Good News for Small Businesses

The American Taxpayer Relief Act of 2012 includes some good news for businesses with the extension of a number of tax credits that encourage innovation, hiring and energy efficiency.

Research Credit Modified and Extended. The Act modifies and retroactively restores the research credit for 2012 and extends it through 2013 to cover qualifying expenses paid or incurred in those years.

Work Opportunity Credit Extended. The Act retroactively extends the general deadline for employing eligible individuals for purposes of claiming the Work Opportunity Tax Credit to cover qualifying hiring that occurred in 2012 and further extends the deadline to cover qualifying hiring that occurs in 2013.

Military Service Differential Pay Credit for Small Employers Extended. The Act retroactively restores the credit for eligible small employers that provide differential pay to employees while they serve in the military to cover payments made in 2012 and extends the deal to cover payments made in 2013. The credit equals 20% of differential pay of up to $20,000 paid to each qualifying employee during the year.

Credit for Building Energy-efficient Homes Extended. The Act retroactively restores the $2,000 per-home contractor tax credit for building new energy-efficient homes in the U.S. (including manufactured homes) for 2012 and extends it through 2013. The credit can also be claimed for substantially reconstructing and rehabilitating an existing home and making it more energy-efficient. Homes that don’t fully meet the energy-efficiency standards may qualify for a reduced $1,000 credit.