I perform tax prep, planning and IRS and State representation for Pittsburgh and vicinity, as well as the rest of the Commonwealth of PA. The time is now to make your last-minute tax moves for 2022. Not a whole lot can be done after December 31st.
Part 2 of 2
4. Use Your Business Credit Cards
Money tight here at the end of the year with Christmas presents to purchase for clients and the family? No problem, put end of the year expenses on the business credit card. For cash businesses the expense is taken when it posts to the credit card, not when the credit card bill is paid.
Now, if you are incorporated (a C or S corporation) and you use a personal credit card for the business expense. The corporation would have to reimburse you for the expense before midnight on December 31st so you would have to submit your expense report to your corporation in sufficient time.
Best to always do business with a business card and business bank account to make life clearer and less subject to scrutiny.
5. Don't Assume You are Taking Too Many Deductions
Some business owners hold back with deductions thinking if they take a loss (Net Operating Loss) it will attract unwanted attention from the IRS and/or State.
This only happens if you a don't show a profit in 3 of 5 years in most cases. The IRS understands and accepts that the first couple of years in business is likely to be lean.
Also, the Tax Cuts and Jobs Act allows losses to only be carried forward and offset 80% of income. So don't be bashful if you have the proof, take those losses.
6. Don't Forget About The Qualified Improvement Property (QIP) Deduction
The CARES Act, in a fix to the Tax Cuts and Jobs Act (TCJA) allows those that own Non-Residential Real Property (Commercial Structures such as office buildings, retail stores, to make improvements to the interior of their stores and depreciate that improvement over 15 years instead of 39 years which still needs to be done for the building itself. This would include things such as fixtures and installation of slat wall to display goods for sale.
Since the items that qualify as QIP are depreciated over 15 years, they would also qualify for Bonus Depreciation or Section 179 Depreciation, as well.
A building itself though would still have to be depreciated over 39 years.
Well, concludes our list of six end of year tax deductions. Feel free to contact me with these or any other tax related issue via phone (412)685-4285 or email chalas@vennwealth.com
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