Starting and running a small or medium-sized business is already a challenge. Adding in the additional economic challenges of the past two years- health and safety concerns, labor shortages, and economic uncertainty- it is a daunting challenge. With some legislation and other tax credits organizations may not know about, there is support out there.

Many of these credits can also be claimed retroactively for 2020 in addition to 2021.The Employee Retention Tax Credit (ERTC)The Employee Retention Tax Credit is a refundable tax credit claimed on quarterly payroll tax filings. If your company is eligible, the 2020 tax year credit is 50% of qualified wages paid during per calendar quarter, and for 2021 through Sept 30 the credit is raised to 70%. The total amount of qualified wages (including allocable qualified health plan expenses) for all 2020 calendar quarters is limited to $10,000, with a maximum credit value of up to $5,000 per employee. This is also increased in 2021 to $10,000 per employee, per quarter, with a maximum credit value of up to $7,000 per employee, per quarter through Sept 30.

If a business started after February 15, 2020, it could be considered a “recovery startup business.” In that case, the maximum credit is $50,000.

Additional resources can be found here and on the ERTC FAQ page on IRS.gov.The Work Opportunity Tax Credit (WOTC)The Work Opportunity Tax Credit (WOTC) is a federal tax credit available to employers who hire and retain qualified veterans and other individuals from target groups that historically have faced obstacles securing employment. As of 2020, most target groups have a maximum credit of $2,400 per eligible new hire, but some may be larger. Hiring certain qualified veterans, for instance, may result in a credit of $9,600 per eligible new hire.
There is no limit to the number of individuals employers can hire as part of the program. As a result, there is no cap on the amount of credits an employer can claim.
Learn more about WOTC requirements and processes here.Disaster Relief Tax CreditOrganizations can claim Disaster Relief Tax Credit if their business has been impacted by a significant natural disaster such as a hurricane, wildfire, or tornado. The tax credit can be claimed if the business’s headquarters, office, or any employee worked in a designated disaster zone.

For disasters that occurred from January 1, 2020, through February 24, 2021, the credit is equal to 40% of the qualified wages paid to each eligible employee, up to $6,000 (maximum credit is $2,400 per eligible employee).Research & Development Credit (R&D)Research & Development tax credit are often overlooked by small and mid-sized businesses. If your company has developed or improved a product, process, technique, formula, or invention, it may qualify for an R&D credit. Companies can generate a net, dollar-for-dollar tax credit, used to offset tax liability, of typically between 6% - 8% of qualified R&D spending.
Many states also offer additional R&D tax credits for qualifying research activities performed within their borders. Find out if you qualify for R&D tax credits here.