Small business tax credits don’t get enough press. And what happens as a result? Business owners miss out on tax credits they never hear about. Don’t worry, we will right that wrong in this article.
It is an easy-to-read list of tax credit programs. As always, speak to a tax professional about any tax issue to ensure you stay on the right side of the good folks at the IRS.
Family Medical Leave Tax Credit
If you have employees you likely know that you have to offer qualified workers a minimum of two weeks paid family and medical leave. On a yearly basis.
What you may be missing out on is the tax credit for this expense. This tax credit is equal to 12.5% to 25% of certain wages paid out for this type leave.
There is often still time to receive this credit if you paid family medical leave in the past three years, according to IRS.gov. You can still be eligible within 3 years of filing your return for the year the leave was taken.
The next credit is an easy one to miss.
Disabled Access Credit
This one is for physical businesses. So, your business is mandated to have disabled access. Think wheelchair ramps, for instance. This could vary depending on what type of building access you paid to have constructed to comply with these access laws.
With this credit, it is crucial to speak with a tax pro. Why? Because the idea is that you can receive a credit during each year where costs were incurred to add access. So, it may not be a one-time credit.
If you have to pay for inspections of entryways annually, you would want to know if those costs qualify for the tax credit.
Also weather-related upkeep such as salting and scraping sidewalks in the winter. This service would include disabled access points. So it’s worth asking your CPA what type of upkeep is within IRS guidelines.
Next credit will interest those in the construction world.
Energy-Efficient Home Credit
This credit can be had with each home sold by a contractor. “If.” Always an “if,” right? If the home meets the energy-efficiency standards connected to the small business tax credit.
It pays to be organized as a business owner and that includes staying up-to-date on tax law. Not as fun as golfing, I know. But saving money through tax credits is the payoff.
The IRS site lists this credit as being between $1,000 and $2,000 per home sold. And it is the main builder who gets the credit. The person who owns the home and performs the construction. Even though they pay third-party contractors to do the building.
Third-party contractors are not eligible for this business tax credit since they have no ownership stake in the home. The original builder is the one selling to the eventual homeowner.
A $2,000 dollar credit is nothing to sneeze at, especially if you are a homebuilder churning out double-digit numbers of homes each year. Some builders are building even higher numbers than that.
Kid-friendly tax credit coming next…
Credit for Employer-Provided Childcare Facilities
Typically it’s larger companies that add childcare facilities for employees’ children. But it’s not out of reach for a smaller company though.
Whether it would pay off, even with a tax credit, is what business owners have to weigh with this one. However, providing next-level conveniences like onsite childcare may be a great way to lure top-tier talent.
The IRS form for this business credit lists the max credit at $150,000 per year. Like many other credits, you may claim it any time within 3 years from the due date of your return. *Original filing or amended return.
**Be sure to listen (link) to our podcast episode covering the controversial electric vehicle tax credit update along with a few other tax credits not covered in this post.
New Markets Credit
This small business credit is designed to prompt business owners to invest in community development. The idea is to invest in low-income communities or persons. Lots of potential here to do some good in the world while also cutting your tax bill down via credits.
Yes, there are many stipulations attached to this program. Your investments can’t simply be to an entity or person you believe is deserving. Committee approvals are involved.
Nonetheless, the New Markets Credit is worth investigating if you are looking to invest in positive change in areas you feel called to assist.
Remaining Business Tax Credits
I’ll wrap this post up with a few more credits not discussed in the podcast episode I mentioned above. These are all listed on the IRS page for small business tax credits (plus a few more obscure credits). These are not used as often but if they fit your circumstances, they shouldn’t be overlooked.
Because if you take time to get every single tax deduction, you should do the same for tax credits since they could have even more impact on your final income tax bill than deductions will.
Final list of credits:
Orphan Drug Credit
Biofuel Producer Credit
Empowerment Zone Employment Credit
Carbon Dioxide Sequestration Credit
Low Sulfur Diesel Fuel Production Credit
Low-Income Housing Credit
Investment advice offered through Private Advisor Group, LLC, a registered investment advisor.