In tax terms, what does the IRS use to determine a deficiency?

The correct choice is determined by the fact that the IRS calculates a tax deficiency by assessing the difference between the taxes a taxpayer has reported as owed and the actual tax liability calculated based on their income and deductions reported on their tax return. The reported taxes owed serve as the baseline for this comparison.

When the IRS audits or reviews a return and finds that the taxpayer has underreported their tax liability—whether due to unreported income, incorrect deductions, or errors in calculation—they assess a deficiency based on this discrepancy from the reported amount. Thus, reported taxes owed are central to identifying any potential underpayment.

In contrast, while gross income, total deductions, and filing status are all relevant elements in calculating the overall tax liability, they do not directly indicate a deficiency. Gross income helps determine taxable income, total deductions reduce taxable income, and filing status can affect tax rates and brackets, but each of these factors does not have a direct correlation to identifying the deficiency itself—it's the reported taxes owed that highlight the difference in what was actually paid versus what is owed.