Small Business, Big Benefits
Taxes are daunting, and especially for a small-business owner’s income. The following tips are six ways small businesses can get some tax relief from COVID-19 this year.
1. The Employee Retention Tax Credit
If your business has fewer than 500 employees and had to partially suspend business due to the pandemic or had a revenue decline of 20% comparative to the same quarter in 2019 then you are entitled to some compensation. This credit is refundable and equal to 70% of each employee's wage and runs through June 30th.
2. The Families First Virus Tax Credit
While employers do not have to pay employees for missing work due to COVID-19 reasons relating to children or other family members, if they choose to, they are entitled to a tax credit through March 31st.
3. Social Security Tax
The due date for Social Security (FICA) taxes is continuing to be pushed back until the end of the year. This is not a credit, but merely an interest-free loan from the government.
4. Work Opportunity Tax Credit
If you hire a veteran, ex-felon, welfare recipient, or someone who has been jobless for more than six months, then you can receive a tax credit. The credit is calculated per employee and the amount is deducted from your tax return. This tax credit has been extended through 2025.
5. Nonprofit Revenue Boost
Charitable contribution tax deductions have been extended through the end of the year. Individuals can take $300 ($600 for joint returns) and corporations can take 25% of their taxable income for charitable contributions.
6. File Quickly
If your company lost money in 2020 then you are eligible to carry that loss for up to five years on your prior tax returns.
The professionals at The Center for Financial, Legal, and Tax Planning, Inc. are more than knowledgeable with regards to making beneficial tax choices for small business owners and individuals. Please contact us at (618) 997-3436 for more information.