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Important tax deduction for those who had any contract, LLC, or business income

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Hi!

We are constantly looking for ideas to save you on tax & ensuring our clients & community are aware of them. This week I wanted to highlight a frequently-forgotten deduction: city taxes.

This email is specifically for those that live in an area subject to city taxes (NYC, Yonker NY, Washington DC (UBT), Philly, Detroit, St Louis MO, etc.) and:

  • Have an LLC or corporation
  • Have any type of 1099-NEC contracting activity
  • Earn any type of self-employment income which is reported on schedule C

If this is you, please read on. If you are not sure if this applies to you, let me know & I can explain.

Now to get to the point:

  • City taxes for the above activities are normally actually deductible on your federal income tax return
  • Many people do not know this & most tax software does not bring this out as an option
  • For this reason, we see this deduction missed on a regular basis

For the sake of a quick example, if you are in the 37% tax bracket & paid 42k in city taxes, your federal tax deduction is $15k. That is quite an important deduction to take!

If you are not sure if this was done, please have us check right away. There is a 3-year statute of limitations for federal refunds & we can petition for a tax refund for you.

Just submit the form below for assistance. Please no not wait until year-end or tax filing season for the following reasons:

  • Now is mid-year, when your accountant will have time to focus on prior years. Most accountants will be focused on other deadlines & deliverables in the fall season, so summer is the time to look through any possible past adjustments
  • Federal refunds expire in 3 years, so now is the time to to have this looked at to prevent a situation where the IRS keeps the refund you are entitled to
  • If you are just now starting a business, mid-year planning on average saves at least a few thousand dollars in taxes each year. This is the time to help you plan for the new business or work-type to ensure your tax profile is optimized. We can go over both this as well as many other strategies now since most must be implemented now if you are to take advantage of them in 2023.

Contact us below if you need help with this or any other tax/accounting task.

Thank you for reading & I hope this tax deduction helps – please feel free to share it with any friends & relatives!

George Dimov CPA

www.dimovtax.com

(833) 829-1120 toll free

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