What Is “Totalization agreement”?
06/02/2026
A totalization agreement is an international accord between the United States and a foreign country designed to eliminate double social security taxation for cross-border workers. These agreements dictate which country’s social security or payroll tax system applies to an employee or self-employed individual working abroad. Additionally, they allow workers to combine, or “totalize,” their work
What Is “Termination of S election”?
06/02/2026
Termination of S election happens when a business loses its special “S corporation” tax status and reverts to being taxed as a traditional C corporation. This can be a voluntary choice made by the business owners, or it can happen accidentally if the company breaks one of the strict IRS rules for S corporations. Once
What Is the “Taxable Income Limitation”?
06/02/2026
The taxable income limitation is a strict boundary set by the IRS that caps a taxpayer’s maximum deduction based on their overall taxable income, rather than just their business performance. In the context of the Section 199A Qualified Business Income (QBI) deduction, it dictates that your final write-off cannot exceed 20% of your personal taxable
What Is “Tax treaty”?
06/02/2026
A tax treaty is a bilateral agreement between two countries resolved to avoid double taxation on individuals and businesses earning cross-border income. These agreements outline which country has the primary right to tax specific types of earnings, often offering reduced tax rates or complete tax exemptions for foreign residents. By clarifying tax rules between nations,
What Is “ Substantial presence test ”?
06/02/2026
The Substantial Presence Test is a mathematical day-counting formula used by the Internal Revenue Service (IRS) to determine whether a non-U.S. citizen is classified as a resident alien for tax purposes. If you meet the specific day-count requirements over a rolling three-year window, you are treated exactly like a U.S. citizen regarding your tax obligations,
What Is a Stretch IRA?
06/02/2026
A Stretch IRA is a financial estate-planning strategy that allows a beneficiary who inherits a traditional or Roth Individual Retirement Account to draw down the account assets slowly over their own natural life expectancy. By taking only small, mandatory annual payouts across several decades, the heir can “stretch” the account’s elite tax perks, keeping the
What Is “ Stock basis ”?
06/02/2026
Stock basis is essentially the amount of money you have invested in a share of stock for tax purposes. It usually starts as the original price you paid for the stock, including any trading fees or commissions. Knowing your stock basis is critical because the IRS uses this number to figure out if you made
What Is a Solo 401(k)?
06/02/2026
A Solo 401(k)—also known as an Individual 401(k) or One-Participant 401(k)—is a traditional retirement plan designed specifically for self-employed business owners who have no full-time employees other than themselves and their spouses. It mirrors the structure of a large corporate 401(k) but offers significantly higher contribution limits by allowing you to save money as both
What Is a SIMPLE IRA?
06/02/2026
A SIMPLE IRA (Savings Incentive Match Plan for Employees) is a tax-advantaged retirement plan designed specifically for small businesses and self-employed individuals. It allows employees to contribute a portion of their pre-tax income directly from their paychecks, while requiring employers to chip in matching or fixed contributions. It offers a middle ground between a standard
What Is “Shareholder basis”?
06/02/2026
Shareholder basis is a running total that tracks the amount of money and property an owner has invested in a corporation, adjusted over time for profits, losses, and payouts. For tax purposes, this number is critical because it determines how much money you can withdraw from the business tax-free and how much of the company’s