Taxes are complex, and for small-business owners, freelancers and people with side gigs, they\u2019re even more complex \u2014 especially now, as filers reckon with the tax effects of small-business relief programs and rule changes.<\/p>\n\n\n\n
But those new twists and turns can create some tax-saving opportunities, according to three tax pros. Here are seven things they say entrepreneurs and independent workers can do to lower their tax bills and their anxiety this filing season and in the year ahead.<\/p>\n\n\n\n
1. Don\u2019t sweat that PPP money<\/strong><\/p>\n\n\n\n If your business received a loan through the Paycheck Protection Program, or PPP, and you qualified for forgiveness, the IRS generally doesn\u2019t consider the money part of your gross income. In addition, on your federal tax return, it\u2019s usually OK to deduct the business expenses that you paid with the loan money.<\/p>\n\n\n\n \u201cThe IRS has been clear,\u201d says Meredith Tucker, who leads the Entrepreneurial Services Group at accounting firm Kaufman Rossin in Fort Lauderdale, Florida.<\/p>\n\n\n\n State-level tax rules may have a different stance on PPP taxability, however, so be sure to consult with a qualified tax pro.<\/p>\n\n\n\n 2. Eat up<\/strong><\/p>\n\n\n\n For 2021 and 2022, the business meals deduction is up from 50% to 100% if the food and beverages are from a restaurant.<\/p>\n\n\n\n \u201cThat can include takeout and delivery. It doesn\u2019t have to be eaten on the premises,\u201d says Mark Luscombe, who is a federal tax analyst for Wolters Kluwer Tax & Accounting.<\/p>\n\n\n\n But make sure you\u2019re getting your business meals from a restaurant. \u201cYou can\u2019t get a deli tray from a grocery store and have it qualify,\u201d he adds.<\/p>\n\n\n\n 3. Watch that odometer<\/strong><\/p>\n\n\n\n If you\u2019re self-employed, you can get a tax deduction for every mile you drive for business purposes. In 2021, the rate was 56 cents per mile, and in 2022, the rate rose to 58.5 cents per mile. That means a 20-mile trip to meet a client might score a deduction of about $12 this tax year.<\/p>\n\n\n\n But don\u2019t guess here; the IRS may ask you to substantiate your mileage. \u201cThe important thing, especially if you don\u2019t have an exclusive vehicle used just for businesses, is to keep a log,\u201d Luscombe says.<\/p>\n\n\n\n 4. Capitalize on special retirement options<\/strong><\/p>\n\n\n\n There are special tax breaks for retirement savings if you work for yourself. Solo 401(k)s<\/a>, also called one-participant 401(k)s, are one example of IRS-blessed retirement accounts designed for self-employed people. They mimic many of the features of an employer-sponsored 401(k), including being able to sock money away pretax.<\/p>\n\n\n\n SEP IRAs<\/a> are another option, and you have more time to contribute \u2014 especially if you get a tax extension, Tucker says.<\/p>\n\n\n\n \u201cYou can take the deduction on your 2021 taxes and not actually have to fund the retirement account until the extended due date of the return, which could be in September, October,\u201d she says.<\/p>\n\n\n\n 5. Look at what\u2019s sitting in your home office<\/strong><\/p>\n\n\n\n The home office deduction is a popular way to get a tax break on rent, utilities and other house-related expenses, but a home office can produce other tax breaks, too. If you commandeered an old table, computer or chair in 2021 for your home office and you haven\u2019t already claimed it as a business expense, you may be able to deduct its current market value, says Sean DiMercurio, a certified public accountant at DiMercurio Advisors in Orlando, Florida.<\/p>\n\n\n\n For example, if you bought a laptop for $3,000 two years ago and now it\u2019s worth $1,250, you may be able to claim a $1,250 deduction if you started using that laptop for your business this year, he says.<\/p>\n\n\n\n \u201cThis is something that is often missed by this group of taxpayers and is completely allowed,\u201d DiMercurio says. Be sure you have the receipts or proof of the original purchase, he adds.<\/p>\n\n\n\n 6. Get ready now for new paperwork in 2022<\/strong><\/p>\n\n\n\n Self-employed people already get a Form 1099-NEC<\/a> from clients who pay them at least $600 a year, but if those clients are using Venmo, PayPal or similar payment platform to send the money, another tax form may start showing up for 2022.<\/p>\n\n\n\n \u201cThey\u2019re going to get a 1099-NEC from the person they did independent contractor work for, and then from the payment processor \u2014 if it was paid by credit card or some electronic means \u2014 they\u2019re also going to get a 1099-K for the same transaction,\u201d Luscombe says.<\/p>\n\n\n\n That means small-business owners will need to be extra organized in 2022. \u201cIt\u2019s going to be a lot more paper and sorting out \u2014 making sure you\u2019re not double-reporting income, too,\u201d he says.<\/p>\n\n\n\n 7. Be serious about bookkeeping<\/strong><\/p>\n\n\n\n \u201cIf you\u2019re eating, sleeping, drinking or thinking about your business, chances are what you\u2019re doing is tax-deductible,\u201d DiMercurio says. Even a few cups of coffee can be tax-deductible under the right circumstances, and it can add up to big money in tax savings, he says.<\/p>\n\n\n\n But be sure to keep receipts and use accounting software<\/a> so you have good records. Also, don\u2019t stretch the truth. Tax evasion is a felony. \u201cIf you can\u2019t make the argument for a deduction or a credit without laughing \u2026 chances are it\u2019s not really a good one,\u201d Tucker says.<\/p>\n\n\n\n More From NerdWallet<\/strong><\/p>\n\n\n\n Tina Orem writes for NerdWallet. Email: torem@nerdwallet.com.<\/p>\n\n\n\n The article 7 Ways Small-Business Owners Can Save on Taxes in 2022 originally appeared on NerdWallet.<\/p>\n","protected":false},"excerpt":{"rendered":"Taxes are complex, and for small-business owners, freelancers and people with side gigs, they\u2019re even more complex \u2014 especially now, as filers reckon with the tax effects of small-business relief programs and rule changes. But those new twists and turns can create some tax-saving opportunities, according to three tax pros. Here are seven things they […]","protected":false},"author":7,"featured_media":2508,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_lmt_disableupdate":"no","_lmt_disable":"","attr_excerpt":["Taxes are complex, and for small-business owners, freelancers and people with side gigs, they\u2019re even more complex \u2014 especially now, as filers reckon with the tax effects of small-business relief programs and rule changes."],"footnotes":""},"categories":[40],"tags":[],"class_list":["post-2496","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business"],"yoast_head":"\n