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The new year has finally made its debut and we are excited to help you begin the year ready to work on your tax filings! This month we’re going to help you navigate those R&D tax credits, your meal and entertainment deductions and what to know about filing information returns.
1-Business Tax Credits for Research & Development
Even though it’s common to picture research and development as the quest that is done to uncover brand-new products or technologies, according to the Internal Revenue Service, their definition is actually broader. The IRS considers the Research and Development (R&D) Tax Credit to clarify that it is “qualified research”, technological in nature, and where the application is meant to help with the development of a new or improved business element.
According to IRS Code Section 41, research is qualified as the following:
- Activities that create a new or improved function
- Activities that improve performance
- Activities that improve reliability or quality
So if you work to improve your production processes for existing products, you qualify. This makes the R&D credit available to many more taxpayers because qualified research expenses include in-house research expenses (like wage supplies that are used during the research along with contract research expenses). Just be prepared to provide the supporting documentation to back up your calculations for the R&D tax credit. Full Article.
2-2022 Meal & Entertainment Deductions
The Consolidated Appropriations Act (CAA) temporarily changed the deductibility of meal and entertainment expenses when it comes to your business. The good news is, some food and beverage expenses made during 2022 are 100% deductible if they were spent at qualifying restaurants. The IRS defines restaurants as qualifying if they are businesses that make and serve food and drinks for immediate consumption, whether on or off the premises. These costs include the entire cost of the meal (or snack) along with any sales tax, delivery fees, and tips. This deduction applies through the Taxpayer Certainty and Disaster Tax Relief Act of 2020. This deduction applies to expenses paid or incurred, for food or beverages supplied by a restaurant, after December 31, 2020 and before January 1, 2023. Some exceptions apply to make certain meal expenses only 50% deductible. To learn what those are, and review a chart with allowable deductions, continue reading Article.
3-Requirements Necessary to File Information Returns
Whether you are an individual or a company, if you have a trade or business you need to make sure you report some kinds of payments on an Information Return, whether the payments were applied to an individual, partnership, or estate, for example.
Typically, payments for the following require that you file an Information Return:
- Services received by an individual who is not a company employee
- Payments to attorneys
- Rents
- Royalties
- Interest payments
You’ll want to file if the amounts paid reach the minimum amounts, or greater, see below. You’ll need to make sure that your Information Returns are postmarked by January 31, 2023, and also electronically filed with the IRS by March 31, 2023. You can get an automatic 30-day extension with IRS if you send in your completed Form 8809. You can review the 2022 General Instructions for Certain Information Returns on the IRS website. To read the full article, with examples of 1099 required reporting.
Corporate Capital
We hope you enjoyed this blog and that you are inspired and ready to file your tax return. At Corporate Capital team, you’ll find a one-stop shop for creating corporations and LLCs across the country. Based in Las Vegas, Nevada, we offer the following specialties:
- Assistance in building business credit and securing business loans.
- Bookkeeping and accounting services (in Las Vegas, Nevada).
- Guidance on how to effectively navigate the Nevada tax code.
- Payroll solutions for your growing organization.
- Personal and corporate tax preparation services.
- Trust writing and asset protection.
If you are wanting to learn more about how we can help you reach your business goals, give us a call to speak with one of our licensed professionals and legal experts. You can reach our business management team in Las Vegas, Nevada, at 855-371-0070. We look forward to helping you in 2023!