(This article originally appeared on The Guardian)
Thanks to the stimulus programs, there are now five ways small can save big on their taxes in 2021 … and even get money back.
The signing of the American Rescue Act this week means that more than $5tn has been spent on stimulus programs in the US to fight the economic impact of the Covid pandemic. A significant amount of this money has been earmarked towards funding small businesses, such as the paycheck protection program and the economic injury disaster loan program. However, all of the stimulus programs contained generous tax incentives that can not only save business owners a significant amount on their taxes in 2021, but also provide additional funding. Here are five that every small business owner should be considering.
Employee retention tax credit
The employee retention tax credit is one such tax incentive. The credit was initially part of the March 2020 Cares Act and has been extended through 31 December 2021. To be eligible for the credit for any quarter in 2021 a business must show that it has been partially or fully shut down or experienced a revenue decline of more than 20% that quarter compared with the same quarter in 2019. If eligible, then the business can take a credit of up to $7,000 per employee per quarter based on their wages against their employer payroll taxes owed.