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Accounting, Tax, & Financial Term Glossary

As your Financial Advisors, there are times we need to use terminology that is common to our field. You may have noticed that when one of these terms is used on, it is explained when you move your mouse over the word. If there is anything that is unclear, or that you would like added, please contact us and let us know<.

  • 1040

    The U.S. Individual Income Tax Return form for the majority of filers.

  • 1040NR

    U.S. Nonresident Alien Income Tax Return

  • 1040X

    If a filed prior tax year return needs an amendment, a 1040X is filed with the IRS.

  • 1099-K

    An informational return that reports Merchant Card and Third Party Network Payments to the IRS. For instance: If your accounts meet a certain level of activity then MasterCard, Visa, American Express, PayPal, etc., should all issue 1099-Ks by January 31.

  • 199A

    Section 199A of the Internal Revenue Code provides many taxpayers up to a 20% deduction for qualified business income from a qualified trade or business operated directly or through a pass-through entity.

  • 940

    Employer's Annual Federal Unemployment (FUTA) Tax Return

  • 941

    Employer’s Quarterly Federal Tax Return

  • AGI

    A three letter acronym standing for adjusted gross income or in other words gross income with certain deductions subtracted out.


    The American Institute of Certified Public Accountants (AICPA) is the world's largest association representing the accounting profession. AICPA members represent many areas of practice. The AICPA sets ethical standards for the profession and U.S. auditing standards for audits of private companies, non-profit organizations, federal, state and local governments. It develops and grades the Uniform CPA Examination.

  • American Taxpayer Relief Act

    The American Taxpayer Relief Act of 2012. It averts the tax side of the fiscal cliff, provides numerous extenders and avoids the automatic sunset provisions that were scheduled to take effect after 2012.

  • AMT

    The Alternative Minimum Tax or AMT is an alternative US income tax originally intended to ensure that high income individuals would not be able to use certain tax strategies to pay little or no tax. AMT is imposed at a nearly flat rate on an adjusted amount of taxable income above a certain threshold, and comes into play when the AMT exceeds the taxpayers normal liability.

  • C Corporation

    For federal income tax purposes, a C corporation is recognized as a separate taxpaying entity. A corporation conducts business, realizes net income or loss, pays taxes and distributes profits to shareholders.

  • CFP

    The Certified Financial Planner (CFP) designation is a professional certification mark for financial planners conferred by the Certified Financial Planner Board of Standards, Inc. in the United States. To have the designation, the candidate must meet education, examination, experience and ethics requirements.

  • CFS

    A Certified Fund Specialist (CFS) is a certification indicating an individual's expertise in mutual funds and the mutual fund industry. A CFS may advise clients on which mutual funds best suit their particular needs.

  • CGMA

    The Chartered Global Management Accountant (CGMA) is a global management accounting designation that recognises the unique role played by men and women at organisations around the world who combine accounting and financial expertise with strategic insight to guide better business decisions. Additionally, it recognises the management accounting experience and expertise of accountants in academia.

  • Commingling Funds

    Failure to observe strict separation of corporate and personal property or accounts.

  • CPA

    Certified Public Accountant (CPA) is the statutory title of qualified accountants in the United States who have passed the Uniform Certified Public Accountant Examination and have met additional state education and experience requirements for certification as a CPA.

  • EA

    Enrolled Agent - “Enrolled” means to be licensed to practice by the federal government, and “Agent” means authorized to appear in the place of the taxpayer at the IRS. Only CPAs, attorneys, and Enrolled Agents may represent taxpayers before the IRS.

  • Earned Income Credit

    The Earned Income Credit (EITC or EIC) is a refundable tax credit for low and medium income individuals and couples, primarily for those who have qualifying children.


    The Economic Growth and Tax Relief Reconciliation Act of 2001 commonly known as one of the Bush-era tax cuts. The Act made changed income tax rates, estate and gift tax exclusions, and qualified and retirement plan rules. In general, the act lowered tax rates and simplified retirement and qualified plan rules. All the 2001 tax cuts were set to expire at the end of 2010 however Congress extended them.

  • FBAR

    If you have a financial interest in or signature authority over a foreign financial account, including a bank account, brokerage account, mutual fund, trust, or other type of foreign financial account, the Bank Secrecy Act may require you to report the account yearly to the U.S. Department of the Treasury by filing Form TD F 90-22.1, Report of Foreign Bank and Financial Accounts (FBAR).

  • Fiscal Year End

    A entity has a Fiscal Year End, if the last month of its tax reporting period is not December. This may be advantageous for many reasons, and is something that we will discuss when doing tax planning.

  • FUTA

    The Federal Unemployment Tax Act (FUTA) tax covers the costs of administering the unemployment insurance and job service programs in all states

  • IRA

    Individual Retirement Account (IRA) - Traditional IRA contributions are often tax-deductible, all transactions and earnings within the IRA may have no tax impact, and withdrawals at retirement may be taxed as income.


