Tax Benefits For Small Businesses In 2022
Small business owners always qualify for a few specific tax benefits. However, for 2022, some of these benefits have been expanded. Some small business owners, for instance, could now be eligible for an enhanced 100 percent deduction for business meals. This is only one of the many tax benefits that small business owners could qualify for when filing their 2022 federal income tax returns. Call us today to learn more.
Enhanced Business Meal Deduction
Generally, business owners can deduct around half of the cost of business-related restaurant meals. However, for 2022, some businesses can actually deduct the full cost of the food and beverages purchased for business purposes. To qualify for this higher limit, either the business owner him or herself, or an employee must be present when the meal is provided. Further, only meals from establishments that qualify as restaurants are deductible. This includes companies that prepare and sell food or beverages to retail customers for immediate consumption, whether on or off the premises. For deduction purposes, grocery and convenience stores, as well as other businesses that primarily sell pre-packaged items don’t qualify as restaurants. Employer-operated eating facilities, even when operated under contract by a third party, cannot be considered a restaurant when calculating deductions. It’s also important to note that extravagant and lavish expenses are not deductible, even if they otherwise qualify.
Home Office Deduction
With more and more business owners now working from home, many could qualify for the home office deduction. Generally, to qualify for this deduction, a business owner must use a room exclusively for business on a regular basis. Exceptions to this requirement do apply, however, to home-based daycare facilities and business storage if the home is the only fixed location for the business. These deductions can be calculated either using the regular or the simplified method.
Under the regular method, expenses of operating the home are divided between personal and business uses. Direct business expenses are fully deductible, while the business portion of incidental expenses, like real estate taxes, rent, utilities, maintenance and repairs are deducted based on the percentage of the home used for business. The simplified method, on the other hand, can be used by sole proprietors and has a prescribed rate of $5 a square foot for business use of the home. The maximum deduction in these cases is $1,500 based on the business use of a property that is at least 300 square feet.
Other Tax Benefits
There are a variety of other tax benefits for which small business owners may qualify, including the:
- Business start-up expense deduction;
- Qualified business income deduction; and
- Health-insurance deduction for self-employed individuals.
To learn more about these benefits, as well as deductions for major expenses, building depreciation, and business equipment or other assets, call our legal team today.
Set Up a One-on-One Consultation Today
Although next year’s tax filing deadline is nearly a year away, business owners can save time by identifying and taking action to qualify for possible tax benefits now. For help, reach out to dedicated Florida tax attorney, CPA, and former FBI Special Agent Ronald Cutler, P.A. at 386-490-9949 today.