Are you up to date on the most recent tax and accounting rulings that may affect your business? As regulations and guidelines are constantly changing, staying on top of recent updates can help inform your business strategy as you plan for the future. Here are some recent tax and accounting amendments and important reminders to keep in mind as you navigate the remainder of the tax year.
Employee Retention Credit claims
If you haven’t yet filed an ERC claim, you still have time to do so. The refundable tax credit, created to help businesses impacted by COVID-19, can be claimed on qualified wages until April 15, 2024, for all quarters in 2020 and April 15, 2025, for all quarters in 2021. Businesses that experienced a full or partial suspension of operations or a significant decline in gross receipts as a result of the pandemic may be eligible to receive the credit. See here for more information.
Work Opportunity Tax Credit update
The IRS announced updated guidance for the Work Opportunity Tax Credit, requiring employers to submit a pre-screening and certification request document to their state workforce agency to be considered for the credit. The program, which has been extended to December 31, 2025, is intended to incentivize employers to hire certain targeted groups who have faced significant barriers to employment for long-term job roles. Employers must first fill out and submit Form 8850 to their local state workforce agency to be approved for the credit. Filing instructions differ from state to state, so please see further filing instructions here and more information about your state’s workforce agency here.
Bonus depreciation phase-out
100 percent bonus depreciation expired at the end of 2022 and will decrease over time until it’s phased out completely by 2027. Bonus depreciation, designed to give business owners the option to deduct a larger percentage of qualified assets from their taxes in the first year of use rather than spread out over the lifetime of the asset, will be reduced to 80 percent in 2023, 60 percent in 2024, 40 percent in 2025, 20 percent in 2026 and will be completely phased out by 2027. If you choose to take advantage of the program, you should plan and invest your capital and business improvement projects before the end of the year. See more information here.
EIDL loan repayments beginning
The U.S. Small Business Administration is reminding borrowers that the COVID-19 Economic Injury Disaster Loan deferment period ends 30 months after the date of disbursement. If you received an EIDL loan, you must take the necessary steps to begin loan repayment or enroll in an alternative repayment plan when your deferment period comes to a close. Set up your SBA Capital Access Financial System account here or find more information about making a payment to SBA here.
Excess business loss limitation extended
Under the Inflation Reduction Act, Sec 461(I) of the IRC was extended for two more years. Noncorporate taxpayers’ business losses will continue to be limited to $262,000 for single taxpayers and $524,000 for joint filers until 2028. Click here for more information about excess business losses.
QuickBooks Desktop 2020 service discontinued
Certain aspects of QuickBooks Desktop 2020 for Windows have been discontinued, including critical security updates and technical support. As Inuit continues to move away from QuickBooks Desktop, many business owners have been choosing to switch to QuickBooks Online for their accounting system due to its affordability, enhanced features, cloud solutions and file-sharing options. For more information about QuickBooks Online, please see here.
While this isn't a comprehensive list of all tax and accounting updates from the past year, it can serve as a reminder of upcoming responsibilities to plan for and opportunities to consider. Speak with your tax and accounting professional to see how you can avoid pitfalls and incorporate any potential benefits listed above into your financial planning.
Dominic Rovano, CPA, is a Co-Partner in Charge of Janover LLC's New York City office. He leads the Professional Services group, and helps its clients satisfy their financial-reporting requirements successfully by providing assurance, tax and other advisory services.