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"If you need a CPA or accountant in Livingston or Essex County, I highly recommend Greg at Monaco CPA. My wife and I switched because my old accountant often didn't return my calls. Greg is different."
"I've been working with Greg Monaco, CPA for a few years now, and he's honestly saved me real money with both personal tax help and crypto tax stuff."
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50 tax, business, crypto, and bookkeeping terms explained in plain English. No jargon walls. Just clear definitions you can actually use.
Your AGI is your total income minus specific adjustments like student loan interest, retirement contributions, and self-employment tax deductions. It's the number the IRS uses to determine your eligibility for most credits and deductions. Think of it as the starting line for your tax return.
Learn about Adjusted Gross Income (AGI)→Your filing status tells the IRS your household situation: Single, Married Filing Jointly, Married Filing Separately, Head of Household, or Qualifying Surviving Spouse. It determines your standard deduction amount, tax bracket thresholds, and which credits you can claim. Picking the right one can save you real money.
Learn about Filing Status→The standard deduction is a flat dollar amount the IRS lets you subtract from your income before calculating tax. Most filers take it because it's simple and often larger than what they'd get from itemizing. For TY2026 per Rev. Proc. 2025-32: $16,100 single/MFS, $32,200 MFJ, $24,150 head of household. (For TY2025 the figures were $15,750 single, $31,500 MFJ, $23,625 HoH.) NJ does not offer a standard deduction.
Learn about Standard Deduction→Itemizing means listing out your actual deductible expenses (mortgage interest, state taxes, charitable donations, medical costs) instead of taking the standard deduction. You'd only itemize if the total exceeds your standard deduction. The OBBBA (P.L. 119-21, §70120) raised the SALT cap to $40,000 for 2025 ($40,400 for 2026, indexed +1%/yr through 2029), which has made itemizing viable for more taxpayers in high-tax states like New Jersey. Important: the cap phases down by 30% of MAGI exceeding $500,000 (2025) / $505,000 (2026), with a $10,000 floor. At roughly $605,000 MAGI in 2026 the cap is fully phased back to $10,000. High-income NJ taxpayers should model their effective cap before assuming the full $40,400 deduction.
Learn about Itemized Deductions→A tax bracket is a range of income that gets taxed at a specific rate. The U.S. uses seven federal brackets ranging from 10% to 37%. Your bracket doesn't mean all your income is taxed at that rate, though. Only the income within each bracket gets that bracket's rate.
Learn about Tax Bracket→Your marginal tax rate is the rate you'd pay on the next dollar you earn. It's the highest bracket your income falls into. This is the number that determines whether a deduction or strategy will actually move the needle on your tax bill.
Learn about Marginal Tax Rate→Your effective tax rate is the actual percentage of your total income that goes to taxes. Divide your total tax by your total income, and that's it. It's always lower than your marginal rate because of how brackets work. This gives you the real picture of your tax burden.
Learn about Effective Tax Rate→Tax liability is the total amount of tax you owe for the year. It's calculated after applying your deductions, credits, and bracket rates. Your liability isn't what you pay on April 15. It's the full-year number. What you owe or get refunded is the difference between your liability and what you've already paid through withholding or estimated payments.
Learn about Tax Liability→A deduction reduces your taxable income, while a credit reduces your actual tax bill dollar for dollar. If you're in the 22% bracket, a $1,000 deduction saves you $220. A $1,000 credit saves you a full $1,000. Credits are almost always more valuable, so claiming every one you qualify for is essential.
Learn about Tax Credit vs Tax Deduction→If you're self-employed or have income without withholding, the IRS expects you to pay taxes four times a year. The due dates are April 15, June 15, September 15, and January 15. Miss a payment or underpay, and you'll get hit with a penalty. Calculating the right quarterly amount upfront prevents surprises at filing time.
Learn about Estimated Quarterly Taxes→Self-employment tax is the Social Security and Medicare tax that self-employed people pay. It's 15.3% (12.4% Social Security up to the wage base, plus 2.9% Medicare). As an employee, your employer covers half. When you're self-employed, you pay both halves. SE tax is calculated on 92.35% of net self-employment earnings - this adjustment approximates the employer-half FICA deduction that W-2 employees receive. For 2026, the Social Security wage base is $184,500, meaning the 12.4% portion stops there, but the 2.9% Medicare tax applies to all earnings with an additional 0.9% above $200K ($250K if married filing jointly). You can deduct half of SE tax as an above-the-line adjustment on Schedule 1.
Learn about Self-Employment Tax→FICA stands for the Federal Insurance Contributions Act. It's the combination of Social Security tax (6.2%) and Medicare tax (1.45%) withheld from employee paychecks. Employers match that amount, so the total is 15.3%. If you run payroll, you need to be on top of these deposits or the penalties add up fast.
