If you’ve submitted your business tax returns before April 15, congratulations! You’ve successfully passed 2022’s tax season! On the other hand, if you’re still struggling with your financial records and IRS forms, no worries, we’re here to help! This article reveals the top 3 lessons learned for filing your business taxes in 2022.
Update yourself on tax law changes
The first and foremost thing to remember when filing your business taxes is to educate yourself on the areas of taxation that affect you and keep yourself updated on tax rules and developments. It’s always a wise option to keep track of the current news because things change annually.
The changes listed below are in effect starting in 2022, so be aware of what they entail for your small business when submitting.
Employee Retention Tax Credit
The Employee Retention Tax Credit (ERTC) is a financial incentive for employers who suffered lower revenues or business disruptions due to government-imposed limitations in 2020 and 2021. Businesses and certain non-profit organizations that paid employees despite the COVID-19 pandemic’s obstacles are also eligible for the ERTC, and many beneficiaries are receiving cash refunds.
Though ERTC expired at the end of 2021, you can still claim this tax credit in 2022. Business owners have three years after the program’s closure to review wages paid after March 12, 2020, to see if they are eligible. The requirements to claim ERTC are the following:
- Your business recovered from a significant reduction in gross receipts
- You haven’t claimed this credit before.
Excess business-loss limitation
Businesses could transfer net cash outflows backward five years or forward forever in 2019 and 2020 thanks to a suspension of Tax Cuts and Jobs Act provisions. Nevertheless, those rules have been reinstated for the 2021 tax period.
This means that taxpayers cannot claim losses totaling more than $524,000 (for couples filing separately) or $262,000 (for the unmarried). This relates to business earnings and liabilities, notably Schedule C and revenue and shortfalls from pass-through entities.
Furthermore, they cannot use W-2 wages to cover business losses. Husband and wife taxes are paid separately and may result in a tax obligation even if lost income exceeds spousal earnings.
Interest expense limitation
Another tax law suspended to assist Americans during the pandemic is the accrued interest restriction rule, which will be reinstated for the 2021 tax year. This regulation restricts taxable income to the current tax year and cuts the financing costs deduction from 50% to 30% of modified tax liability.
Set up a checklist for filing your business taxes
When you run your own business, you’ll be accountable for keeping track of various critical records and tasks. It’s a good idea to establish a checklist to collect all the data you have to monitor year-round. This checklist helps you identify and collect your important documents (such as the home office or travel expenses) and keep them for tax preparation.
Your tax status will probably be similar year to year. Even if your tax situation changes, you can still use the discipline you set in place during the year to expand on in the future. A little effort in planning and staying organized can go a long way.
File your taxes as soon as possible
It might be a good idea to schedule and have all of your papers in one place to assist you in filing early and receiving your tax refund quickly. If you are getting a refund, the earlier you file your form, the faster you will receive your refund—which means more cash on hand during this difficult time.
The sooner you file your taxes, the more time you’ll have to correct any bookkeeping problems or locate lost invoices, documents, or invoices. This additional time can go a fair distance toward reducing stress throughout what can be a stressful time of year.
Additionally, filing your taxes as soon as possible might help you overcome your financial flow. It’s critical to keep track of your 2022 quarterly tax estimate requirements since they may be changing continuously.
The bottom line
When filing your business taxes, remember to use Shoeboxed to save you time and hustle!
Shoeboxed is a receipt management application that turns your receipts and business documents into a digital format in just one click by taking a picture straight from your smartphone or scanning a pdf. It automatically extracts, categorizes, and human-verifies important data from your receipts so that you can go over and check your records anytime with ease. Shoeboxed ensures you will always have your receipts securely stored and ready for tax purposes.Access your Shoeboxed account from your web browser or smartphone app. Stay audit-ready with Shoeboxed for FREE now!