Business Tax Relief: What It Is and How to Get It

If we are talking about the business tax relief concept in its general form, we are also talking about tax breaks that are offered by the government to the taxpayers. These solutions exist through tax laws and are a way to help the economy of a country. That is because people will be aided in their struggle to pay their taxes and therefore these funds will still reach the country. This is certainly better than not helping the taxpayers and, as a result, not being able to collect from them at all.

These business tax relief solutions usually come in the form of deductions and credits. You can also be temporarily exempted from paying your taxes or have certain streams of income become non-taxable, in certain situations. People who have been affected by natural disasters benefit from tax breaks as well as groups like churches or charities. Here are more details on business tax relief, what it is, and how to get it.

How Does Business Tax Relief Work?

Usually, a taxpayer doesn’t have to do anything to benefit from a tax break because they are already there by law. However, there are instances when you need to verify whether or not you are eligible for a certain business tax relief program. There are three main types of such tax breaks that we will be talking about right now.

Deductions

Deductions are probably the most popular tax breaks and they represent certain expenses that you can reduce from your income so that your tax bill is decreased. Your deductions can be either itemized or you can choose to take the standard deduction which is a fixed amount. Keep in mind that by picking the latter option, you won’t be able to itemize your deductions anymore. The standard deduction depends on your marital status and how you are filing for it. For example, for 2022, the deduction for a single taxpayer is $12,950 whereas for a married couple filing together is $25,900.

Some of the most popular itemized deductions that you can enjoy are parts of your local taxes (as long as they are not over $10,000), part of your mortgage interest, medical expenses, charitable donations, certain losses due to theft, some gambling losses, etc. Obviously, if you have enough itemized deductions and they exceed the amount of the standard one offered by the government, it makes sense to pick the first option.

Credits

A tax credit is a more impactful business tax relief solution than deductions. A credit diminishes the amount you owe even after all of the deductions have been applied to your taxable income. These solutions are also beneficial for companies that can significantly reduce their tax bills. There are a lot of types of tax credits for various industries like business, childcare, and investment. Besides that, you can take tax credits even if you are in the agricultural, mining, or energy sectors.

Exclusions

When it comes to tax exclusions, we must explain the fact that those work a bit differently than the previous two business tax relief solutions. Those simply exclude certain income streams from being taxable. For example, things like municipal bonds, childcare support, or life insurance can be definitely subjected to exclusions.

Home sales are also usually subject to tax exclusions but only if you register capital gains from selling your house. You can exclude up to $500,000 from taxes if you file as a married couple and $250,000 as a single individual. There are a few things to be considered in this case which is why you should make sure that you check your state’s website for these details.

Last but not least, some streams of income that you earn from foreign countries can be excluded too. For 2022, the maximum exclusion, in this case, is $112,000 per individual.

Additional Features to Consider

What you need to also know when it comes to these business tax relief solutions is the difference between credits and deductions. They are both methods of saving you some money when paying your tax bill but most people consider tax credits to be the better solution. This is mostly because they reduce the amount of tax you owe directly and the benefit is greater and more noticeable. Deductions only take things out of your taxable income and, in some situations, it is not very much. In case you are in the 22% category, with a $1,000 deduction you will only benefit from a $220 reduction.

You must also know that the 2022 gift exclusion stands at $16,000. The tax return deadline for 2021 is April 18, 2022, but you can file for a six-month extension through Form 4868.

How We Can Help You Decide

If these terms seem to confuse you or if you lack the necessary experience to do those things on your own, there are tax relief firms that do it for you. You can compare and pick the best one for your situation from our website that rates each company according to what they offer and also contains complex reviews of each one of them. You will also find plenty of business tax relief educational resources there that will guide you through the most important tax-related steps. This way, you will make sure that the IRS will never come for you and that all of your taxes will be in order and paid on time.

Bottom Line

In conclusion, business tax relief is a very interesting topic that is of very high importance to all taxpayers. Fortunately, even if you feel lost and inexperienced in this area, numerous firms can deal with this process on your behalf. The most important thing is to always stay informed and to think ahead when it comes to filing your tax return. Do not enlist the help of such a firm when you are already way too deep in back taxes and don’t know what to do. That will be too late and even if your situation can be remedied, it may still be an incredibly stressful process.