2022 Mid-Year Tax Planning Checklist for Business Owners
by Tony Lam
August 01, 2022

Now that we have passed the mid-year point of 2022, it’s a perfect time to review your personal and privately held business transactions. This checklist lays out nine key strategies business owners can leverage that may help with tax planning for this year and into 2023.

  1. Businesses may claim a 100% federal bonus depreciation expense for 2022 on certain fixed assets such as personal properties (e.g., computers or equipment), land improvements, and interior, non-structural parts of the building known as qualified improvement property (QIP). The claimable percentage of federal bonus depreciation drops to 80% in 2023. Businesses may want to consider purchasing and placing the fixed assets in service well in advance of the 2022 year-end.
  2. The Setting Every Community Up for Retirement Enhancement (SECURE) Act was signed into law in December 2019. The Act has favorably changed the deadline for employers to adopt a qualified retirement plan. Employers now have until the business’ income tax return deadline, including extension, to adopt a plan and may treat it as adopted at 12/31 of the prior year. There may still be time to adopt a qualified retirement plan for 2021 in addition to exploring plan enhancement options for 2022.
  3. Review the 20% qualified business income deduction (QBI) calculation and components for non-C Corporation taxpayers for eligibility and maximization.
  4. For tax years starting January 1, 2022, taxpayers must capitalize U.S. based research and development (R&D) expenses and amortize over five years and non-U.S. based R&D expenses over 15 years. Taxpayers are no longer allowed to expense immediately. You should revisit your 2022 income projections and net operating loss usage and plan your tax payments accordingly. For an in-depth review of the rules, see our recent article on R&D expenses.
  5. If you have multistate or multinational business activities, review your state nexus activities and/or transfer pricing documents.
  6. The stock market struggled mightily in the first half of 2022.
    • Consider converting a traditional IRA to a Roth IRA if a Roth IRA is more suitable for you. This conversion will increase your adjusted gross income for 2022. Nonetheless, this may still be a good idea as tax rates may go up in the future.
    • Meet with your tax and investment advisors to discuss capital loss harvesting.
  7. Review your current level of charitable contributions. It may be beneficial to evaluate the deductibility and tax rates for 2022 versus 2023 if your income is expected to change. Consider setting up a donor advised fund in which a deduction may be claimed in 2022 but the actual selection and contribution to charities may be deferred until 2023.
  8. Review the applicability of the pass-through entity (PTE) tax to work around the Tax Cuts and Jobs Act’s (TCJA) $10,000 state and local tax deduction limitation. As of early July 2022, a total of 29 states along with one locality (New York City) have adopted the PTE tax. Eleven of these states (Arkansas, Arizona, Georgia, Kansas, Missouri, Mississippi, North Carolina, New Mexico, Ohio, Oregon and Utah) and New York City are newcomers to the PTE tax and it will become effective in their locations in 2022 or later.
  9. If you are over the age of 70.5 and not able to take advantage of itemized deductions, consider making qualified charitable contributions from your traditional IRA.

For questions or assistance, please contact your tax experts.

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Tony Lam - Partner, Tax - San Ramon CA | Armanino
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