BIRMINGHAM, Ala. (WBRC) - Covid-19 made life harder for many people, especially small business owners. But there’s some good news for entrepreneurs preparing to file taxes this year.
Many entrepreneurs are in for new guidelines from the IRS. First if you’ve filed for the Payroll Protection Program and received any funds, be sure to have all of your documentation ready to go. You need to be able to prove how and where you used that money.
“If you got any PPE loan money, they need to have that. Any receipts, gas logs that they’ve driven around trying to get business,” says Candis Austin of Eagle Eye Tax Professionals. “If they’ve gotten any new expenditures as far as equipment.”
Austin says this is the year of the small business owner, but there are several tax benefits and write offs some owners may be unaware of.
“You have an opportunity. If you took 10 days vacation, you could equivalate that and figure out how much your pay is worth for those days,” says Austin. “You can write those off as expenditures on your tax files.”
Austin says the IRS saw the hit small business owners have taken and they’re being extremely helpful right now.
“It is imperative that we take all of the credits the IRS and the government have given us,” says Austin. Because I don’t know the next time we’ll be able to have these expenditures. So take it, use it, and make it work for you.”
Documentation is key. You will need provide evidence on everything you plan on filing.
“Get all documents and calculate everything,” says Austin. “Think about what they’ve done in 2020 & also get with their CPA to ensure you receive all benefits.”
For those that had to turn to unemployment last year, you are still required to file taxes.
“There’s a look back tax for 2020 which entails the unemployment compensation,” says Tawana Gurley of Eagle Eye Tax Professionals. “This is for the people that were unemployed this year. The IRS is going back to 2019 to tie in with your 2020 your adjusted gross income. "
Also, you will need to show proof you received stimulus payments and how much by using the 1444-A Form. This information is required from everyone when you file your taxes this year.