Returning Value Blog

The week of September 13-17 has been declared National Small Business Week by the Small Business Administration. To commemorate the week, here are three tax breaks to consider.

Since late 2017, taxpayers have been implementing the congeries of changes wrought by the most significant revisions to the Internal Revenue Code (IRC) in a generation, the Tax Cuts and Jobs Act (TCJA). The interpretation and implementation of certain provisions of the TCJA are ongoing, as the Treasury and IRS continue to draft and finalize much-needed guidance.

There’s a harsh tax penalty that you could be at risk for paying personally if you own or manage a business with employees. It’s called the “Trust Fund Recovery Penalty,” and it applies to the Social Security and income taxes required to be withheld by a business from its employees’ wages.

If you’re a business owner and you hire your children this summer, you can obtain tax breaks and other nontax benefits. The kids can gain on-the-job experience, spend time with you, save for college and learn how to manage money. And you may be able to:

Strategic investments — such as expanding a plant, purchasing a major piece of equipment, or introducing a new product line — can add long-term value. But management shouldn’t base these decisions on gut instinct. A comprehensive, formal analysis can help minimize the guesswork and maximize your return on investment.

Are you wondering whether alternative energy technologies can help you manage energy costs in your business? If so, there’s a valuable federal income tax benefit (the business energy credit) that applies to the acquisition of many types of alternative energy property.

The tax policy changes proposed by the Biden administration would roll back many of the tax benefits provided by the Tax Cuts and Jobs Act (TCJA) enacted at the end of 2017. The most significant proposals include increasing the federal corporate income tax rate to 28% from 21%, raising the top personal income tax rate from 37% back to the pre-TCJA rate of 39.6%, reducing the estate tax exemption threshold, thus bringing more estates within the scope of the federal estate tax, and almost doubling the capital gains tax rates on individuals earning $1 million annually, from 20% to 39.6%. The Biden administration is also considering a phase-out of the Qualified Business Income (QBI) deduction applicable to both pass-through entities and real estate investment trusts for those deriving income that exceeds a certain threshold ($400,000)—the QBI deduction currently allows eligible taxpayers to deduct up to 20% of pass-through income.

Breakeven analysis can be useful when investing in new equipment, launching a new product, or analyzing a cost reduction plan's effects. During the COVID-19 pandemic, however, many struggling companies are using it to evaluate how much longer they can afford to keep their doors open.

In late December, Congress passed the Consolidated Appropriations Act, which provided COVID-19 relief provisions and included many tax provisions and extenders. The Act contained many COVID-related tax provisions and a slew of extenders ranging from one year to permanent. This article will focus on the miscellaneous tax and disaster relief provisions, which are more applicable to most taxpayers.

The COVID-19 relief bill, signed into law on December 27, 2020, provides a further response from the federal government to the pandemic. It also contains numerous tax breaks for businesses. Here are some highlights of the Consolidated Appropriations Act of 2021 (CAA), which also includes other laws within it.