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<\/figure>\n<\/div>\n\n\nLuckily, Block Advisors can help. In this post, we\u2019ll guide you through the must-know tax law changes in 2022 (for 2021 tax returns), so you can file your business taxes with accuracy and confidence. Plus, we\u2019ve included two important callouts for your individual taxes.<\/p>\n\n\n\n
How does new tax law affect small business?<\/h3>\n\n\n\n
But first, let\u2019s answer, \u201chow does new tax law affect a small business?\u201d In general, tax law changes can affect self-employed tax deductions<\/a>, credits, due dates, forms required, and more. It can be to your advantage to stay up to date on business tax changes to maximize your tax savings and ensure you\u2019ve filed an accurate business tax return. <\/p>\n\n\n\n Want help?<\/strong> Lean on Block Advisors tax experts to take care of your small business tax preparation<\/a> for you.<\/p>\n\n\n\n If you\u2019re questioning, \u201cwhat are the proposed tax changes for small businesses?\u201d We\u2019ve got the answers. We\u2019ll outline the major tax law changes for 2022 and how it could impact your filing. Review each of the topics below or skim ahead to the 2022 tax reforms that apply to you.<\/p>\n\n\n\n If you took a Paycheck Protection Program loan in 2021, you do not need to include the loan proceeds as income on your tax return even if the loan was forgiven. You can, however, deduct qualifying expenses paid with money received from a forgiven PPP loan.<\/p>\n\n\n\n Have a partnership or S Corporation? You will pass the tax-exempt treatment of the income along to your partners and shareholders. Additionally, the tax basis of partnership and S Corporation shareholders will not be reduced due to the exclusion of these amounts from gross income.<\/p>\n\n\n\n Note: While it\u2019s excluded from your gross business income, your paycheck protection loan<\/a> should be included in your gross receipts in certain cases, which include the gross receipts test for small business taxpayers that is used for many things such as to see if you\u2019re eligible to use the cash method<\/a> of accounting, or are a tax-exempt organization.<\/p>\n\n\n\n Tax rules for EIDL Advances are similar to that of the PPP. For example, if you received an Economic Injury Disaster Loan<\/a> in 2021, you won\u2019t need to include the loan proceeds as income on your tax return. Also, if you received an EIDL advance or targeted EIDL advance you can exclude the amount from income even if the amount was forgiven. Additionally, you could deduct qualifying expenses if you used money from an EIDL that was forgiven. <\/p>\n\n\n\n If you have a partnership of S Corporation, you\u2019ll pass the tax-exempt treatment of the EIDL advance to your partners and shareholders. The tax basis for partnership and S Corporation shareholders will not be reduced as a result of the EIDL advance amounts being excluded from gross income.<\/p>\n\n\n\n This tax law change offers a business deduction almost any business could use! To boost patronage to restaurants in 2021 and 2022, Congress increased the business meal deduction to 100% (from 50% in previous tax years). The deduction applies to dine-in, catered, and take-out business meals. A 50% limit still applies for food and beverage not from restaurants.<\/p>\n\n\n\n The good news about this small business tax law change is that you didn\u2019t need to plan for it in advance! As long as you have your 2021 receipts, you can include deductions from qualifying meals on this years\u2019 taxes.<\/p>\n\n\n\n Keep in mind:<\/p>\n\n\n\n Remember: If your small business hosts a meal in 2022, keep your receipts so you can claim a small business tax deduction<\/a> next year.<\/p>\n\n\n\n Form 7202 is used by self-employed people to figure the amount to claim for qualified sick and family leave equivalent credits under the Families First Coronavirus Response Act. For 2021, self-employed individuals that have taken leave and wish to take advantage of these tax credits should claim them by filing Form 7202, but keep in mind these credits expired during 2021 and will not be available for 2022 returns.<\/p>\n\n\n\n The good news is that even though the qualified sick and family leave credits expired there will still be a general business credit available to employers with a written policy in place that provides paid family and medical leave and satisfies minimum pay requirements. Note that this credit will be claimed using Form 8994 and that it will be available to all qualified employers, not just the self-employed. <\/p>\n\n\n\n Have a loan for your business? You may be able to deduct a portion of the interest from your tax bill. But exactly how much you can deduct is what\u2019s changed.<\/p>\n\n\n\n Note this deduction limit only applies to certain businesses with gross receipts exceeding $26 million (for 2021).