IRS HIGHLIGHTS CREDITS AND DEDUCTIONS
IRS highlights credits and deductions. During small business week, the Internal Revenue Service reminds small business owners and self-employed individuals to take deductions and credits that will help their bottom line. This year, National Small Business Week and the IRS have recognized the importance of small businesses to the overall economic growth of the U.S. economy. Reviewing options and eligibility now can help business owners better estimate their tax situation and plan ahead. Here are just a few key deductions and credits that can benefit small business taxpayers.
IRS highlights credits and deductions. Deductions. Many individuals, including owners of businesses operated through sole proprietorship’s, partnership’s, S corporations, trusts and estates may be eligible for a qualified business income deduction, also called the section 199 A deduction. Some trusts and estates may also claim the deduction directly. The deduction allows them to deduct up to 20% of their qualified business income, plus 20% of qualified real estate investment trust dividends and qualified publicly traded partnership income. Income earned by a C corporation or by providing services as an employee isn’t eligible for the deduction. The deduction is available for tax years beginning after Dec. 31, 2017. Eligible taxpayers can claim it for the first time on their 2018 federal income tax returns filed in 2019.
Business losses. The Tax Cuts and Jobs Act also made changes to losses. Under the Tax Cuts and Jobs Act, losses from a trade or business are now limited to $250,000 or $500,000 for a joint return. This includes activities reported on Schedule C by a self employed individual and farming activities reported on Schedule F. It also includes being an employee and certain activities reported on Schedule E. Excess business losses that are no longer allowed are treated as a net operating loss and carried forward to the following tax year. For most taxpayers, Net Operating Losses arising after 2017 can only be carried forward.
Those who did improper accounting can always amend a tax return going back three years. If its too late and you have a tax debt, call this Tax Resolution Company and ask about our Tax Resolution Services, including all Tax Relief options, including the IRS Fresh Start Program.