‘Small Business Week’ prompted the IRS to publish reminders for entrepreneurs and businesses on how they can better estimate their tax situation and plan ahead. There are some new credits available, and new guidelines as a result of the Tax Cuts and Jobs Act of 2017 that can help generate deductions for trade and business expenses.
Are you getting the full benefits from available deductions and credits?
- Qualified Business Income (QBI) deduction up to 20%, plus 20% of qualified real estate investment trust dividends and publicly traded partnership income: Businesses operated through sole proprietorships, S corporations, partnerships, trusts, and estates may be eligible for a QBI (or section 199A) deduction. C corps are not eligible.
- Business losses from a trade or business limited to $250,000 ($500,000 for a joint return).
- Business expenses are generally deductible if the business operates to make a profit; it must be both ordinary and necessary (as defined under IRS guidelines). Typical business expenses are: business use of a home, business use of a car, meals and entertainment, rent expense, interest, and taxes in relation to trade or business use.
- General business credits for a variety of businesses and activities (defined under IRS guidelines).
- NEW! Employer credit for paid family and medical leave – there is a new general business credit that qualified employers may claim based on wages paid to qualifying employees on family and medical leave.
- Tax credits can help employers hiring new workers – for employers who hire long-term unemployment recipients.
Visit the IRS website for more information, or contact a K·Coe Isom tax expert to ensure your business is maximizing all potential deductions and credits.