Returning Value Blog

The Treasury Department, on April 26, 2022, released proposed regulations limiting the anti-clawback rule previously published on November 26, 2019. The proposed regulations – REG-118913-21 – address certain situations in which an estate could be taxed on gifts made by a donor after 2017 and before a reduction in the basic exclusion amount (BEA), wherein the gifts were free of gift tax when made.

The end of any tax year is a natural time to consider tax planning ideas for the year ahead — and beyond. What tax-related changes should you be aware of this year? We expect to see adjustments to tax brackets and other minor changes to the tax code. But the prospects for more impactful developments in the tax environment are still unclear.

As the 2021 tax filing season progresses, small businesses and self-employed taxpayers should make certain they are taking advantage of all of the tax deductions and opportunities available to them on their 2021 federal income tax returns. Tax savings increases after-tax cash flow and can mean greater return on investment and more money to fund expansion and the overall growth of the business. The following are 10 top tax breaks for small businesses and business owners to keep in mind when finalizing their tax returns for 2021 and planning for 2022.

Here are some facts you should know.

In today’s economy, many small businesses are strapped for cash. They may find it beneficial to barter or trade for goods and services instead of paying cash for them. Bartering is the oldest form of trade, and the internet has made it easier to engage with other businesses. But if your business gets involved in bartering, be aware that the fair market value of goods that you receive in bartering is taxable income. And if you exchange services with another business, the transaction results in taxable income for both parties.

The regulations on nonprofit auditing vary from state to state. There are federal laws that mandate audits for certain nonprofits too. First and foremost, you should educate yourself on the laws in your state and investigate whether you are legally required to undergo an audit. For example, the federal government requires that any nonprofit receiving above a certain amount in federal funding undergo a yearly audit. But again, there are still state regulations you have to adhere to even if the federal law doesn't apply to you. So, what does an audit actually entail?

2021 was undoubtedly a challenging year. Between drops in funding, canceled events and programs, the onset of the “Great Resignation” and other hurdles, nonprofit organizations had to reimagine operations and prioritize financial health to sustain mission-driven work. Now, they’re faced with a pivotal moment to turn crisis into opportunity. Despite COVID-19’s toll on health and the economy, disruption drove positive change for many organizations and, according to BDO’s Nonprofit Standards Benchmarking Survey, organizations plan to carry this momentum into the new year.

As we approach year-end, now is the time for individuals, business owners, and family offices to review their 2021 and 2022 tax situations and identify opportunities for reducing, deferring, or accelerating tax obligations. Areas potentially impacted by proposed tax legislation still in play should be reviewed, as well as applicable opportunities and relief granted under legislation enacted during the past year.

Don’t let the holiday rush keep you from considering some important steps to reduce your 2021 tax liability. You still have time to execute a few strategies.

With the increasing cost of employee health care benefits, your business may be interested in providing some of these benefits through an employer-sponsored Health Savings Account (HSA). For eligible individuals, an HSA offers a tax-advantaged way to set aside funds (or have their employers do so) to meet future medical needs. Here are the important tax benefits:

If your business is depreciating over a 30-year period the entire cost of constructing the building that houses your operation, you should consider a cost segregation study. It might allow you to accelerate depreciation deductions on certain items, thereby reducing taxes and boosting cash flow. And under current law, the potential benefits of a cost segregation study are now even greater than they were a few years ago due to enhancements to certain depreciation-related tax breaks.