Accounting Job Interview Guide

As taxpayers, it is critical that we concern ourselves with the tax system. By that, I don�t mean that we have to study taxation or memorize tax law provisions. We just have to familiarize ourselves with the different tax terms so we know how to protect our rights as tax payers and get the incentives to which we are entitled.

Here are some tax terms to remember:

1. Adjusted gross income or AGI. The AGI is the first step that you need to get acquainted with to calculate your final federal income tax bill. It refers to all income received through the years such as wages, interests, dividends and capital gains, excluding contributions to a qualified IRA, business expenses, moving costs and alimony payments.

2. Progressive Taxation. This is the system applied to taxpayers depending on income. The higher income level, the higher tax rates. The U.S. tax system uses progressive taxation with tax brackets ranging from 10 to 35 percent.

3. Credits. Tax credits are like rewards that you can use to reduce the amount of tax you have to pay. They are more valuable than deductions because they directly cut the amount of tax you owe instead of reducing the amount of taxed income.