Stop guessing what the words mean.

The main individual income tax return. Almost every U.S. taxpayer files one. Everything else you receive feeds into it.

The form an employer sends you showing what you earned and what was already withheld for taxes. If you have a regular job, this is your starting point.

The form you give your employer telling them how much tax to withhold from each paycheck. Fill it out wrong and you either overpay all year or owe a surprise in April.

The form a client asks you to complete so they can report what they paid you. You fill it out; you don’t file it. It usually means a 1099 is coming later.

A family of forms reporting income that didn’t come from an employer, most commonly freelance or contract work. No tax is withheld, so the amount you owe on it is yours to plan for.

The attachment to your 1040 where a sole proprietor reports business income and expenses. This is where legitimate business deductions actually reduce what you owe.

The form that reports your share of income from a partnership or S Corp. The business itself doesn’t pay the tax; the K-1 passes your portion through to your personal return.

Limited Liability Company. Separates your personal assets from the business, so a business debt or lawsuit generally can’t reach your house or savings. Flexible in how it’s taxed, which is why it’s the common starting point.

Professional Limited Liability Company. The version required in many states for licensed professionals, such as doctors, lawyers, architects, and accountants.

A tax election rather than a separate kind of company. Profits pass through to your personal return, and paying yourself a reasonable salary can reduce self-employment tax. Worth considering once profit reaches a certain level.

A fully separate taxable entity. The company pays tax on its profits, and shareholders pay again on dividends, which is what people mean by double taxation. Standard for companies raising outside investment.

Two or more people in business together. Profits and losses pass through to each partner’s personal return according to the ownership split.

Employer Identification Number. A Social Security number for your business. You need one to open a business bank account, hire employees, and file business returns.

A snapshot of what the business owns, what it owes, and what’s left over, all on a single date. Lenders look at this first.

What’s actually yours after subtracting everything the business owes from everything it owns. The bottom line of ownership.

Anything the business owes to someone else. Loans, credit cards, unpaid bills, taxes due.

A payment of profits to shareholders. Taxed differently from wages, which is part of why how you pay yourself matters.

Net Operating Income. What a property or business earns after operating costs but before financing and taxes. Common in real estate.

Profit from selling something for more than you paid. Hold it longer than a year and it’s usually taxed at a lower rate than ordinary income.

Property held by you or your business. Carries its own rules for depreciation, deductible expenses, and how gains are treated on sale.

An expense you can subtract from income before tax is calculated. It lowers the amount being taxed, not your tax bill dollar for dollar.

Listing out your actual deductible expenses instead of taking the standard deduction. Only worth doing when the total comes out higher.

Everyday shorthand for a deductible business expense. Worth saying plainly: a write-off still costs you money. It just reduces the portion that gets taxed.

Spreading the cost of a large purchase across the years you’ll use it, rather than deducting it all at once. Applies to vehicles, equipment, and property.

What you originally paid for something, adjusted over time. It determines your taxable gain when you sell, so a poorly tracked basis means overpaying.

Any legal arrangement that reduces taxable income, such as a retirement account. Legitimate shelters are ordinary planning tools; anything promising to erase your tax bill entirely deserves suspicion.

Internal Revenue Service. The federal agency that collects tax and enforces the rules. Most of their letters are routine and fixable, especially if you respond on time.

A review of your return to verify the numbers. Most are handled entirely by mail and involve a single questioned item, not an in-person examination of your whole life.

The filing itself, where you report income and calculate what’s owed. Distinct from a refund, which is money coming back when you overpaid.

Adjusted Gross Income. Your total income minus certain specific adjustments. Many credits and deductions phase out based on this number, so it drives more than it appears to.

The payroll tax funding Social Security and Medicare. Employees split it with their employer. If you’re self-employed you pay both halves, which catches many first-year freelancers off guard.

Foreign Bank Account Report. Required if your foreign accounts exceed the reporting threshold at any point in the year. Filed separately from your tax return, and the penalties for skipping it are severe.

An employer-sponsored retirement account. Contributions typically reduce your taxable income now, and the money is taxed later when you withdraw it.

A retirement account funded with money you’ve already paid tax on. No deduction today, but qualified withdrawals in retirement come out tax-free.

Certified Public Accountant. A state-licensed credential requiring exams, experience, and ongoing education. CPAs can represent you before the IRS.

Generally Accepted Accounting Principles. The standard rulebook for preparing financial statements, so that numbers from one business can be compared to another.

Arranging in advance how your assets pass on. Done early, it can significantly reduce the tax burden and the administrative mess left to your family.