Section 179 Expense Deduction
Under section 179 of the Internal Revenue Code, you can choose to recover all or part of the cost of certain qualifying property, up to a limit, by deducting it in the year you place the property in service. This is the section 179 deduction. You can elect the section 179 deduction instead of recovering the cost by taking depreciation deductions.
Self-Employment Tax
Self-employment tax is the Social Security tax and Medicare tax for people who work for themselves. Your payments to self-employment tax contribute to your coverage under the Social Security system. Social Security coverage provides you with retirement benefits, disability benefits, survivor benefits, and hospital insurance (Medicare) benefits. By not reporting all of your self-employment income, you could cause your Social Security benefits to be lower when you retire.
Short-Term Capital Gain or Loss
Profit or loss on the sale or exchange of assets or properties held 12 months or less.
Simplified Employee Pension (SEP)
A retirement program for which the administrative costs are lower than for some other nonsimplified (complicated) plans. A business of any size or a self- employed individual may create an SEP.
The filing status you use if, on the last day of the year, you are unmarried or legally separated from your spouse under a divorce or separate maintenance decree, and you do not qualify for another filing status.
Social Security Tax
Tax sent to the Social Security Administration on your behalf. This amount is 6.2% of wages for employees and 12.4% of net profit for self-employed taxpayers.
Standard Deduction
An amount (based on filing status, age, and blindness) that can be subtracted from adjusted gross income to calculate taxable income. You use the standard deduction in lieu of itemizing deductions.
Standard Mileage Rate
A method used to calculate the deductible costs of operating a vehicle (including a car, van, pickup, or panel truck under 6,000 pounds) for business purposes based on a fixed number of cents per mile for business, charitable, medical, or moving miles. The standard mileage rate varies depending on the activity for which the vehicle was used: charitable, medical, or in connection with job-related moving expenses. The standard mileage rate is also known as the optional method and is used instead of a deduction for actual vehicle expenses.
Straight-Line Depreciation Method
A method of depreciation where the deduction is taken in equal amounts each year for the useful life of an asset.