Learn about FICA→A sole proprietorship is the simplest business structure. There's no separate legal entity. You and the business are the same thing in the eyes of the IRS. You report income on Schedule C of your personal return. It's easy to start, but you have no liability protection and you'll pay self-employment tax on all your profits.
Learn about Sole Proprietorship→A Limited Liability Company separates your personal assets from your business debts and lawsuits. By default, a single-member LLC is taxed as a sole proprietorship and a multi-member LLC is taxed as a partnership. The real power of an LLC is that you can elect to be taxed as an S-Corp, which can cut your self-employment tax significantly.
Learn about LLC→An S-Corp is a tax election, not a business structure. You form an LLC or corporation, then file Form 2553 with the IRS to be taxed as an S-Corp. The main benefit is splitting income between salary (subject to FICA) and distributions (not subject to FICA). Done right, it can save thousands in self-employment tax each year. Most CPAs look for net business income consistently above $60,000 to $80,000 before recommending the election, because annual compliance costs (payroll, separate returns, NJ CBT-100S) typically run $2,000 to $5,000. Below that threshold, the FICA savings often don't cover the added costs.
Learn about S-Corporation→A C-Corp is its own taxpaying entity. It pays corporate income tax on profits, and shareholders pay tax again on dividends. That's the "double taxation" you hear about. Most small businesses avoid it, but C-Corps make sense for companies planning to raise venture capital or retain significant earnings at the 21% corporate rate.
Learn about C-Corporation→A partnership is a business owned by two or more people. It files its own return (Form 1065) but doesn't pay taxes itself. Instead, profits and losses pass through to each partner's personal return on Schedule K-1. Partnership agreements matter - messy situations arise when partners don't document their profit splits and responsibilities upfront.
Learn about Partnership→Schedule C is the IRS form sole proprietors and single-member LLCs use to report business income and expenses. It's filed as part of your personal 1040. Your net profit from Schedule C flows into your AGI and is also subject to self-employment tax. Good recordkeeping throughout the year makes this form painless at tax time.
Learn about Schedule C→An Employer Identification Number is your business's tax ID, like a Social Security number for your company. You need one to open a business bank account, hire employees, or file certain tax returns. You can get one for free from the IRS website in about five minutes.
Learn about EIN→If you own an S-Corp, the IRS requires you to pay yourself a "reasonable" salary before taking distributions. Set it too low, and you're asking for an examination. Set it too high, and you lose the tax savings. Finding the right number depends on your role, industry, and revenue to stay compliant while maximizing savings. In David E. Watson, P.C. v. United States (668 F.3d 1008, 8th Cir. 2012), the Eighth Circuit affirmed that an accountant-owner who paid himself $24,000 while receiving $175K-$204K in S-Corp distributions had set an unreasonably low salary; the court accepted the IRS expert's $91,044 reasonable compensation valuation. (Watson was decided by the U.S. District Court for the Southern District of Iowa and affirmed by the 8th Circuit; the Supreme Court denied certiorari.) The general benchmark most tax professionals use is 40% to 60% of net business income, adjusted for geography, industry, and the owner's actual role in day-to-day operations.
Learn about Reasonable Compensation→A pass-through entity doesn't pay income tax at the business level. Instead, profits and losses "pass through" to the owners' personal returns. S-Corps, partnerships, LLCs, and sole proprietorships are all pass-throughs. Most small businesses in the U.S. are structured this way because it avoids double taxation.
Learn about Pass-Through Entity→The Qualified Business Income deduction lets owners of pass-through entities deduct up to 20% of their business income on their personal return. There are income limits and restrictions for certain service businesses. It's one of the biggest tax breaks available to small business owners, but the rules are complicated. Running the numbers is essential to capturing the full benefit. The One Big Beautiful Bill Act (OBBBA §70105) made QBI permanent (it was originally set to expire after 2025) and expanded the phase-in range. For TY2026, the §199A SSTB phase-in begins at $201,750 (single/HoH), $201,775 (MFS - asymmetric per Rev. Proc. 2025-32 §3.26), and $403,500 (MFJ). The phase-in occurs over $75,000 (single/HoH/MFS) or $150,000 (MFJ) of taxable income above the threshold, so the deduction is fully phased out at $276,750 (single) / $553,500 (MFJ). Note that NJ does not conform to QBI, so this deduction only reduces your federal tax.
Learn about QBI Deduction (Section 199A)→Form 2553 is the IRS election to be taxed as an S-Corporation. It must be filed within 75 days of forming your entity or by March 15 for the current tax year. Miss the deadline and you'll have to wait until next year or request late election relief. NJ note: Since P.L. 2022, c.133 (Dec. 22, 2022), New Jersey automatically recognizes the federal S election for privilege periods beginning on or after that date - no separate CBT-2553 needed going forward. The historical trap still affects (a) entities with pre-Dec-22-2022 federal acceptance that never filed CBT-2553 (these need retroactive CBT-2553-R), and (b) LLCs taxed as S-Corps federally that haven't updated their tax Ownership Type to '1120 Filer' via Form REG-C-L or the DORES online portal.
