With more people working from home than ever before, taxpayers may be wondering if they can claim a home office deduction when they file their 2020 tax return next year. The short answer is that self-employed taxpayers who use their home for business may be able to deduct expenses for the business use of it whether they rent or own their home. If you are an employee, however, you are not eligible to take the home office deduction - even if you are working remotely in your home office.
More than 100,000 small businesses have closed due to COVID-19. If yours is one of them, you should be aware that there is more to closing a business than laying off employees, selling office furniture, and closing the doors - you must also take certain actions as required by the IRS to fulfill your tax obligations. For example, if you have employees, you must file final employment tax returns as well as make final federal tax deposits of these taxes.
As a reminder, employers whose business has been financially impacted by COVID-19 can take advantage of the Employee Retention Credit, a refundable tax credit designed to encourage businesses to keep employees on their payroll. The credit is worth 50 percent of up to $10,000 in wages paid by an employer. Employers that are eligible for the credit for the first and second quarters of 2020, can apply for the credit when they file their second-quarter filing of Form 941, Employer's Quarterly Federal Tax Return which is due July 31.
Cash is the lifeblood of any small business. Here are some tips to help your business maintain a sufficient cash flow to meet its financial goals and run efficiently:
Many people enjoy hobbies that are also a source of income. From soap making and pottery to calligraphy and designing jewelry, these activities can be sources of both fun and finances. However, taxpayers who make money from a hobby should know that they must report that income on their tax return.
If you're a small business owner who uses your home for business you may be eligible to claim the home office deduction, which allows you to deduct certain home expenses on your tax return. The benefit to this, of course, is that it can reduce the amount of your taxable income.