--- title: "Decoding Tax Terminology: A Glossary for Texas Taxpayers" description: Confused by tax jargon? Our glossary breaks down complex tax terms into plain language for taxpayers—making filing, notices, and more easier to understand. image: https://blog.powelltaxlaw.com/hubfs/iStock-1319766088.jpg --- (888) 913-9745 Need Assistance With Your Tax Issues Quickly? 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Whether you're preparing to file your taxes, respond to an IRS notice, or simply trying to understand what your accountant is talking about, it’s easy to feel overwhelmed by complicated lingo. At Powell Tax Law, we believe understanding your tax situation shouldn't require a law degree. That’s why we’ve created this user-friendly glossary to help Texas taxpayers decode common tax terms. Whether you're a business owner, independent contractor, or an individual dealing with back taxes, this guide is for you. ## **A–Z: Essential Tax Terms You Should Know** **Adjusted Gross Income (AGI)** Your AGI is your total gross income minus certain adjustments (like student loan interest or retirement contributions). It's a key figure used to determine your eligibility for many tax credits and deductions. **Audit** An audit is a formal review by the IRS or Texas Comptroller to verify the accuracy of your tax return. Being audited doesn’t always mean you did something wrong, but it’s important to have experienced representation if you’re selected. [Learn how we help clients during audits here](https://powelltaxlaw.com/irs-solutions/irs-audit/). **Capital Gains** When you sell an asset like property or stocks for more than you paid for it, the profit is called a capital gain. In Texas, there's no state capital gains tax, but the federal government still gets its share. **CP2000 Notice** This is a common IRS notice sent when your reported income doesn’t match information from third parties (like W-2s or 1099s). It's not an audit—but it does require your attention. **Dependent** A dependent is typically a child or relative who relies on you financially. Claiming a dependent can reduce your tax bill through exemptions or credits like the Child Tax Credit. **Estimated Taxes** If you're self-employed or don’t have enough tax withheld from your paycheck, you may need to make quarterly estimated tax payments to avoid penalties. **Filing Status** Your filing status (e.g., Single, Married Filing Jointly) affects your standard deduction and tax brackets. Choosing the right one can make a big difference in your refund—or liability. **Garnishment** A wage garnishment is when the IRS or Texas Comptroller takes a portion of your paycheck to pay off a tax debt. This is a serious collection action and should be addressed quickly. [We can help stop wage garnishment—learn more here.](https://powelltaxlaw.com/irs-solutions/wage-garnishment/) **IRS Fresh Start Program / Offer in Compromise (OIC)** The IRS Fresh Start Program offers struggling taxpayers a chance to catch up on back taxes through payment plans, penalty relief, and, in some cases, reduced debt. One key option under this program is the **Offer in Compromise (OIC)**, an agreement that allows you to settle your tax debt for less than the full amount owed. While qualifying isn’t easy, it can be a powerful solution for those in financial hardship. [Learn more about OIC eligibility.](https://www.irs.gov/payments/offer-in-compromise) **Installment Agreement** This is a payment plan that allows you to pay off your tax debt over time. It’s one of the most common forms of tax relief and can help you avoid more aggressive IRS collection tactics. **Levy** A levy is the IRS’s legal seizure of your assets to satisfy a tax debt. This can include bank accounts, wages, or even property. If you’ve received a notice, time is critical. **Lien** A federal tax lien is a legal claim against your property when you fail to pay a tax debt. It can impact your credit and make it difficult to sell or refinance property. **Offer in Compromise (OIC)** An agreement that allows you to settle your tax debt for less than the full amount owed. While qualifying isn’t easy, it can be a powerful solution for those in financial hardship. [Learn more about OIC eligibility.](https://www.irs.gov/payments/offer-in-compromise) **Refund Offset** If you owe back taxes or certain debts like child support, your tax refund may be reduced or withheld entirely to cover the amount owed. **Taxable Income** This is your total income minus deductions and exemptions. It’s the figure used to calculate how much tax you owe. **Withholding** This is the portion of your paycheck your employer sends directly to the IRS on your behalf. If too little is withheld, you may owe taxes at the end of the year. ## **Why This Matters for Texans** Unlike most states, Texas doesn’t have a state income tax. But that doesn’t mean you're off the hook—Texas residents are still responsible for federal taxes, self-employment taxes, and state-level business and sales taxes. Understanding your obligations can help you avoid penalties, reduce stress, and make better financial decisions. At Powell Tax Law, we specialize in helping individuals and business owners across Texas resolve tax issues with confidence. From negotiating with the IRS to guiding clients through audits, we speak the language of taxes—so you don’t have to. ## **Final Thoughts** Whether you’re dealing with a tax debt, facing an audit, or just want to make sense of your IRS mail, having a basic grasp of these key terms gives you an edge. And when you're ready to take action, [Powell Tax Law](https://powelltaxlaw.com/) is here to help you every step of the way. **Need help decoding your own tax situation?** [**Contact us today**](https://powelltaxlaw.com/contact/) **for a consultation.** --- [Tax Law](https://blog.powelltaxlaw.com/tag/tax-law), [Documents](https://blog.powelltaxlaw.com/tag/documents), [Tax Season](https://blog.powelltaxlaw.com/tag/tax-season) ## RELATED ARTICLES ### [Essential Documents Texans Need to Save for 2025 Taxes](https://blog.powelltaxlaw.com/essential-documents-texans-need-to-save-for-2025-taxes) Posted by **Powell Tax Law** on 22 Sep, 2025 [![Businessman reviewing documents with woman](https://blog.powelltaxlaw.com/hs-fs/hubfs/iStock-1461344104.jpg?width=500&name=iStock-1461344104.jpg)](https://blog.powelltaxlaw.com/essential-documents-texans-need-to-save-for-2025-taxes) Whether you’re an individual, a busy family, or a small-business owner in Texas, keeping the right tax documents is key to accurate filing a... 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