Who doesn’t want more money in their pocket? It’s something I think all of us would love to have. And small business owners are in luck! Accountants throughout the state of Ohio advocated for small business owners and worked with Ohio legislators to develop the Ohio Small Business Investor Income Deduction provision. In the 2013 tax year, Rea clients eligible for this tax deduction submitted nearly $80 million in tax deductions, and realized nearly $4 million in tax savings. This provision has truly helped small business owners keep money in their pocket!
How Do You Know If You Eligible For The Ohio Small Business Income Deduction?
If you’re a taxpayer who owns a business, such as a sole proprietorship, a partnership or a limited liability corporation, and you bring in $125,000 in Ohio-sourced income (that would be $250,000 if you’re married and file jointly), you’re eligible for this deduction. For the first $125,000 (or $250,000 married, filing jointly) you report, you can take up to a 50 percent tax deduction. For many business owners, that’s real, significant savings. Keep in mind that businesses themselves are not eligible for the deduction, but rather the business owner, as an individual taxpayer, is eligible.
Why This Deduction Matters
This provision, along with others, provides a tax cut for individual taxpayers. Last year, Ohio Governor John Kasich released a broad tax reform package that was aimed at putting money back into Ohio taxpayers’ pockets. Part of this reform was the Ohio Small Business Investor Income Deduction (SBD). The Ohio SBD, along with a string of other tax cutting provisions, is aimed at cutting taxes for Ohio business owners and individuals by $2.7 billion over the next three years. The end goal: to build and accelerate economic and job growth in Ohio.
If you were eligible for this deduction in 2013, you should have realized tax savings. In looking to the future, have you considered what your 2014 tax savings could be by taking advantage of the Ohio SBD? If not, it’s something you should be looking into so you can keep more money in your business.
Ohio Tax Help
Unsure of your eligibility or need help in understanding how this deduction can apply to you? Contact Rea & Associates. Our team of Ohio tax professionals can review your operating structure and help you maximize your 2014 tax savings.
Author: Lee Beall, CPA (Dublin office)
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