What Is “ Prize income ”?
05/27/2026
Prize income refers to the cash or the fair market value of items you win in a sweepstakes, contest, raffle, or game show. The IRS considers almost all prizes and awards to be fully taxable ordinary income. Whether you win cash, a car, or an all-expenses-paid vacation, you are legally required to report the value
What Is “ Prior-year tax safe harbor ”?
05/27/2026
What Is Prior-Year Tax Safe Harbor? The prior-year tax safe harbor is a rule that allows taxpayers to avoid underpayment penalties by paying a specific percentage of the total tax shown on their previous year’s tax return. It provides a guaranteed way to stay in the “clear” with the IRS, even if your income increases
What Is “Principal place of abode”?
05/27/2026
What Is “Principal place of abode”? A “principal place of abode” is the primary physical home where you, or your dependent, live for the majority of the tax year. The IRS uses this term to determine if a child or relative spent enough time living under your roof for you to claim specific filing statuses
What Is “Previously Owned Clean Vehicle Credit”?
05/27/2026
The Previously Owned Clean Vehicle Credit is a federal tax incentive for individuals who purchase a qualified used electric vehicle (EV) or fuel cell vehicle (FCV). It provides a tax credit equal to 30% of the sale price, up to a maximum credit of $4,000, to make sustainable transportation more affordable for more people. 1.
What Is “Premium Tax Credit”?
05/27/2026
What Is “Premium Tax Credit”? The Premium Tax Credit (PTC) is a refundable federal tax credit designed to help eligible individuals and families afford the cost of health insurance premiums. It specifically applies to health plans purchased through the Health Insurance Marketplace, also known as the “Exchange.” Meaning of “Premium Tax Credit” In plain English,
What Is “ Portfolio income ”?
05/27/2026
Portfolio income is money you earn from paper investments, such as stocks, bonds, mutual funds, and high-yield savings accounts. It typically includes interest, dividends, royalties, and capital gains. For federal tax purposes, the IRS categorizes this money separately from the wages you earn at your job and treats it with its own set of tax
What Is “Personal exemption”?
05/27/2026
What Is “Personal exemption”? A personal exemption was a specific dollar amount that taxpayers could deduct from their income for themselves and each of their dependents to lower their tax bill. Under current U.S. tax law, the personal exemption is permanently set to $0, having been replaced by significantly higher standard deductions and expanded child
What Is “Pension Income”?
05/27/2026
Pension Income: A Beginner’s Guide to Retirement Tax Rules Pension income is a series of regular payments made to a retired employee by a former employer or a labor union. It is essentially a “delayed salary” earned through years of service and is typically paid out for the rest of the retiree’s life (and sometimes
What Is a “ Payment plan ”?
05/27/2026
What Is a Payment Plan? A payment plan, also known as an installment agreement, is a formal arrangement made with the IRS to pay off a tax debt over an extended period. It allows taxpayers who cannot afford to pay their full balance immediately to make manageable monthly payments until the debt, including interest and
What Is “Pay-as-you-go tax system”?
05/27/2026
What Is “Pay-as-you-go tax system”? The pay-as-you-go tax system is the method the U.S. government uses to collect income tax throughout the year as you earn or receive income. Instead of waiting until the annual filing deadline to pay your entire tax bill, you are required to pay in installments via withholding or quarterly payments.