What Is “Specific identification method”?
05/29/2026
The specific identification method is an accounting technique that allows you to choose exactly which “batch” or “lot” of an asset you are selling. By identifying the specific shares or items you want to dispose of, you can directly influence the amount of capital gain or loss you report on your taxes. 1. Meaning of
What Is “Statutory nonemployee”?
05/29/2026
A statutory nonemployee is a specific worker classification defined by law where the individual is treated as self-employed for all federal tax purposes. Even if a business directs their work, the IRS legally views them as independent contractors rather than employees for Social Security, Medicare, and income tax withholding. 1. Meaning of “Statutory nonemployee” In
What Is “Social Security tax”?
05/29/2026
Social Security tax is a federal payroll tax that funds the Old-Age, Survivors, and Disability Insurance (OASDI) program in the United States. It is a mandatory contribution collected from employees and employers to provide income for retirees, disabled individuals, and the families of deceased workers. 1. Meaning of “Social Security tax” In plain English, Social
What Is “Semiweekly deposit schedule”?
05/29/2026
A semiweekly deposit schedule is one of two primary timelines the IRS requires employers to use when depositing withheld payroll taxes. It is generally mandatory for businesses that reported more than a specific dollar amount in taxes during a previous “lookback” period. 1. Meaning of “Semiweekly deposit schedule” In plain English, the semiweekly deposit schedule
What Is “Self-employment tax”?
05/29/2026
Self-employment tax is a tax consisting of Social Security and Medicare taxes primarily for individuals who work for themselves. It is similar to the FICA taxes withheld from the pay of most wage earners, but since you are both the employer and the employee, you are responsible for paying both halves of the contribution. 1.
What Is a “Self-employed taxpayer”?
05/29/2026
A self-employed taxpayer is an individual who earns income by carrying on a trade or business as a sole proprietor, an independent contractor, or a member of a partnership. Unlike employees, these individuals do not have a boss who withholds taxes from their paychecks, making them responsible for paying their own taxes directly to the
What Is “Section 1250 property”?
05/29/2026
Section 1250 property refers to all real property, such as buildings and structural components, that is subject to an allowance for depreciation and used in a business or for rental income. Unlike personal property (machinery or equipment), Section 1250 property specifically covers “stationary” assets like warehouses, office buildings, and residential rental units. 1. Meaning of
What Is “Section 125 plan”?
05/29/2026
A Section 125 plan, commonly known as a “Cafeteria Plan,” is a written benefit program maintained by an employer that allows employees to pay for certain qualified expenses with pre-tax dollars. By taking money out of a paycheck before taxes are calculated, employees effectively lower their taxable income and take home more of their hard-earned
What Is “Section 1245 property”?
05/29/2026
Section 1245 property refers to tangible and intangible personal property used in a trade or business that is subject to depreciation or amortization. This category primarily includes business equipment, machinery, vehicles, and patents, but excludes buildings and their structural components. 1. Meaning of “Section 1245 property” In plain English, Section 1245 property is the “movable
What Is “Section 1244 stock”?
05/29/2026
Section 1244 stock is a special type of small business share that allows investors to treat a financial loss from the stock as an “ordinary loss” rather than a capital loss. This unique designation helps entrepreneurs and early-stage investors lower their tax bill significantly if their business venture doesn’t go as planned. 1. Meaning of