What Is “Proposed Regulations”?
06/04/2026
Proposed regulations are draft rules issued by the U.S. Department of the Treasury and the IRS to show the public how they intend to interpret and enforce federal tax laws passed by Congress. Published as a Notice of Proposed Rulemaking (NPRM), these documents serve as a preliminary blueprint before tax guidelines become finalized. Because they
What Is a “Private Letter Ruling”?
06/04/2026
A Private Letter Ruling (PLR) is a written statement issued by the IRS to an individual taxpayer or business entity that interprets federal tax laws and applies them to their specific, unique set of facts. This custom ruling provides a legally binding decision on how a proposed financial transaction will be taxed before the taxpayer
What Is a “Parsonage Allowance”?
06/04/2026
A parsonage allowance is a specific tax provision that allows ordained, licensed, or commissioned ministers who live in a church-provided home (a parsonage) to exclude a portion of their compensation from federal income tax. This allowance covers out-of-pocket expenses required to run and maintain that home, such as utilities, furnishings, and repairs. While these designated
What Is “Nontaxable Combat Pay”?
06/04/2026
Nontaxable combat pay is the compensation received by members of the U.S. Armed Forces for active service in a government-designated combat zone or while hospitalized due to combat-related injuries. Under federal tax law, this specific military income is completely excluded from regular federal income taxes, meaning it is not added to your taxable gross income.
What Is the “More Likely Than Not Standard”?
06/04/2026
The “more likely than not” standard is a high legal benchmark used by the IRS and tax courts to evaluate whether a highly controversial tax position has a greater than 50% chance of being upheld upon examination. It requires that the technical, written legal merits supporting a specific tax treatment outweigh the opposing arguments, assuming
What Is “Ministerial Income”?
06/04/2026
Ministerial income refers to the compensation received by a duly ordained, commissioned, or licensed minister for performing religious services and duties. This includes salaries, offerings, honorariums, and housing allowances received for leading worship services, administering sacraments, or running a religious organization. The IRS treats this type of earnings differently from standard corporate wages because clergy
What Is a “Military Tax Extension”?
06/04/2026
A military tax extension is a specialized provision under U.S. tax law that postpones the deadlines for filing tax returns, paying taxes, and claiming refunds for qualifying members of the U.S. Armed Forces. Unlike civilian extensions that only give you more time to file your paperwork, certain military extensions automatically delay both your filing date
What Is “Military Spouse Residency Relief”?
06/04/2026
Military spouse residency relief refers to federal tax protections that allow the civilian spouses of active-duty U.S. service members to maintain or choose a single state of legal residence for tax and voting purposes, even when they relocate frequently due to military orders. Under these rules, a civilian spouse can elect to share the same
What Is the “Low-Income Housing Tax Credit”?
06/04/2026
The Low-Income Housing Tax Credit, commonly abbreviated as LIHTC and governed by Section 42 of the Internal Revenue Code, is a federal tax incentive designed to encourage private investors and developers to fund, construct, or rehabilitate affordable rental housing for low-to-moderate-income families. Rather than a standard deduction that merely decreases your overall taxable income, this
What Is the “Investment Credit”?
06/04/2026
The investment credit, formally calculated under Section 46 of the Internal Revenue Code, is a federal tax incentive designed to encourage businesses, developers, and self-employed individuals to invest in specific types of capital assets. Rather than a standard deduction that merely decreases your taxable income, this program provides a powerful dollar-for-dollar reduction of your actual