Term Answer Description Adjustments [1] This is a claim made by the taxpayer for each person supported by the taxpayer's income A. C B. This is adjusted annually for changes in cost of living. Adjusted gross income standard deduction Itemized deduction Exemption A C This term includes all income less certain allowable adjustments. F D. This is mortgage interest expense E. This term refers to allowable expenses that are deducted from AGI. F. Deductions such as employee, personal retirement, higher education, and support expenses are included in this category Itemized deduction G. This is used to calculate limits for certain itemized deductions. example Capital gains taxH. Many of these are based on a percentage of AGI. categories Steps to AGI Steps to taxable I Reduce AGI by the standard deduction and allowable exemptions. [ ] J. This figure is based on tax bracket, 5% to 15% tax rate if held over 12 months income Term Answer Description F A. This term refers to income earned on the job A B. To qualify for exclusion during this transaction, you must have Gross income Active income owned and occupied for two of the five prior years. Portfolio income IC Income from savings accounts, stocks, bonds, mutual funds, options, and futures are included in this term. Passive income D- This term includes expenses that can only offset portfolio income Investment expenses E. This term includes income from tax shelters. Real estate or limited F. This is used to determine tax liability partnership expenses Capital gains Sale of a home DG.This tem essentially includes all income subject to federal tax B H. Using taxable income, it is based on tax tables or tax rate schedules. Taxable income I This term refers to an asset sold for more than its original Tax liability J. This term refers to passive income offset