Attention Employers: 5 Ways to Acquire Income Tax Credits for Your Business

Thursday, October 24, 2013, AM | Leave Comment

If you are a small business owner, you may be eligible to receive the general business credit. You may subtract business income tax credits directly from your tax.

Here are five ways you can acquire income tax credits for your business. 

  1. ACA Health Care Tax Credit (Form 990-T)

    The Affordable Care Act (ACA) Health Care tax credit gives a tax credit to small business employers that pay a minimum of 50-percent of the cost for single health insurance coverage for low to moderate income employees. This tax credit helps small business employers offer and maintain health insurance coverage for their employees. You must have less than 25 full-time employees whose average wages are less than $50,000 a year.

  2. Employee Tips Tax Credit (Form 8846)

    You are eligible for a tax credit if you are a food and beverage small business and you pay Medicare and social security taxes on the tips your employees earn. The small business must be a food and beverage establishment where tipping is customary.

  3. Work opportunity credit (Form 5884)

    The work opportunity credit allows a small business owner to acquire an income tax credit if wages were paid to an employee who is a:

    • Long-term family assistance recipient
    • Temporary Assistance for Needy Families (TANF) recipient
    • Qualified veteran
    • Qualified ex-felon
    • Designated community resident
    • Vocational rehabilitation referral
    • Summer youth employee
    • Supplemental Nutrition Assistance Program (SNAP) recipient
    • Social Security Income (SSI) recipient
    • This tax credit can be claimed anytime within three years of the due date of your tax return or amended tax return.

  4. Disabled access credit (Form 8826)

    If your small business incurred or paid expenses in order to comply with the Americans with Disabilities Act of 1990 by providing access to people with disabilities, you are eligible for a business tax credit.

  5. Credit for small employer pension plan startup costs (Form 8881).

    If you are a small business owner and you started a new pension plan, you are eligible for the pension plan’s startup costs. The pension plan must be a 401(k) plan, SIMPLE IRA plan or simplified employee pension (SEP).

You will need to file the General Business Credit form (Form 3800) in addition to the form designed specifically for a certain business tax credit. Your general business credit consists of your carry forward of prior years’ business credits plus the current years’ business credit. The current years’ business credit may be increased by the carryback of business credits from later years.

Author Bio

Hayley is a freelance blogger, author and business consultant. She recommends utilizing ADP Solutions for all your human resource and payroll solutions.

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