Whenever tax time comes around, being a small business owner can be stressful.
You have to keep track of tax deadlines, distribute your employees’ income statements, and complete your business and personal tax return all at once.
With that in mind, you may slip up and make a few tax errors. Here are some common mistakes and how to avoid them.
Underpayment of estimated tax
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The upcoming tax year brings in a lot of changes for self-employed and business taxpayers.
Taxpayers with sole proprietorship, partnerships, trusts, and S corporations will face some difficulties when they’re ready to file for the 2019 tax season because of the Tax Cuts and Jobs Act (TCJA).
Read below for the changes you need to know for your business taxes.
Here’s what qualifies as business income.
In order to have qualified business income (QBI), it must be domestic income from a trade or business. Your qualified business income (QBI) is calculated into a net amount and does not include employee wages, capital gain, interest and dividend income.
The maximum deduction increases.
Prior to the TCJA, you could deduct up to $500,000 for any section 179 property. It has now increased to $1 million. The phase-out threshold also increases from $2 million to $2.5 million. (Subject to change due to inflation.)
The new 20% deduction.
Continue reading “How the Tax Cuts and Jobs Act Affects Businesses”