What Tax Credits Are in the General Business Credit?
The General Business Credit (Form 3800) is used to accumulate all of the business tax credits you are applying for in a specific tax year, to come up with a total tax credit amount for your business tax return. It allows you to calculate the total amount of tax credits for which you are eligible for a specific tax year, including any tax carrybacks and carry forwards (tax credits which you carry back or carry forward from other tax years).
General business credits are reported in a specific order, depending on which credits are used in the tax year.
- First, any carry forwards from past years are used, earliest first
- Then, the general business credit earned during that year is calculated
- Finally, any carrybacks to that year from future years
If your general business tax credits are larger than your tax liability for the year, then the credits are used in a specific order.
How Do I Complete the General Business Credit?
You must complete the specific form for each credit you are taking, then include all of these credits on Form 3800 for the total general business credit.
What Business Tax Credits Are Included in the General Business Credit?
COVID-19-Related Tax Credits
The U.S. Treasury Department and the Internal Revenue Service (IRS) have initiated some new tax credits to help employers during the ongoing COVID-19 pandemic:
The Employee Retention Credit was created to help employers keep employees on the payroll during the economic downturn. Your business can get a fully refundable tax credit equal to 50% of wages of qualified employees for the period of March 12, 2020, to Dec. 31, 2020. The credit increases to 70% of qualified wages for the period of Jan. 1, 2021, to Dec. 31, 2021. You can also get the benefit of the credit by reducing your employment tax deposits and/or getting an advance payment. The time limit on this tax credit has been extended through Dec. 31, 2021.
Other COVID-19-related tax credits help smaller companies (those with fewer than 500 employees) get tax credits for providing sick leave and family leave benefits for workers and their families. Employers can claim the credit on their quarterly federal tax return or by reducing their federal employment tax deposits. This program has been extended through Sept. 30, 2021.
- Small Business Health Care Tax Credit, which allows small employers a tax credit for providing health coverage for employees
- The Research and Development tax credit (from 2015 forward) may be included in the general business credit by corporations. Partnerships and S corporations must use IRS Form 6765 to apply for this tax credit.
Ongoing Tax Credits
Included in the general business credit are the following credits. The form you use to figure each credit is shown in parentheses.
- Alternative motor vehicle credit (Form 8910). This credit consists of the following credits for certain vehicles you placed in service. For more information, see Form 8910.
- Biodiesel and renewable diesel fuels credit (Form 8864). This credit applies to certain fuel sold or used in your business. For more information, see Form 8864.
- Credit for employer social security and Medicare taxes paid on certain employee tips (Form 8846). This credit is generally equal to your (employer's) portion of social security and Medicare taxes paid on tips received by employees of your food and beverage establishment where tipping is customary. The credit applies regardless of whether the food is consumed on or off your business premises. For more information, see Form 8846.
- Credit for employer differential wage payments (Form 8932). This credit provides certain small businesses with an incentive to continue to pay wages to an employee performing services on active duty in the uniformed services of the United States for a period of more than 30 days. For more information, see Form 8932.
- Credit for employer-provided childcare facilities and services (Form 8882). This credit applies to the qualified expenses you paid for employee childcare and qualified expenses you paid for childcare resource and referral services. For more information, see Form 8882.
- Credit for increasing research activities (Form 6765). This credit is designed to encourage businesses to increase the amounts they spend on research and experimental activities, including energy research. For more information, see Form 6765.
- Credit for small employer pension plan startup costs (Form 8881). This credit applies to pension plan startup costs of a new qualified defined benefit or defined contribution plan (including a 401(k) plan), SIMPLE plan, or simplified employee pension. For more information, see Publication 560, Retirement Plans for Small Business (SEP, Simple, and Qualified Plans).
- Many renewable energy, alternative fuels, and non-conventional fuels credits are available. These include credits for renewable electricity, geothermal and solar energy, fuel cell energy, biofuels, and more. Read more about energy-saving and environment-friendly business activities.
- Disabled access credit (Form 8826). This credit is a nonrefundable tax credit for an eligible small business that pays or incurs expenses to provide access to persons who have disabilities. You must pay or incur the expenses to enable your business to comply with the Americans with Disabilities Act of 1990. For more information, see Form 8826.
- Empowerment zone and renewal community employment credit (Form 8844). You may qualify for this credit if you have employees and are engaged in a business in an empowerment zone or renewal community for which the credit is available. For more information, see Form 8844 and Publication 954.
- Indian employment credit (Form 8845). This credit applies to qualified wages and health insurance costs you paid or incurred for qualified employees. For more information, see Form 8845 and Publication 954.
- New markets credit (Form 8874). This credit is for qualified equity investments made in qualified community development entities. For more information, see Form 8874.
- Non-conventional source fuel credit (Form 8907). This credit is for qualified coke and coke gas you produced and sold to an unrelated person during the tax year. For more information, see Form 8907.
- Qualified plug-in electric drive motor vehicle credit (Form 8936). This credit is for new qualified plug-in electric drive motor vehicles placed in service during the tax year. For more information, including information on what is considered as a qualified plug-in electric drive motor vehicle, see Form 8936.
- Work opportunity credit (Form 5884). This credit provides businesses with an incentive to hire individuals from targeted groups that have a particularly high unemployment rate or other special employment needs. For more information, see Form 5884.