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Adjusted Gross Income (AGI)

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Total annual income, including earned and unearned income, minus deductions. AGI is used for calculating how much you owe in federal taxes and how much you get in tax credits.

Earned Income (EI)

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Salaries, wages, tips, professional fees, and other amounts you receive as pay for physical or mental work you perform. This can include things you get in exchange for work instead of wages, such as food, shelter, or other items. Funds received from any other source are not included. (Contrast: unearned income.)

Earned Income Tax Credit (EITC)

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A federal income tax credit for low income working individuals and families. The credit reduces the amount of federal income tax you owe and can result in a refund check. Most people claim their Earned Income Tax Credit (EITC) when they file their federal income taxes.

Federal Poverty Guidelines (FPG)

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Monthly and annual income amounts used to determine financial eligibility for state and federal benefit programs.

Each year, the U.S. Department of Health and Human Services (HHS) issues the Federal Poverty Guidelines (FPG) in the Federal Register. The current FPG for one person is $12,490 per year; for two people, it's $16,910. Add $4,420 for each additional person.

Note: Different state and federal programs adopt the new Federal Poverty Guidelines on different dates each year.

Foreign Income

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Income received for services performed in a foreign county by an individual residing in that country.

Investment Income

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Dividends, capital gains net income, certain rental and royalty income, net passive activity income, and taxable and tax-exempt interest.

Permanently and Totally Disabled

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According to the Internal Revenue Service (IRS), a physical or mental condition which:
  • Is expected to last continuously for at least 12 months (one year) or result in death, and
  • Prevents a person from performing any Substantial Gainful Activity (SGA) (earning more than $1,220 per month; $2,040 if blind).

Qualifying Child

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An IRS classification that may allow a taxpayer to claim the EITC and certain other tax credits. In general, to be a taxpayer’s qualifying child, a person must satisfy four tests:
  • Relationship — the taxpayer’s child or stepchild (whether by blood or adoption), foster child, sibling or stepsibling, or a descendant of one of these.
  • Residence — has the same principal residence as the taxpayer for more than half of the tax year. Exceptions apply, in certain cases, for children of divorced or separated parents, kidnapped children, temporary absences, and for children who were born or died during the year.
  • Age — must be under the age of 19 at the end of the tax year, or under the age of 24 if a full-time student for at least five months of the year, or be permanently and totally disabled at any time during the year.
  • Support — did not provide more than one-half of his/her own support for the year.

Unearned Income (UI)

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Funds received from sources for which no paid work activity is performed. Disability benefits such as SSDI, SSI, short-term disability insurance, and long-term disability insurance; VA benefits; Workers' Compensation; income from a trust or investment; spousal support; dividends, profits, or funds received from any source other than work are all usually considered unearned income.