ALTERNATIVE MINIMUM TAX
This is a separate tax calculated independently of the regular income tax. Tax preference and tax adjustment items are included in the alternative minimum tax base. If the alternative minimum tax exceeds the regular tax, the excess is payable in addition to the regular tax. The purpose of this tax is to insure that no taxpayer who has substantial economic income can avoid significant tax liability through the use of exclusions, deductions and credits.

DEPENDENTS
In general, any person who meets all of the following criteria is considered a dependents

• Relationship
  • Child, stepchild, adopted child or foster child
  • Your grandchild, great-grandchild, etc.
  • Your son-in-law, daughter-in-law
  • Your parent, stepparent, parent-in-law
  • Your grandparent, great-grandparent, etc.
  • Your brother, sister, half brother, half sister, step brother, step sister, brother-in-law, sister-in-law
  • If related by blood, your aunt, uncle, nephew, niece
• Marriage - If the person is married and files a joint return, you cannot take an exemption for the person. (See the exception for persons filing only to get a refund of all tax withheld).
• Citizen or resident - The person must be one of the following:
  • A U.S. citizen or resident alien
  • Resident of Canada or Mexico
  • Your adopted child who is not a U.S. citizen but who lived with you all year in a foreign country
• Income - In general, the person's gross income must be less than $3,650
  
  Your child can have gross income greater than $3,650 if
  • Your child was under age 19 at the end of 2009
  • Your child was under age 24 at the end of 2009 and was a student
    
    A child is considered a student if your child was enrolled as a full-time student during any 5 months of 2009.
    
    
• Support - You provided over half the person's support in 2009.

EXEMPTION
A deduction for a specified amount to which an individual is entitled. There are two types of exemptions, personal and dependent. The exemptions for the taxpayer an taxpayer's spouse are personal exemptions. Exemptions for others that qualify as the taxpayer's dependents are dependent exemptions.

GROSS INCOME
All income you received in the form of money, goods, or services that is not exempt from tax, including any gain in the sale of property including your home.

HEAD OF HOUSEHOLD
Filing status available to unmarried individuals (and some married persons who lived apart) who provide a home for certain individuals:

• You pay over half the cost of providing a home, that was the main home, for all of 2009 of your parent who you can claim as your dependent; or
• You paid over half the cost of providing a home in which you lived and in which one of the following also lived in for more than half the year
  • Your unmarried child. The child does not have to be your dependent.
  • Your married child who must be your dependent. See special rules for children of divorced or separated parents.
  • Your foster child who must be your dependent.
  • Any other relative whom you can claim as a dependent.

INVESTMENT INCOME
Gross income from property held for investment other than net long-term gain on the disposition of property held for investment. The most common sources of investment income are dividends and interest. Income from a passive activity and income from rental real estate in which the taxpayer actively participates are not investment income.

ITEMIZED DEDUCTIONS
The deductions which are allowed under the income tax code except

• The deductions allowable in arriving at adjusted gross income
• The deductions form personal and dependency exemptions

Itemized deductions are arranged in six categories:

• Medical and dental expenses
• Taxes paid
• Interest paid
• Charitable gifts
• Casualty and theft losses
• Miscellaneous deductions

Limitations apply to some of these categories.

QUALIFYING CHILD
Is a child who is your son, daughter, adopted child, stepchild, grandchild, or foster child, and

• is under age 19, or
• is a student under age 24, or
• any age and permanently and totally disabled, and

lived with you in the United States for more than one-half of 2009 (all of 2009 if a foster child)

QUALIFYING WIDOW(ER)
You must meet all of the following criteria in order to check the box on line 5 and use joint return tax rates.

• Your spouse died in 2007 or 2008 and you did not remarry in 2009.
• You have a child, stepchild, adopted child, or foster child whom you can claim as a dependent.
• The child lived in your home for all of 2009 excluding temporary absences (ie. school, vacation, or medical care).
• You paid over half the cost of keeping up your home.
• You could have filed a joint return with your spouse the year he or she died, even if you did not actually do so.

If your spouse died in 2009, you may not file as a qualifying widow(er).

SELF EMPLOYMENT INCOME
Payments received for services performed by an individual, other than payments received as an employee.

STANDARD DEDUCTION
The amount available to a tax payer as a deduction from ADJUSTED GROSS INCOME based on filing status. If your actual deductible expenses exceed this amount, schedule A should be filed to take advantage of the additional amount available. The standard deduction is adjusted for inflation annually.

SURVIVING SPOUSE
The taxpayer whose spouse died during the year. The following criteria must be met.

• Taxpayer's spouse must have died during either of the taxpayer's two preceding tax years.
• Taxpayer's home must be the principal place of abode for the taxpayer's child for the tax year.
• The taxpayer has not remarried before the close of the tax year.
• For the year in which the spouse died, the taxpayer must have been able to file a joint return with the deceased spouse.

If all four conditions are met the taxpayer may use joint return tax rates in the two years following the year of the spouse's death.

UNEARNED INCOME
Income which is not earned income, such as:

• interest
• dividends
• rent
• royalties
• gains from the sale of securities, and distributions from qualified retirement plans