With operators prepping to pay taxes for 2022, the National Restaurant Association recently hosted a webinar with Frost Law that provided guidance on how to get the most out of this year’s returns and plan properly for 2023.
The webinar, “Don’t Leave Money on the Table: Commonly Missed Tax Planning Opportunities for 2022 and 2023,” shared tips on:
- Year-end planning for restaurants, including bonus depreciation, business expenses, ERTC maximization and tax planning.
- Planning for 2023 including the work opportunity tax credit, research and development credit, and planning for long-term sustainability.
The appetite for restaurant experiences remain strong, even with the impact of inflation on discretionary spending habits. Customers are eager to come together over a shared meal they can’t replicate at home.
Here are four of the biggest tips to take into consideration:
1. Employee Retention Tax Credit. The panelist began by addressing the issue of ERTC claims, which many operators took advantage of at the outset of the pandemic. Those claims, however, differed from any Paycheck Protection Program money the operation received, and were never going to be forgiven by the government like PPP claims were. Now, as the IRS looks at ERTC claims, restaurant owners who received the credits must make sure they can prove the credits claimed were sound or risk being audited and being made to repay them. Operators should make sure they understand what they’ve claimed, and why they think they’re eligible, plus have ready access to all the paperwork to back up their claims.
2. FICA Tip Credit. Operators who aren’t taking advantage of the tip credit should start doing so now. If your tipped employees made above the federal minimum wage ($7.25/hr.), you may be eligible for the FICA Tip Credit. Quickservice and fast-casual chains are providing customers the option to tip employees on touchscreens and through apps.
3. The Work Opportunity Tax Credit. This is another big opportunity for operators. WOTC is a federal tax credit available to employers who hire workers from certain targeted groups facing significant barriers to employment. It was set to expire but was extended to credit wages paid or incurred for some individuals starting work on or before Dec. 31, 2025. The extension will give operators two more years to take advantage of this credit.
4. Bonus Depreciation Credit. Another type of potential savings is the bonus depreciation regarding the purchase of equipment. The depreciation credit, however, is expected to phase out in 2023, but could be resurrected in different legislation in future.
These are just some of the tax savings opportunities discussed during the presentation. Download an On Demand recording of the full webinar, free of charge, here.
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