Congress passed the Family and Business Tax Cut Certainty Act on August 2nd and it extended several credits for small businesses. What does that mean for you and your small business? It means you’ll be able to take advantage of some often overlooked tax breaks for the 2013 tax year.
- The Retirement Plan Start-Up Credit
Any company that started a defined benefit plan (401K, SIMPLE or SEP) can apply for a $500 startup expense credit. This credit is available by filing Form 8881.
- Disabled Accessibility Credit
If your business made improvements to the property to fulfill the requirements of the Americans with Disability Act you may be able to claim a tax credit of 50% of the construction costs up to $5000. There are limitations to the credit though. It is only available to companies that had sales below $1 million and had fewer than 30 employees (at one time) on the payroll. This credit is available on Form 8826.
- Work Opportunity Credit
Hiring a veteran could pay off in a big way. Qualified businesses can take a credit of up to $9600 (6,240 if the business is a non-profit). The credit amount is dependent on the wage the veteran is earning, the number of hours worked and how long the veteran was unemployed before being hired by your company. To claim this credit file Form 5884.
- Alternative Motor Vehicle Credit and Fuel Credit
Complete Form 8910 to take one more year of credits for your hybrid business vehicle purchases and your use of alternative fuels including biodiesel, cellulosic fuels and low sulfur diesels. Going green saves you the green here. To find out exactly which vehicles qualify you can take a look at the IRS Alternative Motor Vehicle Page.
- Health Insurance Premium Credit
Businesses with fewer than 25 employees who made less than $50,000 in wages can qualify for the health insurance premiums credit. You also must cover at least half of the health care premium for each of these employees. The calculations for this credit are complicated but Aetna has created a calculator that can do them for you. The credit can be taken with Form 8941.
- Social Security and Medicare Tax Credit
This credit is reserved for businesses that tax tips received by employees. The social security and Medicare taxes paid on tips can be recovered by filling out Form 8846.
- The Empowerment Zone Credit
If your business is in a designated “empowerment” zone, this credit is just for you. Small businesses in the empowerment zone can claim up to 20% of wages paid up to $15000 per employee. Fill out Form 8844 to take this credit.
Adding these deductions to your other tax credits can make a significant dent in the amount of taxes that your business will be liable for in 2013. This can allow you to reinvest that capital into your business to help it grow bigger and better in the near future. If you are looking for help claiming tax credits, most payroll companies provide this service.