Businesses that make business-related payments to charities or government entities for which they receive state or local tax credits will generally be able to deduct them as business expenses, the Internal Revenue Service said recently.
Responding to taxpayer inquiries, the IRS clarified that the general deductibility rule is unaffected by the Tax Cuts and Jobs Act and recent notice concerning the availability of a charitable contribution deduction for certain contributions to government entities. In August, the IRS proposed rules to prevent governments from using charitable contributions to avoid the $10,000 cap on State and Local Tax deductions for individual taxpayers.
“The business expense deduction is available to any business taxpayer, regardless of whether it is doing business as a sole proprietor, partnership or corporation, as long as the payment qualifies as an ordinary and necessary business expense,” the release stated. “Therefore, businesses generally can still deduct business-related payments in full as a business expense on their federal income tax return.”
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Updates on the implementation of the Tax Cuts and Jobs Act (TCJA) can be found on the Tax Reform page of IRS.gov.
Estimated Tax Payments
Additionally, the IRS is reminding businesses that quarterly tax payments are due Sept. 17. The agency is also offering help for businesses trying to estimate their tax payments under the Tax Cuts and Jobs Act.
“The fastest and easiest way to make estimated tax payments is to do so electronically using IRS Direct Pay or the Treasury Department’s Electronic Federal Tax Payment System (EFTPS),” the agency states.
It suggests using Form 1040-ES, Estimated Tax for Individuals, available on IRS.gov.
“The estimated tax package includes a quick rundown of key tax changes, income tax rate schedules for 2018 and a useful worksheet for figuring the right amount to pay,” the IRS stated. “The IRS also mailed 1 million Form 1040-ES vouchers with instructions in late March to taxpayers who used this form last year.”