| As a courtesy to our clients, we have compiled a comprehensive list of common tax terms and definitions for quick reference. | Tax Lingo Troubles? |
Accrual method of accounting |
A business method of accounting requiring income to be reported when earned and expenses to be deducted when incurred. However, deductions generally may not be claimed until economic performance has occurred. |
| Term | Definition |
|---|---|
| Head of household |
Generally, an unmarried person who maintains a household for dependents and is allowed to compute his or her tax based on head of household rates, which are more favorable than single person rates. |
| Health reimbursement arrangement (HRA) |
Employer established account that provides tax-free reimbursements to employees for deductibles and other expenses that could be taken as itemized deductions. |
| Health savings account (HSA) |
For calendar year 2007, taxpayers covered by an HDHP may contribute up to the lesser of the annual deductible or $2,850 ($5,650 for family coverage). |
| High deductible health plan (HDHP) |
For 2008, a high deductible health plan is a health plan with an annual deductible that is not less than $1,100 for self-only coverage or $2,200 for family coverage, and with annual out-of-pocket expenses that do not exceed $5,600 or $11,200, respectively. |
| Hobby loss |
Hobby expenses are deductible only up to income from the activity; loss deductions are not allowed. |
| Holding period |
The length of time that an asset is owned and that generally determines long- or short-term capital gain treatment. |
| Home equity debt |
Debt secured by a principal residence or second home to the extent of the excess of fair market value over acquisition debt. An interest deduction is generally allowed for home equity debt up to $100,000 ($50,000 if married filing separately). |