Small business owners have undoubtedly faced various challenges in the past few years. Fallout from the Covid-19 pandemic has created a challenging economic environment, significantly impacting their bottom lines. However, there are tax credits and deductions that could help alleviate some of the financial burden on small business owners.
One of the top tax credits available to business owners is the Employee Retention Credit (ERC), which is a pandemic-era credit established to help employers bring back their employees during this time. Small-business owners who qualify could claim up to $26,000 per employee, and they have three years from their original tax return to retroactively claim this credit.
Curious to know what other tax credits are available? Yahoo Finance’s shares three top tax tips for small business owners.
Video Transcripts
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REBECCA CHEN: Small business owners have faced numerous challenges in the past couple of years. But luckily, there are some tax credits and deductions that would help. Here are our top three. The first one is an employee retention credit, commonly known as an ERC.
It’s a pandemic-era credit established to help employers return their workers during this era. And each qualified employee can claim up to $26,000. Although this credit was a COVID-19 relief benefit, business owners have three years from their original tax return to go back and retroactively claim this credit.
The next business credit on our radar is the bonus depreciation. In 2022, small business owners can claim 100% bonus depreciation. What this means is if you have a qualified asset, instead of waiting for a period of time to expense them, you can write off the entire thing in just one year and without having to wait. The bonus depreciation rule does start to phase out next year. So make sure you take advantage of it before then.
The last one is the 100% business meal expense. In 2022, business owners can deduct any qualified business-related costs relating to food and beverages bought in a restaurant. The IRS also allows any taxes and tips included in the deduction. However, do be aware that these meals should not be lavish or extravagant.
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