We’re more than mid-way through 2021, and my smartest clients are using this time to strategize how to limit their tax bill and turn those savings into cash for the year. Because hey, it’s only like 20-30% of your income, right? So what are they doing? Here are five things that are top of mind.

1. Leveraging the Employee Retention Tax Credit

This payroll tax credit was established as part of the 2020 CARES Act and then extended through the end of 2021. It can save your business as much as $10,000 per employee for 2020 and $28,000 per employee for 2021. You’re eligible if your business was partially or fully shut down due to the pandemic in either year, or if you lost 20% of your revenues in any quarter this year (50% in any quarter of 2020) compared to the same quarter in 2019. The credit is taken against the employer payroll taxes you owe, and if the credit is higher than the taxes due, you can get the difference back in cash. Didn’t take advantage in 2020? That’s okay, just go back and amend your payroll tax returns.

2. Using the Work Opportunity Tax Credit for Hiring Workers

This is an income tax credit that can be as high as $9,600 per employee if you hire someone who meets its criteria, such as recently out of prison, off welfare or — get ready — has been unemployed for more than six months. Ring a bell? Learn how to calculate in advance of hiring that employee and then use it — or a portion of it — as a hiring bonus to attract those hard-to-find workers. You can take advantage of this credit through 2025.

3. Buy Capital Equipment

Thanks to accelerated depreciation rules, you can (this year) buy approximately $1.1 million in capital equipment — machinery, technology, etc. — and then deduct all of it in the same year as long as you put it into service. Even if you don’t have the cash, get a loan while interest rates are still low. Better yet, get a Small Business Administration Section 7(A) or 504 loan before September 27, 2021, and you will get the first three months of principal and interest forgiven.

4. Take Advantage of a One-Time Loss Carryback Provision.

Again thanks to the CARES Act, there’s a one-time special carryback loss provision that could generate cash for you. If your business lost money in 2020, 2019 or 2018, then all you have to do is amend those and other related tax returns to carry back the loss five years before. If you made money and paid taxes in the years prior, you’ll reduce those earnings and be able to get that tax money back.

5. Clean Up Your Inventory.

Most of my clients are struggling with supply chain issues this year, and they’re taking the opportunity to revisit their inventories so that they can fully maximize the supplies they have. You should do the same and make some hard decisions about that older stuff that’s been lying around for years. Maybe it’s time to admit defeat and dispose of it? You’ll get a tax deduction for doing so, and you’ll free up room for more valuable inventory as it becomes available.

These are just a few of the smart tax moves my clients are making to generate more cash this year. Don’t make the mistake of waiting. Talk to your accountant now and make those and other moves while there’s still time. Because, as I said before, it’s only 20- 30% of your income, right?

Ready to apply for the Employee Retention Credit? Accelerate Tax can help. They specialize in helping businesses maximize their ERC refund.

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