Rules around small business taxes have changed significantly in the last two years.
The program underwent three major changes in the last two years, which is a big reason why many business owners were unaware of the program or didn't apply for it.
For small businesses that missed the program, it's not too late to file retroactively. Many business owners are not familiar with the program, said Kevin Kuhlman, vice president of federal government relations at the National Federation of Independent Business, but can still apply. Retroactive filings are expected to be a big part of this year's taxes.
When the pandemic hit, the CARES Act waived TCJA rules and allowed business owners to carry back net operating losses generated after Dec 31, 2017 and before Jan 1, 2021 up to five years. Moreover, the cap for business interest expenses was raised to 50% of business income, up from 30%. Net operating losses were prominent in 2020 taxes and business owners also amended previous tax returns with net operating losses that they carried back.
Tax planners say this change is less likely to cause business owners pain since few took advantage of it. Edward Renn, a partner in the private client and tax team at Withers, said he's not seeing too many problems as many clients prudently put the money aside in a bank account so the money would be ready when needed.
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