2022 IRS Updates: Small Business Deductions You Don’t Want to Miss!
As we gear up for 2022, small business owners should be aware of the new tax changes that could affect their business. The IRS has updated several key deductions and expenses to help small businesses reduce their tax liability. In this article, we’ll take a close look at the 2022 IRS updates and highlight some essential deductions you don’t want to miss.
1. Qualified Business Income Deduction (QBID)
The Qualified Business Income Deduction (QBID) is a new deduction introduced in 2018 that allows small business owners to deduct 20% of their qualified business income on their personal tax returns. Starting in 2022, the QBID will be limited to $500,000 for single taxpayers and $1 million for married couples filing jointly. This is a significant increase from the 2021 limit of $400,000 for single taxpayers and $600,000 for married couples.
2. Health Insurance Deduction
Small business owners who pay for their health insurance premiums can now deduct the entire cost on their personal tax returns. This deduction applies to all self-employed individuals, including sole proprietors, partners in partnerships, and S Corporation shareholders.
3. COVID-19-Related Expenses
The IRS has updated the definition of deductible business expenses to include COVID-19-related expenses. This means that small businesses can now deduct expenses related to personal protective equipment (PPE), cleaning and disinfecting supplies, and other COVID-19 related expenses incurred to keep their business operational.
4. Office Expenses
Small businesses can also deduct office expenses for their home office, including rent, utilities, and insurance. This deduction applies to all types of home offices, including those that are part of rental properties or owned by the business owner.
5. Depreciation
The IRS has updated the depreciation rules for small businesses by allowing them to fully expense their business assets in the year of purchase. This means that small business owners can deduct the full cost of qualifying assets in the year they are placed in service.
Conclusion
The 2022 updates to the IRS tax code offer several new deductions and updates to help small businesses reduce their tax liability. By taking advantage of these deductions, small business owners can save money on their taxes and continue to grow their business. Remember to speak with a tax professional to ensure that you’re taking advantage of all the deductions available to you.
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