his year sure has been a doozy! Many businesses have had to make huge adjustments to adapt to the challenges, and that is going to ring true for your year-end tax planning strategies, as well. Many of the standard tax tips still apply, but there are a few unique ones created by the Tax Cuts and Job Act (TCJA) and the CARES Act. Here are a few standard and not-so-standard tax tips for businesses as we see 2020 come to an end.
- AMT- The TCJA repealed AMT and gave corporations the chance to claim AMT credits that had gone unused. The CARES Act accelerated the timeline from the previous 2018, 2019, 2020, and 2021 tax year allowances, so you may be able to accelerate your AMT refund.
- Loss carryback- Many companies are seeing losses this year. If your business is one of them, the CARES Act allows you to use your current loss against past income so you can obtain an immediate refund. You can carry back your loss against the past five years.
- Payroll taxes- The CARES Act allowed for deferment of an employer’s share of social security taxes. This gives you more liquidity now when you might need it as you have until the end of 2021 to pay half of it and until the end of 2022 to pay the remaining half. This may or may not be worthwhile to your business, so you should speak with your accountant before taking this deferment.
- Expense planning- A review of your financials this month is critical for knowing whether you need more deductions this year or if you should hold off on certain expenses until next month.
- Income planning- It might be prudent to postpone some invoices, if you can, if you want to minimize your tax liability for 2020. Again, this will require a review of your financials so that you can make the right decision for your business.
At Balanced Bookkeeping of NC, we offer quarterly reviews that can help you better understand your company’s financial position, so you can make sound business decisions. If you are set up with online accounting, we can help you be sure your financial data is accurate and then show you how to pull reports for your CPA so they can help you with year-end tax planning. Reach out today to learn more about how we can help your Mebane, North Carolina area business.
