What Is “ Wage and income transcript ”?
05/27/2026
What Is a Wage and Income Transcript? A Wage and income transcript is an official IRS document that summarizes data from the information returns the IRS has received about you, such as W-2s and 1099s. It lists the income reported by your employers, banks, and other payers to the IRS for a specific tax year.
What Is “Vehicle expense deduction”?
05/27/2026
The vehicle expense deduction is a tax write-off that allows self-employed individuals and business owners to deduct the costs of using a car, truck, or van for work-related purposes. By claiming either a flat rate per mile or the actual costs of operating the vehicle, you can lower your business’s net profit and reduce your
What Is “ Unearned income ”?
05/27/2026
Unearned income is money you receive without actively working for it, such as interest from a bank account, stock dividends, or unemployment benefits. Unlike the wages or business profits you physically clock in to earn, this money grows or arrives passively. However, even though you didn’t actively “work” for it, the IRS still requires you
What Is “ Unemployment compensation ”?
05/27/2026
Unemployment compensation is temporary financial assistance paid by state or federal governments to eligible workers who have lost their jobs through no fault of their own. For federal tax purposes, the IRS treats these benefit payments as ordinary taxable income. This means you must report the money you receive on your tax return, just like
What Is “ U.S. source income ”?
05/27/2026
U.S. source income refers to money you earn or receive from activities, investments, or properties located within the United States. The IRS uses specific “sourcing rules” to determine if your income originated in the U.S., which directly impacts whether the IRS has the primary right to tax that money. 1. Meaning of “ U.S. source
What Is “Underpayment”?
05/27/2026
What Is “Underpayment”? Underpayment occurs when a taxpayer fails to pay enough of their total tax liability through withholding or estimated tax payments during the year. Because the U.S. tax system operates on a “pay-as-you-go” basis, the IRS may charge penalties and interest if the amount you paid is significantly lower than what you actually
What Is “Tuition and Fees Deduction”?
05/27/2026
What Is “Tuition and Fees Deduction”? The tuition and fees deduction was a federal tax benefit that allowed taxpayers to subtract qualified higher education expenses from their taxable income. While it has been replaced by expanded education tax credits in recent tax law updates, understanding its history is essential for taxpayers looking at previous returns
What Is “Trust Income”?
05/27/2026
Trust Income: A Simple Guide for Beneficiaries and Trustees Trust income is the money earned by assets held within a legal entity called a trust. This can include interest from bank accounts, dividends from stocks, rent from real estate, or business profits, which are eventually taxed to either the trust itself or the people who
What Is “ Tips ”?
05/27/2026
Tips (or gratuities) are voluntary, optional extra payments given by a customer to a worker for a provided service. For IRS tax purposes, tips are considered a form of earned income and are subject to specific reporting rules, payroll taxes, and—depending on the year and your occupation—special federal income tax deductions. 1. Meaning of “
What Is “ Treasury Offset Program ”?
05/27/2026
What Is the Treasury Offset Program? The Treasury Offset Program (TOP) is a centralized debt collection system managed by the Bureau of the Fiscal Service (BFS). It allows federal and state agencies to intercept (or “offset”) federal payments—most commonly tax refunds—to pay off a person’s delinquent debts. 1. Meaning of “ Treasury Offset Program ”