What Is “Invoice”?
05/28/2026
What Is an Invoice? An invoice is a commercial document issued by a seller to a buyer that lists the products or services provided and the amount owed for them. In the tax world, it serves as a formal request for payment and acts as a primary record for documenting business income and deductible expenses.
What Is “Inventory”?
05/28/2026
What Is Inventory? Inventory refers to the raw materials, work-in-progress items, and finished goods that a business holds for sale to customers in the ordinary course of business. On a tax return, inventory is treated as a business asset rather than an immediate expense, meaning its cost is typically deducted only when the items are
What Is “Interest on tax debt”?
05/28/2026
What Is Interest on Tax Debt? Interest on tax debt is the additional cost the IRS charges when you do not pay your taxes in full by the original filing deadline. It serves as a fee for the “use” of the government’s money and continues to grow until your balance is paid off completely. 1.
What Is “ Interest abatement ”?
05/28/2026
What Is Interest Abatement? Interest abatement is the process of the IRS reducing or removing the interest charged on a tax debt. Because the law generally requires the IRS to charge interest on unpaid taxes, this relief is typically only granted if the interest was caused by an IRS error or an unreasonable delay by
What Is “Information return penalty”?
05/28/2026
What Is “Information return penalty”? An information return penalty is a fee charged by the IRS when a business or individual fails to file specific reporting forms, such as 1099s or W-2s, on time or with the correct information. These penalties also apply if you fail to provide a copy of the form to the
What Is “Independent Office of Appeals”?
05/28/2026
Independent Office of Appeals Glossary Article The Independent Office of Appeals is a separate, impartial arm of the IRS that offers taxpayers a way to resolve disputes without going to court. It acts as a neutral third party to review cases where a taxpayer disagrees with an IRS decision, such as an audit result or
What Is “Independent contractor classification”?
05/28/2026
What Is Independent Contractor Classification? Independent contractor classification is the process of determining whether a worker is a self-employed professional or a legal employee of a business. This decision is based on the degree of control the business has over the worker’s tasks, tools, and schedule. Getting this classification right is essential because it dictates
What Is “ Independent contractor ”?
05/28/2026
An independent contractor is a self-employed individual or business that provides services to another entity under a specific contract or agreement. Unlike traditional employees, independent contractors are not subject to employer tax withholdings, meaning they are entirely responsible for paying their own income and self-employment taxes. In the eyes of the IRS, if you control
What Is “Hybrid method”?
05/28/2026
What Is a Hybrid Accounting Method? A hybrid method of accounting is a system that combines elements of both the cash and accrual methods to report income and expenses. It is most commonly used by businesses that need to use the accrual method for their inventory while preferring the simplicity of the cash method for
What Is “Household employee”?
05/28/2026
What Is a Household Employee? A household employee is an individual you hire to perform work in or around your private home. You are considered their employer if you control not only what work is done, but also the specific details of how it is performed. Common examples include nannies, housekeepers, health aides, and private