I do not “text message” – I do not even own a cell phone – but I do email and blog. However, my fascination with and use of acronyms goes back many years.
Here are some of the acronyms I use in my emails and blog postings:
SGTM – Sounds Good To Me
TTFN – of course, Ta Ta For Now, or, alternatively TAFN – That’s All For Now
FFR – For Future Reference
GD (as in extensions) – one of my clients recently asked me what GD extensions meant, and I told him “exactly what you think it means”! The GD does not stand for “government deferred” or anything like that. I could have used “MF Extensions” – but chose not to.
DFB – the "clean” version is Damned Fool Bureaucrats. It is generally used in reference to our beloved lawmakers in Trenton and Washington. You can probably figure out the real version on your own.
Nowhere in society is the acronym more widely used than in government – and taxes are certainly no exception.
The Tax Code overhaul of the Reagan years generated a ton of new tax acronyms. There was ACRS (Accelerated Cost Recovery System) – the new word for depreciation – followed by MACRS (Modified Accelerated Cost Recovery System). And then there was FACRS (Foolhardy Acts of Congress under the Ruse of Simplification), which described the entire process. Under the Reagan tax laws you needed a PIG (Passive Income Generator) to wipe out a PAL (Passive Activity Loss).
Here are some of the tax acronyms that I use most often in my postings:
AGI – Adjusted Gross Income. This is the total of your gross income less certain allowable “adjustments to income” – aka “above the line” deductions (your AGI being “the line”) – such as IRA, SEP, SIMPLE, Keogh, MSA and HSA contributions, ½ of any self-employment tax, educator expenses, qualified tuition and fees, early withdrawal penalties on CDs, student loan interest, etc. As many tax credits and deductions are phased-out, or altogether eliminated, based on your AGI, or in some cases a “Modified” AGI (see below), and several items of income are increased and some deductible losses are reduced based on AGI or MAGI, it is perhaps the most important number on your tax return.
MAGI – Modified Adjusted Gross Income. As just mentioned, certain items of income and deduction and certain credits are increased, decreased or totally wiped out based on your AGI. In many cases the AGI is “modified” in the calculation by adding or subtracting certain specific items. Different items have different MAGIs.
AMT (usually preceded by “the dreaded”) – Alternative Minimum Tax. More appropriately called the Maximum Mandatory Tax, this is a required “alternative” method of calculating your federal tax liability that is much more restrictive than the “regular” income tax. It does not allow deductions for personal exemptions, the standard deduction, taxes or miscellaneous itemized deductions, and certain other Schedule A items, and requires an adjustment to the amount of income or deduction claimed for certain “tax preferences”. You must calculate your tax under both the “regular” income tax and the dreaded AMT and pay the higher amount.
NOL – Net Operating Loss. If losses from a business activity, such as self employment or rental property, generate a “negative” net taxable income on your Form 1040 you may be able to carry back or carry forward some of these losses to apply against past or future income. You must first carry back the loss two tax years, and then can carry forward any remaining losses for 20 years. You can elect not to carry back an NOL, using it to reduce only future income.
PS- I’ll be back on Monday!