<\/p>\n\n\n\n Noncorporate taxpayers: Did you know there\u2019s a cap to the amount of business losses you can deduct? For 2021 taxes, a business loss that is more than $262,000 (unmarried) or $524,000 (married) is no longer allowed.<\/p>\n\n\n\n If you have more losses than the cap allows, you may be able to carry the loss forward as a Net Operating Loss. See the next section.<\/p>\n\n\n\n Read more about business losses<\/a>. <\/p>\n\n\n\n Did your business losses outweigh your business income (from all sources)? If yes, you may have a Net Operating Loss (NOL).<\/p>\n\n\n\n What\u2019s tricky with NOLs is that rules have changed more than once in recent years. Knowing what tax changes apply to your 2021 small business return can be confusing.<\/p>\n\n\n\n Two tax law changes for 2021 are important if your small business has a net operating loss:<\/p>\n\n\n\n Do you work with a third-party service to process payments? You\u2019ll want to understand how this change affects you now\u2014and when you file next year.<\/p>\n\n\n\n Why tell you about next year\u2019s taxes now? Simply stated, you\u2019ll want to stay ahead of your tax liability as the year progresses to avoid penalties when you file next year. To do so, you should consider making or adjusting estimated tax payments<\/a> each quarter in 2022. <\/p>\n\n\n\n Need help figuring out how much to pay? Consider adding our Quarterly Tax Payment Service<\/a> to your tax prep.<\/p>\n\n\n\n Are you considering purchasing equipment for your company in the coming this year or next? You\u2019ll want to understand the tax implications around deducting qualifying property.\u00a0<\/p>\n\n\n\n A tax benefit called bonus depreciation allows your business to take an immediate first-year deduction on the purchase of eligible business property, in addition to the asset\u2019s regular depreciation schedule. Curious about what qualifies for bonus depreciation<\/a>? Read on for deducting business costs and more.<\/p>\n\n\n\n The Tax Cut and Jobs Act (TCJA) includes a provision for bonus depreciation that allows a deduction for 100% of the purchase price of qualifying property. After tax year 2022, the bonus depreciation rate will be reduced annually:<\/p>\n\n\n\n The Child Tax Credit was expanded in 2021 to provide more money for more families. With the change, up to half of the credit was paid as advance payments throughout 2021, while the other part can be claimed when you file your 2021 tax return, in 2022.<\/p>\n\n\n\n This is the first time the IRS sent advance payments for the Child Tax Credit, so you can expect some changes in how you file. You\u2019ll need to report the advance amount on your 2021 returns in order to claim the remainder of your credit.<\/p>\n\n\n\n To make sure your individual return is accurate and to avoid delays, you\u2019ll want to keep an eye out for Letter 6419. The IRS will send this document to you in January to record your advance payment amount.<\/p>\n\n\n\n If you opted out or didn\u2019t receive the advance, you\u2019ll be able to claim the credit due to you when you file your 2021 return.<\/p>\n\n\n\n Did you receive a stimulus payment in 2021? The process for reporting stimulus payments is different than it was for the first two stimulus payments. What\u2019s new this year is the IRS will send Letter 6475 in January. This document will show the amount you received for 2021.<\/p>\n\n\n\n To avoid lengthy tax refund delays, you\u2019ll want to use the amounts shown on your Letter 6475 to accurately report your payment.<\/p>\n\n\n\n If you qualify and didn\u2019t get the full amount, you can claim a Recovery Rebate Credit to get the money you deserve.<\/p>\n\n\n\n Taxes can be complicated, especially when you\u2019re a small business owner or self-employed. Luckily, we\u2019re ready to help you with all of your small business tax<\/a> questions and make your tax filing easy.<\/p>\n\n\n\n9 Must-know tax law changes for 2021 returns as a small business owner<\/h2>\n\n\n\n
1 – PPP tax reporting<\/h3>\n\n\n\n
2 – Economic Injury Disaster Loan (EIDL) Advance loan reporting<\/h3>\n\n\n\n
3 – A tax law change for 2021-2022: Business meals are 100% deductible<\/h3>\n\n\n\n
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4 – Sick leave reporting changes for the self-employed<\/h3>\n\n\n\n
5 – Business interest expense rate returns to previous levels<\/h3>\n\n\n\n
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6 – Excess business loss limitation will begin again in 2021<\/h3>\n\n\n\n
7 – Net Operating Losses rules differ from last year<\/h3>\n\n\n\n
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8 – Looking ahead: Electronic payment tax law changes for 1099-Ks reporting<\/h3>\n\n\n\n
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9 \u2013 Looking forward: Bonus depreciation declines after 2022 <\/h3>\n\n\n\n
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Tax law changes in 2022 for individual filers<\/h2>\n\n\n\n
1 – Child Tax Credit<\/h3>\n\n\n\n
2 – Stimulus payments and Recovery Rebate Credits<\/h3>\n\n\n\n
Get help with tax law changes in 2022 <\/h2>\n\n\n\n