The COVID-19 has taken millions of humans lives and trillions of dollars. Those who have managed to survive so far are often barely scraping by and are close to losing their job or business. This is why tax relief for small businesses is essential right now.
There are several tax credits, breaks, and benefits that businesses need to maximize their survival. Deciphering just what can be written off, however, take a lot of work and effort. Hopefully, businesses kept meticulously organized records this year to make the end of the year, accounting a little easier.
To find out which tax breaks your business may be eligible for, check out the list below.
1. CARES Act Loans
The Coronavirus Aid, Relief, and Economic Security Act (CARES) was mainly passed to keep businesses open and people working. One loan program under this act is known as the Paycheck Protection Program.
Under CARES, businesses can apply for loans for up to $10 million. If the employer provides a steady paycheck to its employees, these loans never need to be repaid. The only thing that needs repayment is the interest accrued.
The interest rate on these loans is capped at 4%. Companies can inquire about this program at various financial institutions. The total loan amount depends on how much employees were paid within a specific timeframe.
2. Various Tax Credits
Businesses can apply for various tax credits based on their unique situation. Under the Family and Medical Leave Act, employees sick or quarantined due to COVID-19 can receive 100% of the salary for up to two weeks. In return, businesses can receive a tax credit for up to $511 per day, per employee.
There are other situations covered by FMLA, like those employees indirectly affected by COVID-19. This is especially relevant for employees with children. Those tax credits are up to $200 per day.
If a business can prove it took a 50% loss this year, they can also apply for a tax credit for keeping employees on payroll and receive up to $5,000 per worker.
3. Tax Cuts and Jobs Act (TCJA) Benefits
One of the biggest benefits of this act is the allowances that can be written off to limit a company’s tax liability. Unfortunately, most businesses don’t adequately take advantage of these write-offs in the best of times — you can read more to find out why.
Thanks to TCJA’s depreciation provision, businesses can write off asset additions, qualified improvement property, and vehicles. Expenditures on property and furniture can also be deducted up to $1.04 million, an increase of almost $500,000 from the last tax year.
More Tax Relief for Small Business
Thankfully, this is not the complete list of all tax relief for small businesses this year. There are also special benefits for independent contractors, the self-employed, and gig workers. They can receive special unemployment benefits that they don’t normally qualify for.
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