Business related deductions & cash contributions

Forum|Forum|3 years ago
September 28, 2022
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1. Has anything changed for 2022 regarding Qualified Business Income deduction or SEP-IRA contributions?

2. If you don't itemize, can you still deduct a limited amount (e.g. $300) for cash contributions?

MariaDG1

Hi there! Great questions.
The income limit to qualify to claim QBI deduction has changed for 2022. In general, in 2022 the limits rise to $170,050 for single filers and $340,100 for joint filers.If you’re over that limit, complicated IRS rules determine whether your business income qualifies for a full or partial deduction.

Similarly, the SEP IRA contribution limits have also increased for 2022. Small business owners can contribute up to 25% of total compensation, or $61000 maximum, as long as they contribute the same rate for all eligible employees. (Contributions are based on the first $305.000 of compensation for 2022.)
The above the line charitable tax deductions for filers who do not itemize was a temporary measure, and was not extended past 2021. It will not be available on your 2022 tax return.
Thanks for participating today!