What Is “Employee vs. contractor”?
05/28/2026
What Is “Employee vs. contractor”? “Employee vs. contractor” refers to the legal and tax-related classification of a worker. This distinction determines whether a business must withhold taxes from a worker’s pay (employee) or if the worker is responsible for handling their own taxes as a separate business entity (independent contractor). The IRS uses specific guidelines
What Is “ Disregarded entity ”?
05/28/2026
A disregarded entity is a business that is recognized as a separate legal structure by its state government but is ignored by the IRS for federal tax purposes. Instead of filing its own corporate tax return, the business passes all its profits, losses, deductions, and credits directly to its owner’s personal tax return. This classification
What Is “Deductible business expense”?
05/28/2026
What Is a Deductible Business Expense? A deductible business expense is a cost incurred while running your trade or profession that the IRS allows you to subtract from your total income. By deducting these costs, you reduce your taxable profit, which ultimately lowers the amount of income tax you owe. 1. Meaning of “Deductible business
What Is “De minimis safe harbor”?
05/28/2026
What Is the De Minimis Safe Harbor? The de minimis safe harbor is an IRS rule that allows small business owners and landlords to immediately deduct the cost of inexpensive tangible property as a business expense. Instead of “capitalizing” these items and spreading the tax break over several years through depreciation, you get to write
What Is “DBA”?
05/28/2026
What Is a DBA? A DBA, which stands for “Doing Business As,” is a professional nickname for a business. It allows an individual or a company to conduct business under a name that is different from their own legal name or the registered name of their corporation or LLC. In the eyes of the IRS,
What Is “Currently not collectible”?
05/28/2026
What Is “Currently not collectible”? “Currently not collectible” (CNC) is a special status the IRS assigns to taxpayers who are going through severe financial hardship. It means the IRS has agreed to temporarily stop trying to collect your tax debt because you cannot afford to pay your basic living expenses. 1. Meaning of “Currently not
What Is “ CP2000 notice ”?
05/28/2026
What Is a CP2000 Notice? A CP2000 notice is an official letter from the IRS informing you that the information reported on your tax return does not match the data provided to the IRS by third parties, such as your employer or bank. It is essentially a “Notice of Proposed Adjustment” that outlines changes the
What Is “Taxable income”?
05/28/2026
What Is Taxable Income? Taxable income is the specific portion of your total earnings that the government is actually allowed to tax after you have taken all your legal deductions and adjustments. It is the “final number” used to determine your tax bracket and the total amount of tax you owe for the year. 1.
What Is “ Correspondence audit ”?
05/28/2026
What Is a Correspondence Audit? A correspondence audit is a tax examination conducted entirely through the mail or via digital document uploads rather than in-person meetings. It is the most common type of IRS audit, where the agency requests specific information or documentation to verify a part of your tax return. 1. Meaning of “
What Is “ Corporation ”?
05/28/2026
A corporation is a formal, independent legal entity owned by shareholders that exists completely separate from the people who founded or run it. This structure offers the strongest protection from personal liability for business debts and lawsuits. For tax purposes, a standard corporation (known as a C Corporation) files its own tax return and pays