The Internal Revenue Service has reminded business owners that tax reform legislation passed last December affects nearly every business.
With just a couple of months left in the year, the IRS is highlighting important information for small businesses and self-employed individuals to help them understand and meet their tax obligations.
Here are several changes that could affect the bottom line of many small businesses:
Qualified Business Income Deduction
Many owners of sole proprietorships, partnerships, trusts and S corporations may deduct 20 percent of their qualified business income. The new deduction — referred to as the Section 199A deduction or the qualified business income deduction — is available for tax years beginning after Dec. 31, 2017. Eligible taxpayers can claim it for the first time on the 2018 federal income tax return they file next year.
A set of FAQs provides more information on the deduction, income and other limitations.
Temporary 100 percent expensing for certain business assets
Businesses are now able to write off most depreciable business assets in the year the business places them in service. The 100-percent depreciation deduction generally applies to depreciable business assets with a recovery period of 20 years or less and certain other property. Machinery, equipment, computers, appliances and furniture generally qualify.
Taxpayers can find more information in the proposed regulations.
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