The 2020 tax season is upon us. Small business owners can score big by being informed. Which tax credits can your business claim? Every dollar claimed in credit is a dollar off your tax bill. Help your bottom line by finding out which tax credits your business is eligible for this season.
Small businesses are scrappy and nimble, and every dollar counts. The choice of itemizing deductions has no bearing on receiving tax credits. Thus, tax credits can be a boon to your small business. Governments want to reward businesses for strengthening community economies, implementing climate-conscious practices, and providing employment. These rewards boil down to some very lucrative credits:
• General Business Credit
• Small Business Health Care Tax Credit
• Paid Family and Medical Leave Employer Credit
• Federal Tax Fuel Credit
• Alternative Motor Vehicle Credit/Qualified Plug-In Electric Drive Motor Vehicle Credit
These small business credits are easy to apply for. The IRS provides information on eligibility requirements for each credit. Further, the General Business Credit is claimed by filing tax form 3800.
Does your small business provide employee health plans? Eligible businesses can receive a credit of up to 50% of employee premiums paid by employers, or 35% paid by tax-exempt employers.
Paying for employees Family and Medical Leave can also earn your business credit. However, the payment must not be less than 50% of the employee’s normal wages.
Your business could be eligible for the Federal Tax Fuel Credit if it exports certain fuels (e.g. methanol, ethanol, biodiesel, renewable diesel). Only businesses that are involved in the production of said fuels and not consumption meet the eligibility requirements.
Depending on which autos are in your fleet, your business could claim some credits. The Alternative Motor Vehicle Credit and the Qualified Plug-In Electric Drive Motor Vehicle Credit are two credits available in 2020 that pertain to vehicles. The Alternative Motor Vehicle Credit is only applicable to original owners of cars purchased prior to 2017 that implement fuel cell technology. The Qualified Plug-In Electric Drive Motor Vehicle Credit is an incentive for businesses to purchase and utilize electric vehicles in their motor pools. Contact us for help in identifying which credits your business is eligible for.
Tax Tips for the Self-Employed
Everything You Need To Know About Form 1099-NEC
An Overview of the Net Operating Loss Tax Provisions in the CARES Act
How To Decrease Your Small Business Debt? A Step-By-Step Guide
Why Every Small Business Needs a Bookkeeper?
Tax Credits That Could Benefit Small Businesses