Bankrate's financial glossary
Did you run across an unfamiliar term when applying for a mortgage, credit card
or auto loan? Find the meaning here, along with definitions of other financial words
and phrases, in Bankrate.com's financial glossary.
Adjusted gross income (AGI)
All the income you received over the course of the year such as wages, interest, dividends and capital gains minus things such as business expenses, contributions to a qualified IRA, moving expenses, alimony and capital losses. The adjusted gross income is used to calculate federal income tax.
Adjustments to Income
For taxes, adjustments to income include IRA contributions; deduction for one-half of self-employment tax; contributions to a retirement plan for self-employed individuals (Keogh plan or self-employed SEP or SIMPLE plan); contributions to a medical savings account; penalty on early withdrawal of savings; and alimony payments.
Alternative minimum tax (AMT)
An IRS method for ensuring that high-income earners pay their fair share of taxes. It disallows many common deductions. If the amount of tax owed under the AMT is higher than what's owed under the regular tax system, the taxpayer pays the AMT.
AMT tax rate
The tax rate for taxable AMT income of $175,000 or less is 26 percent. The rate for taxable AMT income above $175,000 is 28%. The tax rates are lower than what high-income earners pay under the regular tax system, but there are far fewer allowable deductions.
Annual Percentage Yield (APY)
The percentage, required by Truth in Savings regulations, to be disclosed on interest-bearing deposit accounts that reflects the total interest to be earned based on an institution’s compounding method, assuming funds remain in the account for a 365-day year.
Annuitizing an IRA
A way to withdraw money from an IRA without penalty before age 59 1/2. To do this you have to agree to take the money out in "substantially equal payments" over time based on your life expectancy.
An increase in the value of a property or item.
Personal possessions of value, including cash, real estate and investments.
Average annual yield
The average yield per year over the life of the investment, assuming all principal and interest remain on deposit until maturity.
A report of financial condition, including assets, liabilities and net worth.