What Is “Noncapital asset”?
05/29/2026
A noncapital asset is a specific type of property that the IRS excludes from the definition of a capital asset. Most commonly, these are assets used in the daily operations of a business, such as inventory, accounts receivable, or business supplies. 1. Meaning of “Noncapital asset” In plain English, if a capital asset is something
What Is “Net earnings from self-employment”?
05/29/2026
Net earnings from self-employment is the amount of profit from your business that is subject to self-employment tax. It is calculated by taking your total business income, subtracting your business expenses, and then applying a specific IRS adjustment factor (typically 92.35%). 1. Meaning of “Net earnings from self-employment” In plain English, this is the “final
What Is “Nanny tax”?
05/29/2026
The nanny tax refers to the federal payroll taxes that a household employer must pay if they hire someone to work in their home. These taxes include Social Security, Medicare, and federal unemployment insurance (FUTA). 1. Meaning of “Nanny tax” In plain English, the “nanny tax” is what happens when you stop being just a
What Is “Monthly deposit schedule”?
05/29/2026
A monthly deposit schedule is a timeline set by the IRS requiring employers to deposit their payroll taxes once a month. It is the standard schedule for small businesses whose total tax liability falls below a specific threshold during a designated “lookback” period. 1. Meaning of “Monthly deposit schedule” In plain English, the monthly deposit
What Is “Medicare tax”?
05/29/2026
Medicare tax is a federal payroll tax used to fund the Medicare program in the United States. This program provides health insurance for individuals aged 65 or older and younger people with certain disabilities or specific medical conditions. 1. Meaning of “Medicare tax” In plain English, Medicare tax is your contribution to the national healthcare
What Is “Liabilities”?
05/29/2026
Liabilities are financial debts or legal obligations that an individual or business owes to another party. In the world of taxes, liabilities represent the “owes” side of your financial equation, which can directly impact your deductions, your business’s value, and how much tax you ultimately pay. Meaning of “Liabilities” In plain English, a liability is
What Is “Lookback period”?
05/29/2026
A lookback period is a specific window of time in the past that the IRS examines to determine which tax rules or schedules apply to you in the present. In the world of payroll, it is the 12-month timeframe used to decide how frequently a business must deposit its payroll taxes. 1. Meaning of “Lookback
What Is “HRA”?
05/29/2026
An HRA, or Health Reimbursement Arrangement, is an employer-funded plan that reimburses employees for qualified medical expenses and, in some cases, health insurance premiums. Because these reimbursements are tax-free to the employee and tax-deductible for the employer, they are a popular alternative to traditional group health insurance. 1. Meaning of “HRA” In plain English, an
What Is “Holding period”?
05/29/2026
A holding period is the total length of time you own an asset, measured from the day after you acquire it until the day you sell or dispose of it. This timeframe is critical because it determines whether any profit you make is taxed at a high “short-term” rate or a much lower “long-term” rate.
What Is a “Gig Worker”?
05/29/2026
A gig worker is an individual who earns income by providing on-demand services, often through a digital platform, app, or marketplace. In the world of taxes, gig workers are generally treated as independent contractors rather than employees, meaning they are responsible for handling their own tax withholdings. 1. Meaning of “Gig Worker” In plain English,