
- Estimated Tax Payments
- Quarterly payments made to the IRS and state on income not subject to withholding, to avoid underpayment penalties.
- Fractional CFO
- An outsourced senior finance leader engaged part-time to provide forecasting, KPI reporting, and strategic financial guidance.
- K-1
- A tax form issued by partnerships, S-corps, and trusts reporting each owner's share of income, deductions, and credits.
- NIIT (Net Investment Income Tax)
- A 3.8% tax on investment income for high-income taxpayers above modified AGI thresholds.
- Offer in Compromise
- An IRS program allowing taxpayers to settle tax debt for less than the full amount owed when collection is unlikely.
- Pass-Through Entity
- A business structure (LLC, S-corp, partnership) where profits flow to owners' personal returns rather than being taxed at the entity level.
- Qualified Business Income (QBI) Deduction
- A deduction of up to 20% of qualified pass-through business income, subject to thresholds and trade-or-business limits.
- Real Estate Professional Status (REPS)
- An IRS designation allowing rental losses to offset non-passive income, requiring 750+ hours and majority of personal services in real estate.
- Reasonable Compensation
- The wage an S-corp owner-employee must pay themselves before taking distributions, based on what a third party would pay for similar services.
- S Corporation
- A pass-through entity election that can reduce self-employment tax on profits above a reasonable salary.
- Section 1031 Exchange
- A tax-deferred swap of like-kind investment real estate, allowing gain recognition to be postponed.
- Solo 401(k)
- A retirement plan for self-employed individuals with no employees, allowing both employee and employer contributions.