The ‘Dear Abby’ of the tax world, Eva Rosenberg explains how to increase your deductions, reduce what you owe and boost profits for your business.
Doing your business tax returns generally involves a
certain amount of complexity. This year, it’s even more complex with all the
new tax laws that have been passed, extended or amended since the PATH Act of
2015 – all the way to the Further Consolidated Appropriations Act of 2019
(which includes both the Setting Every Community Up for Retirement Enhancement
Act (SECURE Act); and the Taxpayer Certainty and Disaster Tax Relief Act
These days, we have so many new and twisted issues and elections we may need to make on our business returns, that it may be a better idea to put those tax returns on extension. You will want to buy time to figure out all the things that apply to your particular business or industry.
After all, if an election has to be made (depreciation, accounting method, various credits, various deductions, whatever), the election must be made on a timely filed tax return. Sure, some elections allow you to amend within 6 months of filing. But, usually by the time you realize you missed the election, it’s too late to meet that deadline.
What are some things you need more time to figure out?
- Do you qualify for the Sec 199A 20% Qualified Business Income Deduction (QBI)
- Are you an SSTB – Specified Service Trade or Business?
only a part of the business an SSTB, while another part is not?
- Yes, you may split up a business into two parts for the QBI
about a pharmacist who owns his pharmacy.
- His work is a medical service = SSTB
- His sales of all the other non-prescription products are not SSTB sales and don’t qualify for the limitation.
you subject to the interest expense deduction limitations and the GILTI taxes?
- Generally, businesses who meet the small business definition don’t need to worry about it (or so I thought)
- But, taxpayers who have investments in pass-through entities (partnerships, S corporations, LLCs) that do are subject to the interest income limitation may be affected
depreciation method is the correct one for each of the different classes of
assets that your business purchased?
- Section 179
- Bonus depreciation (requires electing out if not using 100% bonus depreciation)
- ADR, GDS, MACRS
- Luxury vehicle limits – vs mileage (which includes depreciation
you still set up a retirement plan for last year?
- The SECURE Act has some new provisions – do they affect 2019, or start in 2020
you amend your 2018 tax return before filing for 2019?
- Both the Setting Every Community Up for Retirement Enhancement Act (SECURE Act); and the Taxpayer Certainty and Disaster Tax Relief Act (TCDTRA) have provisions retroactive to 2018
These are just some of the issues to consider that you need to think about before filing.
Putting your business on extension will give you time to think through the law changes that affect them. What forms do you use?
- Form 4868 is due by April 15th for your personal Form 1040 and LLCs that are reported as part of your Form 1040 (on Schedules C, E, F)
- Form 7004 for all your
other entity returns (partnerships, corporations, gift taxes)
- It is due by March 15th for partnerships and S corporations
- It is due by April 15th for C corporations (1120) and gift tax returns (706) and estate and trust returns (1041)
The latest edition of my book, Small Business Taxes Made Easy contains complete updates about the business considerations, from the PATH Act of 2015, up to and including the Setting Every Community Up for Retirement Enhancement Act (SECURE Act); and the Taxpayer Certainty and Disaster Tax Relief Act (TCDTRA). The new book will be available by April 1st (maybe sooner).
Even better news! Starting in May, I will be teaching a 12-part series of courses at CCH CPELink,  based on the first 12 chapters of the book. Please join me – and invite your clients.
They will understand why they need to consult you to rebalance their tax and business plan each year.
 They will be adding it to the schedule this month – I JUST sent them the course descriptions this morning. Here is the link to the series: https://www.cchcpelink.com/product/detail/?p=18138&s=85iz6kg