The end of tax season is near! If you have not done so already, your last day to file taxes is April 18. Small business owners are responsible for funding their own retirement plans to supplement their Social Security benefits. Being retired or partially retired does not exactly equate to a lack of tax-deductible contributions to retirement plans such as IRAs. People over 50 have higher contribution limits for traditional IRAs, Roth IRAs, and 401(k)s.
Fortunately, there are tax implications that lend a helping hand to business owners making contributions.
Percentage deductible: 100%
Eligibility: Retirement accounts that comply with IRS regulations and are deemed “tax-qualified.”
Example deductions: Contributions made to the following types of tax-qualified retirement plans:
SIMPLE IRA
Keogh plan
Solo 401(k)
Special considerations: Business owners with employees must follow a specified set of rules in order to keep their retirement contributions tax-deductible. These are called nondiscrimination rules and they assert that the business owners’ selected retirement plan benefits all employees—not just the owner.
Check out the link below for a list of other tax deductions you can claim this tax season!
https://www.ritbsinc.com/small-business-tax-deduction-list
What questions do you have about tax season? We are here to provide help with tax preparation, accounting, payroll management, and business formation! R&I Tax and Bookkeeping is here to help! You may contact us via our 'Contact' page at https://www.ritbsinc.com/contact. We can also be reached via phone at 253-777-1106.
Osterhaus, E. (2021, February 1). Complete list of small business tax deductions (2021). QuickBooks. Retrieved December 16, 2021, from https://quickbooks.intuit.com/r/taxes/small-business-tax-deductions/
Fishman, S. (2022, January 17). Top Six tax deductions for seniors and retirees. www.nolo.com. Retrieved April 12, 2022, from https://www.nolo.com/legal-encyclopedia/top-tax-deductions-seniors-retirees-29591.html