What Is “ Passive income ”?
05/27/2026
Passive income is money you earn from a trade, business, or rental activity in which you do not “materially participate” on a regular, continuous, and substantial basis. For federal tax purposes, the IRS strictly limits your ability to use losses from these hands-off activities to reduce taxes on your active income, like your W-2 wages
What Is “Partnership Income”?
05/27/2026
Partnership Income: A Simple Tax Guide for Partners and Owners Partnership income is the share of profits (or losses) generated by a business that is structured as a partnership. Because a partnership is a “pass-through” entity, the business itself does not pay federal income tax; instead, the income flows through to the individual partners who
What Is “Partially refundable tax credit”?
05/26/2026
What Is “Partially refundable tax credit”? A partially refundable tax credit is a type of tax incentive that can reduce the amount of tax you owe to zero. If the credit amount is higher than your tax bill, you can receive a specific portion of the remaining balance back as a refund. 1. Meaning of
What Is “Partially Refundable Credit”?
05/26/2026
What Is “Partially Refundable Credit”? A partially refundable credit is a hybrid tax benefit that can both reduce the amount of tax you owe and provide a refund for the remaining balance, up to a certain limit. One portion of the credit is “nonrefundable,” meaning it can only bring your tax bill down to zero,
What Is “ Paper filing ”?
05/26/2026
What Is Paper Filing? Paper filing is the traditional method of submitting a tax return by printing out physical forms, signing them by hand, and mailing them to the IRS or state tax authorities. While most taxpayers now use electronic methods, paper filing remains a valid, manual way to fulfill your tax obligations. 1. Meaning
What Is “ Paid preparer ”?
05/26/2026
What Is a Paid Preparer? A paid preparer is any person or business that is paid to prepare, assist in preparing, or substantially review a federal tax return. By law, these professionals must have a valid Preparer Tax Identification Number (PTIN) and sign the “Paid Preparer” section of any return they complete for a client.
What Is “Overpayment”?
05/26/2026
What Is “Overpayment”? In the world of U.S. taxes, an overpayment occurs when the total amount of tax you paid throughout the year—through paycheck withholding or estimated payments—is more than the actual tax you owe. Essentially, it means you have paid the IRS more than your fair share, and the government owes you the difference
What Is “Ordinary dividends”?
05/26/2026
What Is “Ordinary dividends”? Ordinary dividends are corporate distributions paid out of a company’s earnings and profits to its shareholders. Unlike “qualified” dividends, which get special tax treatment, ordinary dividends are taxed at the same standard progressive rates as your regular income, such as wages from a job. 1. Meaning of “Ordinary dividends” In plain
What Is “ Ordinary income ”?
05/26/2026
Ordinary income is any money you earn that is taxed at the standard federal income tax rates. It is the most common type of income and includes your wages, salaries, tips, bonuses, commissions, and business profits. 1. Meaning of “ Ordinary income ” In plain English, ordinary income is the standard money you make from
What Is “ODC”?
05/26/2026
What Is “ODC”? ODC stands for the Credit for Other Dependents. It is a non-refundable federal tax credit typically worth $500 per person for qualifying dependents who do not meet the requirements for the standard Child Tax Credit. Meaning of “ODC” In plain English, ODC is the tax code’s way of acknowledging that you might