Tax credits lower your tax liability dollar for dollar, which can dramatically reduce the amount of money you owe at the end of the year. Here are some of the tax credits every small business owner should know about.
- Small Business Health Care Tax Credit.
If you qualify for this tax credit, you will be able to reduce your tax liability by up to 50 percent of the contributions you have made toward your employees' health insurance premiums during the year. To claim this credit, you must have fewer than 25 full-time equivalent employees, pay an average employee salary of $50,000 or less and pay at least 50 percent of your covered FTE employees' premium costs. You must also offer coverage to your FTE employees through the Small Business Health Options Program Marketplace.
- Retirement Plan Startup Credit.
If you are a small business that established a new retirement plan during the year, you may be able to claim a credit for some of the costs you paid. This credit will apply to start-up costs for qualified, SIMPLE and SEP plans. The maximum credit you can claim is 50 percent of the cost to establish the plan, educate employees about the plan and administer the plan, up to a maximum of $500 per year. You can claim this credit for a total of three years, beginning with the tax year before the year in which the plan will become active. This credit is available only to small business owners with fewer than 100 employees.
- Disabled Access Credit.
The disabled access credit is available to businesses that take steps to make their facilities, products and/or services accessible to people with disabilities. You may qualify for this credit if you have no more than 30 full-time employees or you earn no more than $1 million in revenue during the year. If you qualify for this credit, you can claim 50 percent of expenses related to removal of barriers, the purchase of adaptive equipment, modification of equipment, sign language interpreters, readers for people with visual impairments, conversion of print materials to accessible formats and consulting services.
- Business Energy Investment Tax Credit.
This credit is designed to reward small businesses that invest in cleaner, more efficient energy sources. If you qualify for this credit, you can claim up to 30 percent of expenses related to small wind turbines, fuel cells and solar energy updates. You can also claim up to 10 percent of expenses related to Combined Heat and Power (CHP) systems, microturbines and geothermal systems.
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