Learn about Form 2553→A registered agent is a person or company designated to receive legal documents and official mail on behalf of your business. Every LLC and corporation in New Jersey is required to have one. You can serve as your own registered agent, but many business owners use a service so their home address isn't on public record.
Learn about Registered Agent→New Jersey's Gross Income Tax is the state's personal income tax. Unlike the federal system, NJ doesn't allow most of the same deductions. The rates range from 1.4% to 10.75%, and the top rate kicks in at $1 million of income. NJ also taxes some things differently than the feds, like capital gains, which get no preferential rate.
Learn about NJ Gross Income Tax (GIT)→The CBT-100S is the New Jersey Corporation Business Tax return for S-Corporations. Even though S-Corps are pass-throughs for federal purposes, NJ imposes a separate entity-level tax. There's a minimum tax based on gross receipts, and the filing deadline differs from the federal deadline. It catches a lot of new S-Corp owners off guard.
Learn about NJ CBT-100S→The Business Alternative Income Tax is New Jersey's workaround for the federal SALT deduction cap ($40,000 for 2025 and $40,400 for 2026 under OBBBA, up from the original $10,000). Pass-through entities can elect to pay state tax at the entity level, which becomes a deductible business expense. The owners then get a credit on their personal NJ return. It's a legitimate way to get around the SALT cap, and running the numbers is worth it for every eligible pass-through entity. Current BAIT rates (N.J.S.A. 54A:12-3(b), 2025 PTE-100 Instructions) use a three-bracket schedule: 5.675% on the first $250,000 of distributive proceeds; 6.52% on $250,001-$1,000,000; and 10.9% on income over $1,000,000. (The older 9.12% bracket for $1M-$5M income was eliminated by P.L. 2021, c.419 effective Jan 1, 2022.) The election must be made annually by March 15 (or the next business day if March 15 falls on a weekend) and applies to all members of the entity for that tax year.
Learn about NJ BAIT Election→When you sell your home and leave New Jersey, the state requires either a prepayment of estimated tax or the filing of a waiver. It's not technically a separate tax. It's an estimated payment on the gain from selling your NJ property. The amount is the greater of 2% of the sale price or your estimated tax on the gain. Proper planning before you sell can reduce this significantly.
Learn about NJ Exit Tax→Unlike the federal system, New Jersey doesn't give capital gains a lower tax rate. Long-term and short-term gains are all taxed as ordinary income under the GIT. That means NJ residents can face a combined federal and state rate that's higher than they expect on stock sales, crypto sales, and real estate gains.
Learn about NJ Capital Gains Treatment→New Jersey's Urban Enterprise Zone (UEZ) program offers tax incentives to businesses operating in designated economically distressed areas. Qualified businesses can charge a reduced sales tax rate of 3.3125% (half the standard rate) on certain in-person retail sales. It's a real benefit for brick-and-mortar businesses in eligible zones.
Learn about Urban Enterprise Zone→If you sell taxable goods or services in New Jersey, you need a Certificate of Authority from the Division of Revenue. It's your license to collect sales tax. You can't legally make retail sales without one. There's no fee to register, and you can do it online through the NJ Division of Revenue website.
Learn about NJ Sales Tax Certificate of Authority→Every LLC, corporation, and other registered entity in New Jersey must file an annual report with the Division of Revenue. It's due each year by the anniversary of your formation, and the fee is $75 for most entities. Miss it and the state can revoke your business's good standing, which creates problems down the line.
Learn about NJ Annual Report→Cost basis is what you originally paid for a crypto asset, including any fees. When you sell, your gain or loss is the sale price minus your cost basis. If you bought 1 ETH for $2,000 and sold it for $3,500, your gain is $1,500. Getting this wrong is the number one reason people overpay on crypto taxes.
Learn about Cost Basis→FIFO stands for First In, First Out. It means when you sell crypto, the IRS assumes you're selling the oldest units you bought first. It's the default method most exchanges use. In a rising market, FIFO usually results in higher gains because your oldest coins likely had the lowest cost basis.
Learn about FIFO→Specific identification lets you choose exactly which units of crypto you're selling. Instead of defaulting to FIFO, you can pick the lot with the highest cost basis to minimize your taxable gain. It requires detailed records, but it can save significant money. The IRS allows it as long as you can adequately identify the units sold.
Learn about Specific Identification→A taxable event is any transaction that triggers a tax obligation. In crypto, selling for cash, trading one coin for another, spending crypto on goods or services, and receiving staking rewards are all taxable events. Simply holding or transferring between your own wallets is not taxable. Knowing the difference keeps you from reporting things you don't need to.
