Illinois -- Taxes are complex, and for small-business owners, freelancers and people with side gigs, they're even more complex - especially now, as filers reckon with the tax effects of small-business relief programs and rule changes.But those new twists and turns can create some tax-saving opportunities, according to three tax pros. Here are seven things they say entrepreneurs and independent workers can do to lower their tax bills and their anxiety this filing season and in the year ahead.
State-level tax rules may have a different stance on PPP taxability, however, so be sure to consult with a qualified tax pro.For 2021 and 2022, the business meals deduction is up from 50% to 100% if the food and beverages are from a restaurant ."That can include takeout and delivery. It doesn't have to be eaten on the premises," says Mark Luscombe, who is a federal tax analyst for Wolters Kluwer Tax & Accounting.
But make sure you're getting your business meals from a restaurant."You can't get a deli tray from a grocery store and have it qualify," he adds.If you're self-employed, you can get a tax deduction for every mile you drive for business purposes. In 2021, the rate was 56 cents per mile, and in 2022, the rate rose to 58.5 cents per mile. That means a 20-mile trip to meet a client might score a deduction of about $12 this tax year.
But don't guess here; the IRS may ask you to substantiate your mileage."The important thing, especially if you don't have an exclusive vehicle used just for businesses, is to keep a log," Luscombe says.There are special tax breaks for retirement savings if you work for yourself.