| Term |
Definition |
| Main Home |
Regular, permanent place
of abode. |
| Margin |
A percentage of the full
price of a security that must be paid as a down
payment by an investor buying on credit. The
required margin fluctuates subject to federal
regulations. |
| Married Filing
Jointly |
The filing status used
by a couple who are married at the end of the tax
year and not legally separated under a final
decree of divorce or separate maintenance and who
record total income, exemptions, and deductions
of both spouses on one tax return. |
| Married Filing
Separately |
The filing status used
by a married couple who choose to record their
respective incomes, exemptions, and deductions on
separate individual tax returns. |
| Material
Participation Income |
Active income, as
distinguished from passive income, from
employment as well as business and other for-profit
activities in which the taxpayer takes a
significant and active role. |
| Medical Expenses |
Qualified medical
expenses of an individual, spouse, and dependents
are allowed as an itemized deduction to the
extent that such amounts (less reimbursements)
exceed 7.5 percent of adjusted gross income. |
| Medical Savings
Account (MSA) |
A trust or custodial
account created or organized exclusively for the
purpose of paying the qualified medical expenses
of a high deductible health plan of the account
holder. Eligible individuals or small employers
can establish MSAs with qualified trustees or
custodians. Contributions to MSAs are deductible,
within limits, as an adjustment to income. |
| Medicare Tips |
Tips reported to an
employer by a tipped employee. Such tips are
subject to Medicare withholding. |
| Medicare Wages |
Total wages paid to an
employee that are subject to Medicare tax. This
amount doesn't include tips, which are reported
separately. |
| Midpoint Class Life |
The average period for
depreciating an asset under the CLADR System.
Midpoint class life is used to determine the
asset's recovery period under ACRS and MACRS. |
| Mileage Rate (Optional
Method) |
The method of deducting
automobile expenses based on business miles
driven. For 1999, two rates apply: the rate is 32.5
cents per mile for the period January 1 - March
31; the rate is 31 cents per mile for the period
April 1 - December 31. |
| Modified Accelerated
Cost Recovery System (MACRS) |
The method of
depreciation introduced by the Tax Reform Act of
1986. MACRS is not an entirely new system of
depreciation, but rather a series of significant
modifications to the ACRS system. (See
Accelerated Cost Recovery System.) MACRS is
mandatory for most depreciable assets placed in
service after December 31, 1986, and was
available on an optional basis for assets placed
in service after July 31, 1986, and before
January 1, 1987. Under MACRS, costs of qualified
property are written off over predetermined
periods. |
| Modified AGI (Adoption
Credit) |
For purposes of
computing the adoption credit, modified adjusted
gross income is regular AGI plus: (1) any foreign
earned income exclusion, (2) any foreign housing
exclusion or deduction, and (3) any exclusion of
income from U.S. possessions and Puerto Rico. |
| Modified AGI (Child
Tax Credit) |
For purposes of
computing the child tax credit, modified adjusted
gross income is regular AGI minus any excluded
foreign, U.S. possession, or Puerto Rican income. |
| Modified AGI (Earned
Income Credit) |
For purposes of
computing the earned income credit for most
taxpayers, modified AGI is regular AGI without
regard to any excess of capital losses over
capital gains; net loss from estates and trusts;
net loss from nonbusiness rents and royalties;
and 75 percent of any net loss from businesses
computed separately with respect to (1) nonfarm
businesses conducted as a sole proprietor, (2)
farm businesses conducted as a sole proprietor,
and (3) other trades or businesses (not including
income as an employee). |
| Modified AGI (Social
Security) |
For purposes of
determining the taxable portion (if any) of
social security or Railroad Retirement benefits,
modified AGI is the sum of AGI plus (1) tax-exempt
or excluded interest, and (2) any amounts
exempted or excluded for foreign earned income,
foreign housing, American Samoan income, or
Puerto Rican income. |
| Mortgage Credit
Certificate |
Qualified taxpayers who
receive a mortgage credit certificate from a
state or local government to buy, rehabilitate,
or improve their main homes may claim a credit
for a percentage of their home mortgage interest.
The percentage is set by the government and
ranges from 10 to 50 percent. If the percentage
exceeds 20 percent, the maximum credit is $2,000
per year. The itemized deduction for home
mortgage interest must be reduced by the amount
of the credit. The credit is not refundable, but
any portion that is unused because it exceeds tax
liability may be carried over to the following
three years where it can be added to any credit
for the current year. The credit is computed on
Form 8396. Mortgage credit certificates may be
subject to a recapture rule if the home is sold
within nine years. |
| Moving Expenses |
An adjustment to income
permitted to employees and self-employed
individuals who move for work-related reasons,
providing certain requirements are met. Form 3903
is used to compute deductible moving expenses. |
| Multiple Support
Agreement |
If two or more persons
who would otherwise be entitled to an exemption
for a dependent, together furnish more than half
the dependent's support (but no one individual
provides more than half), any one of them who
furnishes more than 10 percent of the support is
entitled to the exemption if all the others who
furnished more than 10 percent of the support
file written declarations that they will not
claim an exemption for the individual for that
taxable year. Form 2120 is used for this purpose. |
| Mutual Fund |
An open-ended investment
company that invests money of its shareholders in
a usually diversified group of securities of
other corporations. |
