Though we're a few months off from having finalized IRS forms for tax year 2012, it's a good idea to start thinking now about how your financial obligation for this year is shaping up. Barring any legislation that affects them, here are five business tax credits (not deductions) that you may want to explore.
The Small Business Health Care Tax Credit for Small Employers
As a part of the Affordable Care Act of 2010, this credit has been available since the 2010 tax year to businesses that:
Have fewer than 25 full-time equivalent employees (FTEs)
Pay average wages of less than $50,000/year
Contribute at least 50 percent of the cost of single (not family) health care coverage for all employees.
The amount of the credit varies depending on the size of the company; smaller
businesses actually get larger credits. The current maximum credit is 35 percent for small business employers and 25 percent for tax-exempt organizations like charities (these rates will increase on January 1, 2014). Click here to see if you qualify. The tax is refundable to eligible businesses that have no taxable income. You can file an amended return for 2011 if you didn't claim it and could have.
Work Opportunity Credit for Qualified Tax-Exempt Organizations Hiring Qualified Veterans
If your company has hired a veteran (or you plan to employ one before December 31, 2012), you may be eligible for a Work Opportunity Tax Credit (WOTC). This Credit is claimed on the Form 5884-C. According to the IRS, the credit can be as high as $9,600 per veteran when offered by for-profit employers or up to $6,240 per veteran for tax-exempt organizations.
Employers must file a Form 8850 within 28 days of hiring a qualified veteran.
Credit for Increasing Research Activities
To qualify for this credit, your company must be involved in research that is technological in nature. Your work must relate to a new or improved function or level of quality, performance or reliability, and must ultimately be of business benefit to taxpayers. you would file a Form 6765.
Credit for Small Employer Pension Plan Startup Costs
You can report this credit on Form 3800 (General Business Credit); it gives eligible employers an up to 50 percent (maximum $500, for three years) credit on costs incurred for initiating an employee retirement savings plan. President Obama's fiscal 2013 budget plan proposes an increase in this amount.
Credit for Employer-Provided Childcare Facilities and Services
Also reported on Form 3800, this credit pertains to qualified childcare expenditures made by an employer. It's 25 percent of these expenses plus 10 percent of qualified childcare resource and referral expenditures, and is limited to $150,000 per tax year.
If you have questions on any of these tax credits...or anything else tax related...please call or email us. We are here to help you navigate.