Learn about Taxable Event→Form 1099-DA is the IRS form that crypto brokers and exchanges must issue starting in 2025 to report digital asset transactions. It's similar to a 1099-B for stocks. The form reports gross proceeds, and in later years, cost basis too. A reconciliation review ensures your 1099-DA matches your actual activity. Under IRS Notice 2024-56, brokers began reporting gross proceeds for tax year 2025 (forms issued in early 2026). Cost basis reporting phases in for tax year 2026 and beyond. DeFi front-ends and non-custodial platforms have a later compliance timeline. Wallet-by-wallet tracking is now the default method under Revenue Procedure 2024-28.
Learn about Form 1099-DA→Wallet-by-wallet tracking means calculating your cost basis separately for each wallet or exchange account. Under current IRS rules, you can't move crypto between wallets and blend the cost basis together without proper documentation. This approach gives you the most accurate and defensible tax reporting.
Learn about Wallet-by-Wallet Tracking→When you stake crypto to help validate transactions on a blockchain, the rewards you earn are taxable income. You report them at fair market value on the date you receive them. If you later sell those staking rewards, you'll also owe capital gains tax on any price increase since you received them. The IRS confirmed this treatment in Rev. Rul. 2023-14, which states that staking rewards are includible in gross income in the tax year the taxpayer gains dominion and control over them. The Jarrett v. United States case challenged this position, arguing rewards create new property (not income), but the case was mooted after the IRS issued a refund, leaving the legal question unresolved.
Learn about Staking Rewards→DeFi stands for Decentralized Finance. It covers lending, borrowing, liquidity pools, yield farming, and other financial activities on blockchain protocols without traditional intermediaries. The tax rules are still evolving, but the IRS treats DeFi transactions the same as any other crypto activity. Every swap, claim, and withdrawal can be a taxable event.
Learn about DeFi→An airdrop is when a crypto project distributes free tokens to wallet holders. The IRS treats airdrops as ordinary income, taxable at the fair market value when you receive them. Your cost basis for future sales is that same value. Some airdrops are worth very little, but you still need to report them.
Learn about Airdrop→A hard fork happens when a blockchain splits into two separate chains, often creating a new token for existing holders. The IRS has said that if you receive new coins from a hard fork, it's taxable income at the fair market value when you gain control of the new tokens. The most famous example was Bitcoin Cash forking from Bitcoin in 2017.
Learn about Hard Fork→Your chart of accounts is the list of every category your business uses to track money coming in and going out. Think of it as the filing system for your books. A well-organized chart of accounts makes bookkeeping faster, tax prep easier, and financial reports actually useful. In QuickBooks Online, this is one of the first things to configure properly.
Learn about Chart of Accounts→Bank reconciliation is the process of matching your accounting records to your bank statement. It catches duplicate entries, missed transactions, and errors before they become bigger problems. I recommend doing it monthly. If your books and bank don't match, something's off, and you want to find out sooner rather than later.
Learn about Bank Reconciliation→Accounts receivable (AR) is money your customers owe you for products or services you've already delivered. It shows up as an asset on your balance sheet. Keeping AR organized and following up on late invoices is critical for cash flow. If you're not tracking it, you could be leaving money on the table.
Learn about Accounts Receivable→Accounts payable (AP) is the money your business owes to vendors and suppliers. It shows up as a liability on your balance sheet. Staying on top of AP helps you avoid late fees, maintain good vendor relationships, and plan your cash flow. Setting up proper systems ensures nothing slips through the cracks.
Learn about Accounts Payable→Cash basis accounting records income when you receive payment and expenses when you pay them. Accrual accounting records income when you earn it and expenses when you incur them, regardless of when cash changes hands. Most small businesses use cash basis because it's simpler, but the IRS requires accrual for businesses with over $30 million in average annual gross receipts.
Learn about Cash Basis vs Accrual→GAAP stands for Generally Accepted Accounting Principles. It's the standard set of rules and guidelines that govern how financial statements are prepared in the U.S. Banks, investors, and creditors expect GAAP-compliant financials. For small businesses, following GAAP ensures your books are taken seriously when you need a loan or want to bring on investors.
Learn about GAAP→Cost of Goods Sold is the direct cost of producing or purchasing the products you sell. It includes materials, labor directly tied to production, and manufacturing overhead. COGS gets subtracted from revenue to calculate gross profit. Tracking it accurately matters because it directly reduces your taxable income.
Learn about COGS→Depreciation lets you spread the cost of a business asset (equipment, vehicles, furniture) over its useful life instead of deducting it all at once. Section 179 and bonus depreciation can let you write off the full cost in year one, but NJ has different rules than the feds. Checking both federal and NJ rules ensures you're getting the right deduction at each level.
Learn about Depreciation→