Month: February 2023

What are child tax credits Child Tax Credits (CTCs) is a federal tax benefit that provides financial support for American taxpayers with dependent children under […]

Modified adjusted gross income (MAGI) is an individual’s adjusted gross income (AGI) adjusted for tax-exempt interest income and certain deductions added back in.

401k is an employer-sponsored tax-advantaged retirement account. Workers make direct contributions from their paychecks (before IRS tax withholding) with Employers commonly making a matching contribution. Since the 401k plan confers tax advantages and is meant for retirement, IRS has placed restrictions on 401k withdrawals. Penalty-free funds can be withdrawn at age 59 ½ (early withdrawal attracts a 10% penalty).

Tax refunds refer to any reimbursements made to a taxpayer by the federal (or state) government for excess taxes paid. It’s often caused by employers withholding too much from an employee’s paycheck.

Adjusted Gross Income, abbreviated as AGI is simply your total or gross income adjusted for specific “above-the-line” deductions to determine which tax benefits a taxpayer is eligible for. The Adjusted Gross Income may include wages, salaries, interest, dividends, retirement income, Social Security benefits, capital gains, business, and other sources.

Not all US citizens are required to file a federal income tax return (though not required doesn’t necessarily mean you shouldn’t). You are not required to file a tax return if your income is below a certain threshold based on your age and status (there is no set minimum income for filing a return, it all depends on filing status and age).