Love them or loathe them, almost everyone has a date with taxes this time of year. Tax season can give anyone cold feet — especially if they feel shaky on the lingo that comes with most tax returns. 

Many Americans are somewhat confident with how returns work and what their terminology means. There’s room for improvement, however. One recent survey found that 49% of Americans across age groups were familiar with the Earned Income Tax Credit (EITC), which is designed to give low- to moderate-income filers a break on what they owe.¹ On a generational level, however, there’s a wide gap in confidence: Gen Z were the least familiar (28%) versus Gen X, who were the most knowledgeable (59%).² 

The same can be said for another foundation of the current tax system. Just over half (51%) of respondents could define what the standard deduction is, but those who don’t may be losing out on opportunities for a bigger refund. In brighter news, 61% could pin down what a tax filing status means.

Tax language may not be overly romantic, but mastering it could render sweet rewards. Here’s how to flip a 1040 form into a love letter. (Or at least comprehend what it’s asking for.)

Missed connections

Understanding tax terminology goes beyond simply filling out forms. It can empower individuals to navigate the often-confusing maze of rules and requirements that come with filing taxes. Here are some of the most important terms and concepts for this year’s love letter to the Internal Revenue Service (IRS).

Deductions and credits: two significant others

Deductions and credits are two of the most crucial tools in a taxpayer's toolbox, but they work in very different ways. Deductions reduce taxable income, meaning the amount of money a person is taxed on is smaller. Common examples include the standard deduction or deductions for things such as mortgage interest or student loan payments. 

On the other hand, tax credits directly reduce the amount of tax owed. A prime example is the Child Tax Credit, which provides a direct dollar-for-dollar reduction in taxes owed for qualifying dependents. The EITC, a reduction available to lower-income workers, is designed to provide them with a financial break come tax time. More on this credit later.

Read more: 2024 & 2025 federal tax brackets and income tax rates

Setting standards

The standard deduction is one of the most commonly used terms, yet it can still be confusing for some. It’s essentially a flat reduction in taxable income that all taxpayers can claim without having to itemize expenses. For those who qualify, it simplifies the filing process and can lead to substantial savings. In 2025, the standard deduction for single filers is $14,600, while married couples filing jointly can claim $29,200.

The EITC BFF: Loving the Earned Income Tax Credit

The EITC is one of the most powerful credits available, yet many eligible taxpayers fail to claim it.⁴ This credit is designed to benefit low- to moderate-income earners, with the amount increasing based on income level and number of dependents.

For some, the EITC can even result in a refund larger than the taxes paid — yet nearly one in five eligible Americans do not take advantage of it.⁵ Understanding how and when to claim the EITC can make a significant difference in a tax return.
 

Source: IRS

Filing status: time to define the relationship

Filing status isn’t just about choosing whether to file as single or married. It can affect everything from the standard deduction to eligibility for credits. For instance, Head of Household status offers a higher standard deduction and more favorable tax brackets than filing as Single.⁶ Choosing the correct filing status can ensure that a taxpayer is taking full advantage of all available benefits.

Read More: What is tax liability?

Giving returns some TLC

Tax jargon may seem overwhelming at first, but help is readily available. The IRS website offers numerous resources, including a comprehensive glossary of terms, tools for estimating deductions, and tax preparation software recommendations. Nonprofit organizations, tax professionals, and even state tax agencies often provide guides and resources designed to demystify the process.

Tax season doesn’t have to cause commitment issues. By becoming familiar with key terms and understanding how they affect one’s return, filing taxes can go from a stressful chore to a confident exercise. The more fluent taxpayers are about the language of returns, the better equipped they will be to maximize their returns.