Few people enjoy tax time, especially small business owners. It can be confusing and overwhelming whether it’s your first year filing or you’re an old pro. However, understanding which tax credits are available to you can lighten your tax burden.
Don’t confuse tax credits with deductions, however. Deductions lower your taxable income by a percentage, while tax credits cut your tax liability by a specific dollar amount. This makes them especially valuable to companies in lower tax brackets.
The best way to take advantage of every available tax credit is to work with a tax preparer, like MCG Solutions. Your company may not be eligible for every credit, and there are certain rules you’ll need to follow in order to claim them.
Here are some of the most common tax credits you may qualify for:
- General business tax credit: This credit includes many individual tax credits for specific activities, like expanding into new markets, retaining new employees, and buying electric vehicles. You or your tax preparer must fill out a separate form for each credit and add them up on Form 3800.
- Disabled access credit: If your company has a total revenue or $1 million or less, or has 30 or fewer full-time employees, you can offset the cost of making your facilities accessible to people with disabilities. This credit covers up to 50 percent of your expenses, ranging from $250 to $10,250.
- Employer-provided childcare: If you directly pay for, or otherwise help your employees obtain childcare, you may qualify for the Employer-Provided Child Care Tax Credit. This is good for 25 percent of expenses, plus 10 percent of any childcare resource and referral expenses. The maximum credit is $150,000 per year.
- FMLA credit: The Family and Medical Leave Act provides qualifying employees with up to 12 weeks of unpaid leave and access to group health benefits each year. Eligible employers can claim a credit for a percentage of the wages they pay to qualify employees while they’re on leave.
- Small business health insurance premium credit: This credit can be good for up to 50 percent of the premiums you paid for health insurance. It applies to companies that have fewer than 25 full-time employees, among other conditions.
- Work opportunity credit: If your company hires employees who traditionally face barriers to employment, you may qualify for up to $9,000 over two years. Barriers might include lack of childcare, transportation, and education, as well as disabilities, prior convictions and recipients of long-term family assistance.
Keep in mind that even if you don’t qualify for these specific credits, you may be eligible for others not listed here. Your tax preparer can help you determine which credits and deductions are available to lower your tax burden.
MCG Solutions offers tax preparation and bookkeeping services to small businesses. There’s no need to slog through tax credit research on your own—contact us today to learn more about our services and how we can help.