((((NerdWallet) – Taxes are complex and even more complex for small business owners, freelancers, and those with side gigs. Especially now, filers are considering the tax impact of small business bailout programs and rule changes.
However, according to three tax experts, these new twists and turns could create some tax-saving opportunities. Here are seven things they say that entrepreneurs and independent workers can do to reduce their tax bills and their anxieties this season and next year.
1. Don’t sweat that PPP money
If your business receives a loan through the Paycheck Protection Program (PPP) and you are eligible for forgiveness, the IRS usually does not consider the money portion of your total income. Also, in a federal tax return, you can usually deduct the operating costs paid on the loan.
“The IRS is clear,” says Mereddy Stacker, who heads the entrepreneurial services group at Kaufman Rossin, an accounting firm in Fort Lauderdale, Florida.
State-level tax law may have different stances regarding PPP’s taxability, but be sure to consult a qualified tax expert.
2. Eat
In 2021 and 2022, if the food and drink is from a restaurant, the business meal deduction will increase from 50% to 100%.
“This may include takeaways and deliveries. You don’t have to eat on-site,” said Mark Luscombe, a federal tax analyst at Wolters Kluwer Tax & Accounting.
But make sure you get your business meal from the restaurant. “I can’t get a deli tray from a grocery store and qualify,” he adds.
3. Look at that odometer
If you are self-employed, you can get a tax credit for every mile you drive for business purposes. In 2021, it was 56 cents per mile, but in 2022 it rose to 58.5 cents per mile. This means that a 20-mile trip to meet a client could earn a deduction of about $ 12 this year’s tax year.
But don’t guess here. The IRS may ask you to prove your mileage. “Especially if you don’t have a business-only vehicle, it’s important to log,” says Luscombe.
4. Take advantage of special retirement options
If you work for yourself, there are special tax deductions for retirement savings. Solo 401 (k) sIs an example of an IRS-blessed retirement account designed for self-employed people, also known as a one-participant 401 (k). They mimic many employer-sponsored 401 (k) features, including the ability to suck money before tax.
SEPIRA It’s another option and you have more time to contribute — Tucker says, especially if you get a tax extension.
“You can get a tax deduction for 2021 and in fact you don’t have to fund your severance pay account until the extension date of the refund, which may be in September of October,” she says. ..
5. See what’s sitting in your home office
Home office deductions are a common way to get tax deductions for rent, utilities and other housing related expenses, but home offices can also generate other tax deductions. If you command an old table, computer, or chair for your home office in 2021 and haven’t charged it for your business yet, you may be able to deduct your current market value, Di Mercurio’s Certified Accountant. Says Sean Di Mercurio. Advisor to Orlando, Florida.
For example, if he bought a laptop for $ 3,000 two years ago and is now worth $ 1,250, he said he could claim a $ 1,250 deduction if he started using the laptop for business this year. Says.
“This is often overlooked by this group of taxpayers and is fully licensed,” says Di Mercurio. Make sure you have a receipt or proof of your first purchase, he adds.
6. Get ready for the new paperwork in 2022
Self-employed already Form 1099-NEC From clients who pay at least $ 600 a year, but if those clients are sending money using Venmo, PayPal, or a similar payment platform, you may see another tax form in 2022.
“They get 1099-NEC from someone who has worked as an independent contractor, and then 1099-NEC from a payment processor (if paid by credit card or some electronic means). Transaction K “says Luscombe.
This means that small business owners need to be further organized in 2022. “It will be more paper and tidying up. Don’t double-report your income,” he says.
7. Take bookkeeping seriously
“If you eat, sleep, drink, or think about your business, chances are that what you’re doing is tax deductible,” says Di Mercurio. Even a few cups of coffee can be tax deductible under the right circumstances, which can bring a lot of money to tax savings, he says.
However, please be sure to keep and use the receipt. Accounting software I have a good record. Also, do not stretch the truth. Tax evasion is a felony. “If you can’t laugh and discuss deductions and credits … it may not be really good,” says Tucker.
7 Ways Small Business Owners Can Save Taxes in 2022 | WGN Radio 720
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