by Blair Butters | Jan 12, 2021 | Uncategorized
We’ve reached the end of the year; the time of year where you’re working on closing out your books for the calendar year. You may have already started planning for the new year and have set goals for 2021, but before you do, it’s important to look back at 2020 and determine how you can best utilize 2020 deductions when reporting the activity in 2021. There has been a lot of change when it comes to tax requirements and guidelines, so in this month’s blog we break a few of these down, some related to business income and others related to personal income. Retroactive Bonus Depreciation for Business The federal coronavirus relief bill and the CARES Act were passed by Congress in order to help offset some of the financial burdens on individuals and businesses due to the current pandemic. With its passing, new opportunities for deductions have emerged. Thanks in large part to the CARES Act, a technical problem has been fixed that now allows a 100 percent bonus depreciation for qualified business improvements which are generally capital expenditures like remodeling the inside of buildings. It does not include improvements or remodeling for residential rentals or personal homes. It also does not include outside or structural remodels to your brick-and-mortar stores. However, the great news is that this is a retroactive fix, so businesses can fully deduct qualified improvements dating back to January 1st, 2018 by amending previously filed tax returns. Business Income Reduction If you are an accrual basis taxpayer, make sure that you accrue for 2020 expenses incurred prior to January 1, 2021. If you incurred...
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