The end of the year is a time of celebration, a time to relax and get together with loved ones. For many business owners, however, the end of the year heralds a decidedly not relaxing time: the beginning of the next tax season.
If your business’s fiscal year lines up with the calendar year (that is, if your fourth quarter ends on December 31st), now is the time to start getting your taxes in order. The earlier you start, the lower your chances of making a mistake on your forms or incurring late filing penalties.
Moreover, your business may need extra time to adapt to recent updates in the tax code. While we could spend days discussing all the changes, we’ve decided to give you just the highlights we think you’ll be most interested in.
2019 Tax Code Updates for Businesses
- 100% deduction for Asset Additions: The PATH Act of 2015 made permanent expensing purchases—like equipment or software—fully deductible in the first year. The deduction was increased to $1,050,000 on purchases of less than $2,550,000 when used in the same tax year and more than 50% of the time. The Tax Cuts and Jobs Act of 2017 allow for 100% first-year bonus depreciation on qualifying new and used purchases made between September 2017 and January 1, 2023, and placed into service during the year. This deduction now includes “Used” property if the property meets certain requirements (i.e. the taxpayer did not acquire the property from a related party, the taxpayer did not use the asset prior to acquisitions, etc.)
- R&D Tax Credit: Take advantage of recent revisions to the R&D Tax Credit to offset your payroll taxes. Indiana offers two tax incentives encouraging investments in R&D: credit against state income tax and a refund of sales tax paid.
- Social Security: The Social Security annual wage base will increase to $132,900, while the Social Security rate for employers is 6.2% up to the wage base and the Medicare tax rate is 1.45% on all pay.
- Pass-through Deduction: Owners of Partnerships, S-Corporations, Sole Proprietorships, and other pass-through entities can deduct up to 20% of their qualified business income, subject to limitations for individuals with taxable incomes in excess of $160,700 and $321,400 for married couples.
In short, there are numerous reasons to think about your taxes now and to start preparing even earlier than usual.
Fortunately, we have the perfect tax planning resource for you. Our friends at inDinero have put together a comprehensive guide about the 2019 tax season.
The guide includes…
- 2020 tax deadlines for filing 2019 business returns;
- what forms and actions various business entities need to file and take by their deadlines;
- considerations for companies that have started, ended, or converted to another business format in 2019;
- information about extending filing deadlines;
- and much more.
Still working on your 2018 return? Check out inDinero’s 2019 Business Tax Season Tax Guide here. Questions about your 2019 tax strategy? Schedule some time with us today to learn more about how an outsourced CFO can help.