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Potential tax credits for small- and-medium-sized businesses

Posted by Shivali Anand

August 27, 2021    |     3-minute read (462 words)

Certain tax credits aimed at small and medium-sized enterprises can help reduce the amount of taxes you owe. The following tax credits, in addition to the R&D tax credit, should be discussed with a tax adviser to verify whether they are appropriate for you.

General business tax credit:

 This comprises several credits rather than just one and can help you obtain credit for actions such as buying certain electric vehicles, creating a pension plan, entering new markets, generating low-sulfur diesel fuel or completing mine rescue team training.

Family and medical leave credit:

 Employers who give paid family and medical leave to their employees may be eligible for this tax credit. If you have employees on family or medical leave, the credit will be computed as a proportion of the salaries you paid them during their absences.

Work opportunity credit:

 This is available to businesses that recruit persons from certain target groups who have traditionally encountered job obstacles. They are divided into 10 groups by the government, including those who receive food stamps/SNAP, ex-felons, unemployed veterans and others. Using these credits, you may save up to $9,000 over two years.

Small business health care tax credit: 

Federal law provides this tax credit to eligible small employers who provide health care coverage to their employees. Companies with less than 25 full-time employees may be eligible for this credit if they pay an average wage of less than $50,000 per full-time equivalent every year. It is required that you provide a qualifying health plan to your workers via the Small Business Health Options Program Marketplace and pay at least half the cost of the employee's plan (but not the employee's family's plan).

Disabled access credit: 

It's possible to qualify for this tax credit if you've made your facilities or offices accessible to individuals with impairments. Total revenue of $1 million or less is required, along with 30 or fewer employees. If you spend $10,000 on handicapped access, the credit will pay up to half your expenses.

Alternative motor vehicle credit: 

Vehicle alternative financing tax credits of up to $8,000 may be available to your business if it purchases a vehicle that runs on alternative fuel. If you buy a four-wheeled fuel cell vehicle that meets specific standards, you may be eligible for this tax credit. You must own (not lease) the car, use it during the tax year and fulfill a few additional conditions to guarantee that you meet the standards.

This is a list of some of the more frequent tax credits that small and medium-sized enterprises may wish to examine, but it is by no means comprehensive. Tax professionals can provide you with information on tax credits that may help you save money at tax time.

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