    Jobs and Growth Tax Relief Reconciliation Act of 2003. Among other provisions, the act accelerated certain tax changes passed in 2001, increased the exemption amount for the individual Alternative Minimum Tax, and lowered taxes of income from dividends and capital gains. Part of the Bush-era tax cuts.

  • LLC

    A limited liability company (LLC) is a flexible form of enterprise that blends elements of partnership and corporate structures. It is a legal form of company that provides limited liability to its owners in the vast majority of United States jurisdictions.

  • MAGI

    Modified AGI (Adjusted Gross Income.) Or AGI modified by foreign income being added back.

  • Master's Degree in Tax

    The Master of Science in Taxation (MST) is a advanced professional graduate degree specifically designed for individuals who are tax specialists.

  • NII

    Net investment income is income received from investment assets before taxes.

  • Nonresident Aliens

    An individual is considered a nonresident alien of the United States for any period that you are neither a U.S. citizen nor a U.S. resident alien.

  • OCR

    Optical Character Recognition, a technique used to determine the letters and words in an image.

  • Offer In Compromise

    An offer in compromise (OIC) is an agreement between a taxpayer and the Internal Revenue Service that settles the taxpayer’s tax liabilities for less than the full amount owed.

  • Partnership

    A partnership is the relationship existing between two or more persons who join to carry on a trade or business. Each person contributes money, property, labor or skill, and expects to share in the profits and losses of the business.

  • PFS

    A Personal Financial Specialist (PFS) shows that a CPA has demonstrated their knowledge and expertise in personal financial planning. PFS credential holders have a specific experience, education and examination requirement that sets them apart from other CPAs and financial planners, and is regulated by the AICPA.

  • Ponzi Schemes

    A Ponzi scheme is a fraudulent investment operation that pays returns to separate investors, not from any actual profit earned by the organization, but from their own money or money paid by subsequent investors.


    The Patient Protection and Affordable Care Act (PPACA). Its primary purpose is to facilitate health care reform. The PPACA includes key tax provisions that affect individuals and businesses

  • QBI

    QBI is the net amount of qualified items of income, gain, deduction and loss from any qualified trade or business. Only items included in taxable income are counted. In addition, the items must be effectively connected with a U.S. trade or business. Items such as capital gains and losses, certain dividends and interest income are excluded.

  • Reasonable Wage

    A reasonable and appropriate salary that is paid to officers or shareholders who provide more than minor services to their S Corporation.

  • Red Flag

    An informal term describing an action that is considered to raise the likelihood of an audit.

  • Resident Aliens

    In our context, a Resident alien is a noncitizen of the United States who resides in the country. Resident aliens are generally taxed in the same way as U.S. citizens.

  • Roth IRA

    In contrast to a traditional IRA, contributions to a Roth IRA are not tax-deductible. Withdrawals are generally tax-free, but not always and not without certain stipulations.

  • S Corporation

    S Corporations are corporations that elect to pass corporate income, losses, deductions and credit through to their shareholders for federal tax purposes. Shareholders of S corporations report the flow-through of income and losses on their personal tax returns and are assessed tax at their individual income tax rates. This allows S corporations to avoid double taxation on the corporate income.

  • Schedule C

    A Schedule C is used to report profit or loss from sole proprietorship 'business' on an Individual's tax return.

    The industry often calls individuals operating a 'business' under their own name, instead of a business entity like a Corporation or LLC, a 'Schedule C' or a 'Schedule C Business.'

  • Section 444 Election

    An election requesting a Fiscal Year End vs a calendar year end.


    A SIMPLE IRA plan (Savings Incentive Match PLan for Employees) allows employees and employers to contribute to traditional IRAs set up for employees. It is ideally suited as a start-up retirement savings plan for small employers not currently sponsoring a retirement plan.

  • Sole Proprietorship

    A sole proprietorship is a type of business entity where there is no legal distinction between the owner and the business. From a tax perspective the owner receives all profits (subject to taxation specific to the business) and has an unlimited liability for all losses and debts.

  • SSTB

    Specified service trade or business (SSTB), which includes a trade or business involving the performance of services in the fields of health, law, accounting, actuarial science, performing arts, consulting, athletics, financial services, investing and investment management, trading, dealing in certain assets or any trade or business where the principal asset is the reputation or skill of one or more of its employees.

  • U.S. Tax Court

    U.S. Tax Court specializes in adjudicating disputes over federal income tax. Only a few hundred non-attorney CPAs have passed the intense Tax Court exam, and have the qualification: Admitted to Practice: U.S. Tax Court.

  • W2

    A United States federal tax form issued by employers and stating how much an employee was paid in a year.