HR Deductions You Can Claim on Your Taxes
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As a business owner, it is in your best interest to take advantage of every tax break that is available to you. Doing this reduces your burden, leaving you with more funds to help cover the costs of your next year of business. Unfortunately, many business owners aren’t aware of just how many credits and deductions are available to them, particularly within their HR departments. Here are some of the HR-based deductions that you can use to reduce your tax burden and bolster your business.
Offering at least a very basic health plan is now the law in the United States unless you can demonstrate that doing so would irrevocably hurt your company’s financial health. Even so, offering a comprehensive benefits package (as opposed to the least you can offer) is in your company’s best interest. For one thing, people who have good benefits are more loyal to the company that offers them. For another offering, health benefits are a tax deductible expense. The better the plan, the larger the deduction.
The reason few companies take advantage of this benefit is because the rules surrounding affordable healthcare are always changing. Hopefully, those rules will change in a way that offers better resources to business owners. As the specialists at Asure Software note in a blog post published earlier this year:
“Along with the previously listed changes, the new rules aim to simplify comparison shopping—or negotiating to get the best deal on health care. According to KHN, one of the biggest changes the new rules offer is “requesting that next year insurers voluntarily offer plans with a standard set of coverage costs—from deductibles to copayments for drugs or doctor visits.” Because this change is voluntary, insurers may not be inclined to change, but the rule may make it simpler to find a health care provider that matches your budget.”
Choose Your Employees Carefully
Did you know that there are tax credits for businesses that hire veterans? According to the Veterans Administration:
“The Special Employer Incentives (SEI) program provides assistance to employers who hire Veterans. The SEI program connects qualified Veterans with a specific role at your organization. Veterans who successfully complete the hiring program are expected to stay on at your organization. With this program, you can hire a qualified trainee at an apprenticeship wage.
Employers are reimbursed for up to half the Veteran’s salary to cover certain supplies and equipment, additional instruction expenses, and any loss of production.”
Another fantastic tax benefit for business owners is the Work Opportunity Tax Credit. This program gives tax breaks to companies that hire individuals from specifically targeted groups who have, historically, had a difficult time finding employment. These groups include veterans, people who receive SNAP and TANF benefits, people living in Empowerment Zones and Rural Renewal Counties, etc.
In addition to providing tax incentives for hiring people with disabilities, there are also tax benefits offered to employers that make structural changes to their workplaces to make them more accessible. These include changes like putting in wheelchair ramps and elevators, and making the space easier to navigate for people with disabilities and the elderly.
In addition to on-site changes, you can also claim the expenses you incur offering transportation and commuting assistance to your employees. For example, offering monthly transit passes to employees is not considered a “benefit” in the way healthcare is considered. This means that you can deduct the cost of providing those passes as a standard business expense. You might also want to consider offering company cars or even – if your company is very large – shuttles that take employees to and from their workplaces each day.
It is absolutely in your best interest to offer tuition reimbursement to your employees. As the world changes so does the way we do and approach business. This means that your employees will likely have to re-educate themselves regularly or even, in some industries, earn certain types of degrees and certifications to keep their positions (this is common in the field of engineering). Paying their tuition helps ensure that these employees stick with your company when that education is complete.
As we stated earlier, taking advantage of tax breaks is an important part of reducing your tax burden. We’ve outlined a few breaks that are offered specifically to employers. You are also eligible for deductions based on your energy conservation, your income levels, where your employees are located, etc.
Of course, before you attempt to claim any benefit or credit, make sure that it is legitimately earned by your company. Claiming benefits for which your company does not qualify is an excellent way to encourage an audit.
Photo courtesy of: rdelarosa0
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