Credits and Deductions that Could Help Your Company’s Bottom Line
Running a business can be costly and complicated, especially when tax season rolls around. Fortunately, there are a number of credits and deductions that can help small business owners and self-employed taxpayers with their bottom line. Determining eligibility for these deductions and credits can be difficult, so if you need help reviewing your tax options, it is important to contact a Florida tax return preparation attorney who has the resources and experience to advise you.
Qualified Business Income Deduction
There are a few different deductions for which small business owners qualify, including the qualified business income (QBI) deduction. This deduction is available to businesses operated through partnerships, S corporations, trusts, estates, and sole proprietorships. Businesses that qualify for this deduction are permitted to deduct up to:
- 20 percent of their qualified business income;
- 20 percent of any qualified real estate investment trust (REIT) dividends; and
- 20 percent of any qualified publicly traded partnership (PTP) income.
This deduction is available for tax years starting after the end of 2017, so eligible taxpayers will be permitted to claim it for the first time on tax returns filed this year.
In addition to the QBI deduction, many businesses are also able to deduct business expenses on their tax returns, but only if the company operates to make a profit and the business expenses were both necessary and ordinary. Ordinary expenses are those that are common and accepted in a certain trade or industry, while necessary expenses are those that are helpful to the business itself. Fortunately, an expense does not have to be indispensable to a business in order to be considered a business expense. Examples of commonly deducted business expenses include:
- Home expenses, such as insurance, repairs, mortgage interest, and utilities if the business owner uses part of his or her residence to operate the business;
- Business use of a vehicle;
- Rent expenses for a property being used in the trade or business, but only if the taxpayer owns no equity in the property;
- Up to 50 percent of the cost of business meals if the taxpayer or an employee is present and the meals and entertainment being provided are not extravagant;
- Business interest expenses, or the amount charged for the use of funds borrowed by a taxpayer for business activities; and
- Federal, state, local, and foreign taxes that are directly attributable to their trade or business.
For help determining whether you qualify for any of these business expenses deductions, or if you were unfairly denied such a deduction by the IRS, please contact our legal team today.
General Business Credits
The general business credit actually includes around two dozen tax credits, all of which apply to a variety of businesses and company activities. One popular general business credit is the employer credit for paid family and medical leave, which qualified employers can claim based on the amount of wages they paid to employees who were granted family and medical leave. The Work Opportunity Tax Credit (WOTC) is also available to employers who hire long-term unemployment recipients, recipients of public assistance, and certain veterans.
Schedule a One-on-One Consultation with a Dedicated Tax Return Preparation Attorney
To speak with an experienced tax return preparation lawyer about your own tax-related questions and concerns, please call Ronald Cutler, P.A. at 386-490-9949 today.