2022 Year End Income Tax Planning for Your Business

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2022 Year End Income Tax Planning for Your Business

Before the end of the tax year, you may consider the following actions as a means of reducing your exposure to income taxes in the current year. Not all will apply to you, but many may.  Please contact us to discuss the potential benefit and your eligibility before taking action.

  • Consider elections to pay entity level taxes before year-end to claim a current year deduction against federal taxable income while avoiding deductible limitations on taxes that apply to individuals.
  • Accelerate or defer income or deductions into a tax year where taxable income may be lower and/or more beneficial.
  • Consider accelerating depreciation deductions for planned capital investments in the coming year.
  • Maximize your contributions to retirement plans and consider year-end accruals for any contributions deductible in 2022 but payable next year.
  • A change in accounting method may result in currently deductible adjustments as well as retroactive application for the entire tax year.
  • Consider the opportunity to apply current or previously suspended passive, basis, or net operating losses to offset current year income.
  • Assess income from pass-through entities (S corporation or partnership), sole proprietors, and some rental properties that may qualify for a 20% deduction of your business
  • Consider eligibility for employment and/or income tax credits resulting from paid family or medical leave, hiring of disadvantaged workers, or other employee retention programs.
  • Review and remain eligible for preferential small business status to avoid limitations on deductible interest, losses, or required change in your accounting method from cash to accrual.

Visit our website for additional details of the above noted items in addition to other potential year-end planning opportunities. Ensure you reach out to your tax adviser to answer any questions in detail as you should examine any tax planning options thoroughly before initiating action.