Tax filing season is upon is, and if you are one of the million small business owners in America, then you have special considerations to think about when you file your taxes.
Are you among the millions of Americans who started your own business this year? According to the SBA, this year has seen a record amount of small business openings.
While being a business owner can be a great way to make money and ensure financial success, there are special tax considerations you must be aware of.
2022 Tax Season
As the public starts to file their 2022 taxes, Keith Hall, the president and CEO of the National Association for the Self-Employed (NASE), the nation’s leading advocate and resource for the self-employed and micro-businesses, encourages all Americans to “prepare early, gather documents, and review updates and reminders to this year’s tax system.”
“The number one thing every American can do right now, regardless of how you file, is to prepare early,” said Keith Hall, president, and CEO of the National Association for the Self-Employed (NASE), the nation’s leading advocate and resource for the self-employed and micro-businesses.
“With the record-breaking surge in new small business applications, many American taxpayers are filing for the first time as self-employed entrepreneurs. There are documents that need to gathered, tax code updates to be reviewed, and additional tax obligations, responsibilities, and deductions to be aware of before filing.”
“Under the tax system, an overwhelming majority of small businesses and self-employed entrepreneurs can expect to benefit from key changes and updates to the tax code that will help save both time and money. In fact, you should file as soon as possible to receive any expected refunds in a timely manner and to avoid delays. Don’t wait until the last minute and remember; it’s never too early to prepare.”
Key 2022 Tax Filing Updates & Reminders
- The tax filing deadline is Tuesday, April 18th, 2023
- Under the tax system:
- A lower individual rate, which is where most self-employed small businesses file.
- An increase in the standard deduction is $12,950 for single filers and $25,900 for married couples.
- Reduction or elimination of specific deductions, such as for moving expenses or the unlimited state and local tax deductions, are known as SALT deductions, which are now capped at $10,000.
- A streamlined, standard home office deduction is available.
- The standard mileage rate for business use of an automobile is 58.5 cents per mile through 6/31 for 2022 tax returns, up from 56 cents last year and 62.5 cents from 7/1 through the end of 2022. (The rate for the 2023 tax year has been set at 65.5 cents per mile.)
- Limits for retirement plan contributions such as SEPs, IRAs, and 401(k) plans may have changed for your situation.
“Don’t overlook hidden deductions,” continued Hall. “Take the time to ensure you are filing the most beneficial return possible. From itemizing your deductions to a more streamlined home office deduction and claiming the use of your car for work purposes and the impact of retirement contributions, these options can impact your returns. Our tax system allows for many benefits for those in the small business community.”
Tax Filing Tips
- Gather Your Documents Early – don’t wait until the last minute; now is the time to start making sure you have all your important tax filing documents.
- You’re Not Alone – stay connected; there are resources out there to help you, from NASE.org, IRS.gov, and SBA.gov and tax professionals.
- Educate Yourself About Changes to the Tax Code – believe it or not, there are changes and adjustments to the tax code year-to-year; make sure you find out what they are so you are prepared and can take advantage of them.
- Don’t Forget About Hidden or Overlooked Deductions – don’t leave anything on the table; make sure you are not missing any deductions that apply to you that can make the difference, such as mileage reimbursement, retirement contributions, and the home office deduction.
“Remember, you are not alone, and there are resources out there for help, including NASE.org, IRS.gov, and SBA.gov, where information and assistance is readily available,” concluded Hall.