Top 10 Small Business Tax Relief Programs to Take Advantage of Before They Expire

As the year comes to a close, small business owners are reminded that several tax relief programs are set to expire in December 2020. These programs, which were introduced to help small businesses recover from the economic downturn caused by the COVID-19 pandemic, are designed to provide temporary relief from taxes and other financial burdens. In this article, we'll explore the top 10 small business tax relief programs that are set to expire and provide guidance on how to take advantage of them before they're gone.

1. Employee Retention Credit: The Employee Retention Credit is a refundable tax credit that allows eligible employers to claim a credit against their payroll taxes for retaining employees during the pandemic. The credit is worth up to $5,000 per employee and is available for wages paid between March 13, 2020, and December 31, 2020.

2. Paycheck Protection Program (PPP): The Paycheck Protection Program is a loan program that provides financial assistance to small businesses to help them retain employees and cover certain expenses. The program is set to expire on December 31, 2020, and businesses that have not yet applied for a loan should do so as soon as possible.

3. Economic Injury Disaster Loan (EIDL) Program: The Economic Injury Disaster Loan Program provides low-interest loans to small businesses that have suffered economic injury as a result of the pandemic. The program is set to expire on December 31, 2020, and businesses that have not yet applied for a loan should do so as soon as possible.

4. Tax Credits for Paid Sick Leave and Family Leave: The Families First Coronavirus Response Act (FFCRA) provides tax credits to employers who provide paid sick leave and family leave to employees who are affected by the pandemic. The tax credits are worth up to $511 per day for paid sick leave and up to $200 per day for paid family leave.

5. Deferral of Payroll Taxes: The CARES Act allows employers to defer payment of payroll taxes for the remainder of 2020. This means that employers can delay payment of their payroll taxes until 2021, which can provide a temporary cash flow boost.

6. Expansion of Net Operating Loss (NOL) Carrybacks: The CARES Act allows businesses to carry back net operating losses (NOLs) to previous years, which can provide a tax refund. The program is set to expire on December 31, 2020, and businesses that have not yet taken advantage of it should do so as soon as possible.

7. Increased Limit on Business Interest Expense: The CARES Act increases the limit on business interest expense from 30% to 50% of a business's adjusted taxable income. This can provide a tax benefit for businesses that have high interest expenses.

8. Expansion of Section 179 Expensing: The CARES Act expands the Section 179 expensing limit from $1 million to $2.5 million. This can provide a tax benefit for businesses that purchase new equipment or property.

9. Increased Limit on Charitable Contributions: The CARES Act increases the limit on charitable contributions from 10% to 25% of a business's taxable income. This can provide a tax benefit for businesses that make charitable donations.

10. Extension of Depreciation and Amortization: The CARES Act extends the depreciation and amortization periods for certain assets, which can provide a tax benefit for businesses that purchase new equipment or property.

In conclusion, small business owners should take advantage of these tax relief programs before they expire. By doing so, they can reduce their tax liability, increase their cash flow, and provide a temporary boost to their business. It's essential to consult with a tax professional to determine which programs are best for your business and to ensure compliance with all applicable tax laws.