{"id":3461,"date":"2023-04-13T15:13:50","date_gmt":"2023-04-13T19:13:50","guid":{"rendered":"https:\/\/www.skypointfcu.com\/wph\/workarea\/?p=3461"},"modified":"2023-04-13T15:14:13","modified_gmt":"2023-04-13T19:14:13","slug":"small-business-tax-changes-and-tips-to-know-in-2023","status":"publish","type":"post","link":"https:\/\/www.skypointfcu.com\/wph\/workarea\/blog\/small-business-tax-changes-and-tips-to-know-in-2023\/","title":{"rendered":"Small-Business Tax Changes and Tips to Know in 2023<\/strong>"},"content":{"rendered":"\n

Tax season brings rule changes for business owners, and this year is no different. For instance, you can deduct 100% of what your business spent at restaurants in 2022 on your taxes this year. But in 2023, that figure will return to 50%. <\/p>\n\n\n\n

What never changes, experts say, is the need to keep accurate records and work with a tax professional you trust. <\/p>\n\n\n\n

\u201cBusiness owners are oftentimes viewing their financial record-keeping as the last thing to do on the list. And they do it themselves, and they do it at night over a cup of coffee while they\u2019re watching TV,\u201d says David Levi, a certified public accountant and managing director at CBIZ, a tax, accounting, insurance and HR firm with offices across the United States. <\/p>\n\n\n\n

\u201c[But] you don\u2019t know what you don\u2019t know. And the one thing that\u2019s certain in the tax world is change,\u201d Levi says.<\/p>\n\n\n\n

Here are some key rule changes and deadlines to note as you file your 2022 taxes and plan for 2023. <\/p>\n\n\n\n

Find out whether you can still claim the Employee Retention Tax Credit<\/strong><\/p>\n\n\n\n

The Employee Retention Tax Credit \u2014 a policy meant to encourage business owners to keep staff during the COVID-19 pandemic \u2014 applied only to wages paid before Oct. 1, 2021, so you can\u2019t claim it on your 2022 tax return. <\/p>\n\n\n\n

But there\u2019s still time to amend your 2020 and 2021 returns to claim the ERTC, which was worth up to $7,000 per quarter per employee while it was in effect. You can generally amend tax returns within three years after filing your return.<\/p>\n\n\n\n

\u201cIt\u2019s probably one of the most powerful credits that I\u2019ve seen in my 30 years with the [Internal Revenue] Service,\u201d says Eric Hylton, the national director of compliance for Alliantgroup, a tax consulting firm, and former IRS commissioner for the Small Business\/Self-Employed Division.<\/p>\n\n\n\n

You might qualify for the ERTC if your business was ordered to fully or partially close in 2020 or 2021, or if your revenue compared to 2019 decreased by more than 50% in 2020 or more than 20% in 2021. <\/p>\n\n\n\n

Talk to a tax professional<\/a> about whether you qualify. Hylton notes, too, that there were \u201csignificant delays\u201d in processing ERTC applications last year. <\/p>\n\n\n\n

Prepare for bonus depreciation to begin fading out this year<\/strong><\/p>\n\n\n\n

From mid-2017 until the end of 2022, business owners who bought costly equipment could claim 100% of the asset\u2019s bonus depreciation \u2014 which is usually spread out over the life of the equipment \u2014 in the same year they bought the asset.<\/p>\n\n\n\n

That provision is going away unless Congress extends it. In 2023, bonus depreciation falls to 80%. It drops an additional 20% each year after that. <\/p>\n\n\n\n

\u201cPeople have been of the mindset that, \u2018you know, if I go out and I buy a piece of equipment, or I go out and I spend something on my real estate, that\u2019s going to be completely capitalizable; I might be able to take 100% bonus [depreciation],’\u201d Levi says. \u201cThat\u2019s not the case, [in 2023] it\u2019s 80%.\u201d <\/p>\n\n\n\n

Look into starting a retirement plan for your employees<\/strong><\/p>\n\n\n\n

Businesses with up to 50 employees can now claim a tax credit for 100% of the cost of starting a retirement plan<\/a>, up to $5,000. You can also claim a credit for up to $1,000 in employer contributions to each employee\u2019s plan. <\/p>\n\n\n\n

The tax credit phases out for businesses with 51 to 100 employees. It previously covered 50% of retirement plan startup costs. <\/p>\n\n\n\n

\u201cIf a business owner is on the fence [about] whether they should start a 401(k) or retirement plan, some of these credits could push them over the decision point,\u201d says Janel E. Carroll, a CPA and certified financial planner at Truepoint Wealth Counsel in Cincinnati. <\/p>\n\n\n\n

Plan a tax- and energy-efficient renovation <\/strong><\/p>\n\n\n\n

If you\u2019ve been thinking about going green<\/a>, 2023 might be a good time from a tax perspective, Hylton says. The Inflation Reduction Act, signed into law in August 2022, included several tax credits and business deductions. <\/p>\n\n\n\n

One change increased the size of the Energy-Efficient Commercial Buildings Deduction, allowing business owners to claim larger deductions per square foot of renovation if their projects qualify. In addition, tax-exempt organizations such as charities and religious institutions can now claim these deductions, too.<\/p>\n\n\n\n

On top of that, in 2023, businesses can claim a tax credit of up to $7,500 when they purchase electric or fuel cell electric vehicles. For vehicles larger than 14,000 pounds, the credit can go up to $40,000. <\/p>\n\n\n\n

Hylton encourages business owners to \u201cprobe your CPA or tax practitioner on some of these other credits [to see] whether your business actually qualifies\u201d for these tax benefits. <\/p>\n\n\n\n

Get ready for a more robust IRS <\/strong><\/p>\n\n\n\n

The Internal Revenue Service has announced plans to hire 4,000 phone support staffers and 700 in-person support staffers for the 2023 tax season. It\u2019s the result of a funding boost meant to help the agency provide better customer service and expedite processing times, Hylton says.<\/p>\n\n\n\n

When waiting for a refund or tax credit, \u201ctime is money,\u201d Hylton says.<\/p>\n\n\n\n

While Hylton notes that a better-staffed IRS may also result in a \u201cslight increase in audits,\u201d he and Carroll don\u2019t think most business owners need to worry. <\/p>\n\n\n\n

\u201cI think the focus is going to be on customer service \u2014 and based on the wait times that we have when we call the IRS, that\u2019s definitely where the need is,\u201d Carroll says.<\/p>\n\n\n\n

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