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2021 Construction Taxes
Following the unprecedented events that took over 2020 and part of 2021, many construction businesses are still struggling with the outcome from the COVID-19 pandemic.
Last year was difficult for construction companies. Contractors depleted their backlogs quicker than they could replenish them. Do you want to close out 2021 in the best financial position? It’s time for tax planning!
Key Tax Provisions for 2021 Planning
While the new legislation is bringing helpful tax provisions for struggling companies, the passaging of such legislation is far from certain. Understanding several provisions under the current tax law can help contractors plan for 2021. These include the Coronavirus Aid, Relief, and Economic Security (CARES) Act and older tax provisions that companies often overlook.
Have your financial specialist guaranteed you are taking full advantage of these provisions? Reach out they have not. I’d be happy to provide you with free guidance.
The Tax Cuts and Jobs Act (TCJA) has increased the bonus deprecation deduction to 100% for certain property acquired and placed in service after Sept. 27, 2017, and before Jan. 1, 2023. Recently, the CARES Act made Qualified Improvement Property (interior improvements to nonresidential property) depreciable over 15 years and eligible for 100% bonus depreciation. Your construction business should consider whether you have qualifying property, including QIP, and whether you should use the bonus depreciation this year.
Tax Credits and Deductions
Several tax credits and deductions could help reduce your tax liability. For example, contractors testing new processes or techniques on construction jobs could be eligible for research and development tax credits. Working on behalf of our nation? You could be eligible for a deduction of up to $1.80 per square foot for energy-efficient commercial buildings that you build for federal, state or local governments.
While the smart move is to consult tax and accounting experts in order to address the situation that is unique to your business, these are some basic talking points that can help you kick-start your 2021 financial goals. Feel free to reach out if you need free guidance to implement these tax strategies.
While the smart move is to consult tax and accounting experts in order to address the situation that is unique to your business, these are some basic talking points that can help you kick-start your 2021 financial goals. Feel free to reach out if you need free guidance to implement these tax strategies:
Is your business struggling to find Financial Guidance during the COVID-19 hardship?
We’ve been helping our construction clients with disaster relief, survival budgeting, and cash management plans since March!