In response to the unprecedented coronavirus pandemic and its accompanying economic disruptions, Congress has passed significant legislation to help small-business owners. This legislation includes some tax credits that might offer immediate relief.

If your business has been impacted by the COVID-19 crisis (and, at this point, it’s hard to imagine any business hasn’t been), here are some tax credits worth knowing about. 

1) Employee Retention Tax Credit (ERTC)

Who’s eligible: Any business that had to partially or fully suspend its normal operations due to the coronavirus; or any business whose gross receipts are down 50% or more when compared with the same quarter in the prior year.

How much: 50% refundable tax credit, or $10,000 for each employee. The credit is incurred on any wage paid from March 13, 2020, through the end of this year.

2) Tax credits for sick and family leave

Who’s eligible: Businesses of under 500 employees that offer paid sick leave or paid family leave for reasons directly related to COVID-19. 

How much: Refundable tax credit that equals 100% of the amount paid for the sick leave or family leave. This is paid quarterly, but the IRS has also said that business owners can withhold the employer part of their payroll taxes and use it to fund the leave. 

3) Delayed payroll tax

Who’s eligible: Both businesses and self-employed people can delay payment of their payroll taxes. Instead, these payments can be deferred. They’ll need to be paid over the course of the next two years, including at least 50% by the end of 2021. Note that companies that received assistance through Paycheck Protection Program loans are not eligible for these deferred payments.

4) Expansion of charitable gift deductions

Who’s eligible: Companies that make contributions to charitable causes.

How much: Previously, charitable contributions made by corporations could not exceed 10% of their taxable income, but now that amount has been bumped up to 25%.

Additional Tax Implications for Small Businesses

There are still further tax relief provisions that have been made available to small companies. These include:

• On individual returns, the cap on business loss deductions has been lifted. Business owners can file amended returns for 2018 or 2019 to take advantage of this.
• Companies are now permitted to increase their business interest expense deductions. For both 2019 and 2020, businesses can deduct 50% of interest expense (up from 30%).
• Business owners are also now able to write off any expenses that are associated with making improvements to their facilities. (Residential properties do not qualify for this.) In effect, this expands the tax deduction for property improvements to a full 100% of the total cost.

There are a number of ways in which business owners can use recent legislative provisions to seek some financial relief during these tumultuous and uncertain times. Be sure to take advantage of any relief options that apply to your business. For more information, connect with the U.S. Chamber of Commerce. 

About the author
Amanda E. Clark is the president and editor-in-chief of Grammar Chic, a full-service professional writing company. She is a published ghostwriter and editor, and she's currently under contract with literary agencies in Malibu, California and Dublin. Since founding Grammar Chic in 2008, Clark, along with her team of skilled professional writers, has offered expertise to clients in the creative, business and academic fields. The company accepts a wide range of projects; often engages in content and social media marketing; and drafts resumes, press releases, web content, marketing materials and ghostwritten creative pieces. Contact Clark at www.grammarchic.net.