Our friends from Ronald Blue & Company have great ideas for planning year end strategies. They are amazing CPAs with a similar heartbeat as ours to expand their client’s mission. Below is a recap for saving money as this calendar year comes to a close.
Top Strategies for Businesses
• Establish a Tax-Favored Retirement Plan — Current rules for retirement allow significant deductible contributions. Small business plan options include 401(k), the defined benefit pension plan, and the SIMPLE-IRA. With the right planning, you can receive bigger deductible contributions. The SECURE Act also has additional incentives allowing credit for new eligible plans an increase from $500 to $5,000. If you need help exploring these options contact our retirement expert now!
• Purchase Needed Equipment — There is currently a generous depreciation tax break. Certain assets may qualify for 100% first-year bonus depreciation if it is acquired and placed in service in the calendar year of 2020. Your business may be able to write off the entire cost of some or all 2020 asset additions on this year’s return. Click here to learn more about Depreciation Deductions on heavy and light autos and various types of property.
• Net Operating Losses (NOLs) — The CARES Act momentarily loosened the NOL limitations. If your small business expects a loss this year, you will be able to carry back 100% of that loss to the prior five tax years. If you had an NOL carried into 2020, you can claim a deduction equal to 100% of your taxable income.
• Maximize the Deduction for Pass-through Business Income — For 2020, the deduction for Qualified Business Income (QBI) can be up to 20% of a pass-through entity. Restrictions can apply at higher income levels and be based on owner’s taxable income. The QBI deduction may also be claimed for up to 20% of income from qualified REIT dividends and 20% of Qualified income from publicly-traded partnerships. The QBI deduction is only available to non-corporate taxpayers (individuals, trusts, and estates.) Various limitations can have a side effect on your allowable QBI, it is important you pay careful attention at year-end tax planning time. For more on this topic contact us.
• Claim 100% Gain Exclusion for Small Business Stock — There is a 100% federal income tax gain exclusion privilege fore eligible sales of Qualified Small Business Corporation (QSBC) stock that was acquired after 9/27/2010. QSBC shares must be held for more than five years to be eligible for the gain exclusion break.
To learn more about how you can save in the new year, visit our website and look at our friends Ronald Blue & Co. Home (ronbluecpa.com)