Vocabulary - Terminology for components of taxable income omponents to Taxable Income Terminology atch the terms relating to the basic terminology and concepts of personal taxation on the left with the descriptions of the terms on the ach description carefully and type the letter of the description in the Answer column next to the correct term. These are not necessarily complete definitions, but there is only one possible answer for each term. Term Answer Adjustments Adjusted gross income Deductions Standard deduction Itemized deduction Exemption ale Description A. This is adjusted annually for changes in cost of living. B. Reduce AGI by the standard deduction and allowable exemptions. C. This term equals gross income less adjustments. D. This can be either standard or itemized. E. Many of these are based on a percentage of AGI. F. This is a daim made by the taxpayer for each person supported by the taxpayer's income G. This is used to calculate limits for certain itemized deductions. H. These are charitable contributions. I. Deductions such as employee, personal retirement, higher education, and support expenses are induded in this category, 1. This is taxed as ordinary income it held less than 12 months. Itemized deduction example Capital gains tax categories Steps to AGI Steps to taxable income