2022 Tax Season: The Deductions You Should Get to Now

Business taxes are obviously something you shouldn't take lightly. So, it's best to make your preparations for the 2022 tax season while you still have the time. Otherwise, you could miss out on essential considerations that will affect your taxation.

You should also note that there are certain deductions and credits that are likely expiring or already expired. Make sure you check up on your deal with these before you have to file your taxes. It's better to do this now so that you don't end up having issues with the IRS later on.

Section 179

For a very long time, businesses were able to deduct the purchase price of equipment they used to produce products and services. This deduction is called Section 179.

Congress has been very generous with this deduction for businesses for the longest time, especially in the face of the global pandemic. However, those times are coming to an end. 2022 is the last year you can take total deductions for this, so you should make use of them before the year ends.

Charitable Contributions

Individuals can get up to one hundred percent of their adjusted gross income deducted if they can itemize all of their charitable contributions. Corporations, on the other hand, can claim up to twenty-five percent of their taxable income. This does, however, apply only to cash contributions. So, corp tax returns will require the itemization of cash donations to avail this deduction for the applicable year.

Food Donations

Donations made for food inventories of non-profit organizations and government efforts are entitled to a deduction of up to twenty-five percent of the entire company's taxable income. As federal incentivization continues, this limit may see another shift in the coming year. So, it's best to start pinning this down right away.

Paycheck Protection Program Loans

The Paycheck Protection Program (PPP) was established because of the devastation caused by COVID-19. With it, you could deduct expenses paid for with the loans provided by the program. That said, this program ended on May 31, 2021.

If you can still confirm expenses related to PPP loans during their active period, it will still be tax-deductible.

COVID-19 Leaves

This refers to any paid leaves you spent for COVID-19 vaccinations and recovery. However, this only counts for leaves until September 30, 2021. So, you'll need to double-check if any of these expenses are still fileable in 2022.

While these tax credits are no longer applicable in the next tax season, you will still see 2021 costs affecting your tax bill.

Research and Development Costs

If you are expecting to get tax deductions on your research and experimental expenditures, you should note that this is no longer applicable in 2022 and beyond. The section of the Tax Cuts and Jobs Act that covers this has already expired, and there is currently no amendment noting that you can still pursue this.

Conclusion

There are many considerations you need to keep in mind when you are filing for taxes. If you fail to do so, you could end up getting hit with a huge tax bill. What's worse is that you might not even be aware that you had issues with your tax return until it's too late. If you want to avoid all of that, then it's best if you start preparing now.

Tottax helps optimize taxes for small businesses and their owners. Connect with us for personalized bookkeeping services in Denver.