Small Business Taxpayers: The Year in Review for 2021
2021 is coming to an end and here comes tax-year 2021. As a business owner you need to know that changes that happened in the tax code to better prepare your tax plan for your business. Here’s a Year In Review for 2021 made for Small Business Taxpayers!
Standard Mileage Rates
For small business tax year 2021, the standard mileage rate will be 56 cents per business mile driven.
Health Care Tax Credit for Small Businesses
Small business employers who pay at least half the premiums for single health insurance coverage for their employees may be eligible for the Small Business Health Care Tax Credit as long as they employ fewer than the equivalent of 25 full-time workers and average annual wages do not exceed $56,000. This amount is adjusted annually for inflation in 2021.
In 2021, the new small business tax credit is worth up to 50 percent of your contribution toward employees’ premium costs (up to 35 percent for tax exempt employers).
Work Opportunity Tax Credit (WOTC)
The Work Opportunity Tax Credit is extended through 2021 under the Further Consolidated Appropriations Act, 2021. The credit can be used by employers who hire long-term unemployed individuals (unemployed for 27 weeks or more). It is generally equal to 40 percent of the first $6,000 of wages paid to a new hire.
SIMPLE IRA Plan Contributions
Beginning January 1, 2021, the maximum contribution limit for SIMPLE IRA plans is $13,500 if you’re under 50 and $16,500 if you’re 50 or older. The maximum compensation used to determine contributions will be $290,000.
A lot has happened in the past year, and it’s important to keep up to date with these changes. We know that keeping up to date with all the tax code changes every year is hard work for a small business owner that doesn’t have enough time on their hands. Lucky for you we are here to help!