The IRS is acknowledging Small Business Week (this week) by endorsing two important tax credits and a special relief program that could provide major tax benefits this year.
The two tax credits- one for hiring veterans and one for employer-provided health care reduce taxes for small businesses when they file their 2012 federal income tax returns.
Tax Credit for Hiring Veterans
The Work Opportunity Tax Credit gives employers a chance to receive tax credit if they hire eligible unemployed veterans. For-profit employers can receive up to $9,600 per veteran and tax-exempt organizations can receive up to $6,240 per veteran. The refund is contingent upon many different factors, including how long the veteran was unemployed before being hired, how many hours they work, and their first year income. Businesses who hire veterans with service related injuries qualify for the biggest tax credits.
Employers must certify these new hires in order to get the credit. Typically, employers file a Form 8850 with the state workforce agency within 28 days after the employee is hired. However, under a special rule, employers have until June 19, 2012, to complete and file this form if a veteran was hired on or after Nov. 22, 2011, and before May 22, 2012. The 28-day rule will again apply to eligible veterans hired on or after May 22. The form can be submitted electronically or faxed.
Businesses use Form 5884 and Form 3800 to claim the tax credit. Tax exempt organizations use a different claim procedure through Form 5884-C. Details are on IRS.gov.
Tax Credit For Small Businesses that Provide Health Care
Small businesses that provide 50 percent or more of employee health insurance premiums may be eligible for the small business health care tax credit. Started two years ago, the credit is manufactured to entice small employers to begin to offer healthcare or maintain coverage they already have.
Small businesses can claim the credit from 2010 to 2013 and beginning in 2014, two additional years. Geared towards small businesses that primarily employ low-and moderate-income workers, the maximum credit, in tax-years 2010 through 2013, is 35 percent of premiums paid by small businesses and 25 percent of premiums paid by tax-exempt organizations, increasing to 50 percent and 35 percent in 2014.
Employers can claim the credit on their income tax return using Form 8941 and Form 3800. Tax-exempt organizations also use Form 8941 and then claim the credit on Form 990-T.
Recently, the Small Business Health Care Tax Credit page re-emerged on IRS.gov and is filled with info and guides created to aid small businesses in figuring out if they qualify for the credits. The page includes a step-by-step guide for figuring out eligibility, examples, FAQ’s, YouTube videos and a webinar.
If you or your small business is in trouble with the IRS, do not hesitate to call the professionals at JG Tax Group. With over 120 years combined IRS experience, we can help you secure and repair your finances and assets.
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