Small Businesses – What To Know For 2023
It’s never too early to start your tax planning, and the IRS recently announced several new and existing tax benefits that businesses can take advantage of in 2023, as well as some reporting changes that are coming this year.
Cutting Energy Costs
The Inflation Reduction Act of 2022 contained provisions that can help small businesses save money on their energy costs, including:
- A tax credit covering 30% of the cost of switching to low-cost solar power
- A tax credit up to $5 per square foot to support energy-efficient improvements that lower utility bills
- Tax credits of up to 30% for purchase costs on clean commercial vehicles, such as electric and fuel cell models meeting applicable requirements, through the Clean Commercial Vehicle Credit (no limit on the number of credits that can be claimed)
Employee Retention Credit
Eligible businesses that did not apply for the Employee Retention Credit (ERC) in 2020 and 2021 can still claim it by filing amended federal payroll tax returns, although the IRS urges businesses to be wary of the many ERC scams out there.
Educational assistance programs to pay for student loans
Businesses that offer educational assistance programs can utilize them to help their employees pay student loan obligations. While traditionally these programs helped employees pay for tuition, books, and other educational supplies, they can now be used to pay principal and interest amounts on qualified loans, either directly to the lender or to the employee themselves. This option has been available for payments made after March 27, 2020, and will be offered until December 31, 2025, under current law. Tax-free benefits are limited to $5,250 per employee.
1099-Ks
Starting this year, businesses and other taxpayers who receive more than $600 from third-party settlement organizations (including payment apps) may receive Form 1099-K. The reporting threshold is much lower than previous years, which will lead to more people receiving the forms, although there are no changes to what counts as income or how the tax is calculated. Form 1099-K reports various business transactions, such as income from self-employment, gig economy activities, and the sale of personal items and assets.
Contact Us
If you have questions about the information outlined above or need assistance with a tax or accounting issue, Klatzkin can help. For additional information call 609-890-9189 or click here to contact us. We look forward to speaking with you soon.
©2023 Klatzkin & Company LLP. The above represents our best understanding and interpretation of the material covered as of this post’s date and should not be construed as accounting, tax, or financial advice. Please consult your tax advisor concerning your specific situation.