As a small business owner, you’re juggling a million things—clients, payroll, marketing, you name it. Taxes? They’re probably the last thing you want to think about. But what if I told you that you might be leaving thousands of dollars on the table every year just because you’re not claiming the tax credits you’re entitled to? Yep, free money from the IRS that could be sitting in your pocket instead of theirs.
In a recent episode of the Small Business Finance Podcast, host Tiffany dives deep into the world of tax credits, breaking down the most commonly missed opportunities that could save your business big bucks. Whether you’re a freelancer, entrepreneur, or running a growing company, this is one topic you can’t afford to ignore. Let’s unpack the key takeaways from the episode and show you how to claim the credits you deserve before they slip away.
Why Tax Credits Matter More Than Deductions
First things first: tax credits are not the same as deductions. Deductions lower your taxable income, which is great, but credits? They’re a dollar-for-dollar reduction in what you owe the IRS. For example, a $10,000 deduction might save you $3,000 if you’re in a 30% tax bracket. A $10,000 tax credit? That’s $10,000 straight back in your bank account.
Here’s the kicker: billions of dollars in tax credits go unclaimed every year, especially by small businesses. Why? Because many entrepreneurs assume credits are only for big corporations or that their CPA would’ve mentioned them. Spoiler alert: that’s not always the case. The IRS isn’t going to call you up and say, “Hey, you forgot your free money!” It’s on you to know what’s out there and how to claim it.
The Most Commonly Missed Tax Credits for Small Businesses
Let’s dive into the top tax credits Tiffany highlighted in the podcast—credits that could put thousands back in your pocket. Trust me, at least one of these will surprise you.
1. R&D Tax Credit: Not Just for Tech Giants
When you hear “Research and Development (R&D) Tax Credit,” you might think it’s only for Silicon Valley startups or pharmaceutical companies. Think again! This credit applies to any business working to create or improve products, processes, software, or even internal workflows.
- Who qualifies? If you’re spending money on innovation—like developing new systems, prototyping, or improving processes—you could be eligible.
- Potential savings: Up to 10% of qualifying expenses, with startups able to offset up to $250,000 in payroll taxes.
- Example: A marketing agency developing custom software tools for clients could claim this credit, saving thousands.
2. Work Opportunity Tax Credit (WOTC): Get Paid to Hire
Hiring new team members? The Work Opportunity Tax Credit rewards businesses for hiring from certain underrepresented groups, like veterans, long-term unemployed individuals, or formerly incarcerated people.
- Who qualifies? Employers hiring from specific categories outlined by the IRS.
- Potential savings: Up to $9,600 per employee hired.
- Example: A roofing company saved $35,000 by hiring veterans under this program—money that went straight back into their business.
3. The Augusta Rule: Rent Your Home, Tax-Free
This one’s a hidden gem. Under IRS Section 280A, you can rent your home to your business for up to 14 days a year, completely tax-free. Host a team meeting, retreat, or photoshoot at your house? Charge your business a fair market rental rate, and that money goes straight to you, no taxes owed.
- Who qualifies? Any business owner who uses their home for business purposes.
- Potential savings: $5,000–$30,000 per year, depending on your location and rental rates.
- Pro tip: Document everything with a rental agreement to keep the IRS happy.
4. Solar and EV Tax Credits: Go Green, Save Green
Thinking about solar panels or an electric vehicle for your business? The government wants to help you make the switch.
- Who qualifies? Businesses investing in solar energy or purchasing electric vehicles.
- Potential savings: Deduct 30% of solar installation costs or get up to $7,500 for an EV.
- Why now? These credits can offset upfront costs while saving you on energy bills long-term.
Why Small Businesses Miss Out (And How to Avoid It)
So, why are so many business owners leaving money on the table? Here are the top reasons, straight from the podcast:
- Assuming they don’t qualify. Many credits are designed specifically for small businesses, but the IRS doesn’t make it easy to figure out which ones apply to you.
- CPAs focused on filing, not strategizing. Most CPAs prioritize compliance over hunting for credits. If you’re not asking about specific credits, they might not bring them up.
- Not knowing credits can be retroactive. Missed a credit last year? You might still be able to claim it by amending returns from the past three years.
- The tax code is confusing. Let’s be real—deciphering IRS rules feels like cracking a secret code. Without guidance, it’s easy to miss out.
The good news? You don’t have to navigate this alone. Here’s how to make sure you’re claiming every credit you’re entitled to.
How to Claim Your Tax Credits Before It’s Too Late
Tiffany shared a step-by-step game plan to help you stop missing out. Here’s what to do:
Step 1: Don’t Rely Solely on Your CPA
Your CPA is probably awesome at filing taxes, but strategizing is a different skill set. Ask them directly: “Can you review my last three years of returns for missed credits?” If they can’t give you a clear answer, it’s time to bring in a tax strategist who specializes in credits.
Step 2: Get a Tax Credit Review
Even if you’ve already filed, it’s not too late. Credits like the R&D, Work Opportunity, and Employee Retention Credit can often be claimed retroactively for up to three years. One business owner in the podcast got a $75,000 refund two years after filing just by reviewing their returns. Schedule a review ASAP—once the deadline passes, that money’s gone for good.
Step 3: Keep Impeccable Records
The IRS loves documentation. Want to claim the R&D credit? Track employee hours, project details, and research costs. Augusta Rule? Have a written rental agreement. Create a dedicated folder (digital or physical) for tax credit records so you’re audit-ready.
Step 4: Work with a Tax Strategist
A tax strategist doesn’t just file your taxes—they work year-round to minimize your tax burden and uncover every credit and deduction you qualify for. One business owner switched to a strategist and saved $55,000 in a single year by claiming missed credits and optimizing their business structure.
Act Now Before Credits Expire
Here’s the bottom line: the IRS isn’t going to hand you a checklist of credits you’re eligible for. If you don’t claim them, that money stays with them. And some credits—like the Employee Retention Credit—have expiration dates. Wait too long, and you could lose out forever.
So, what’s your next step? Start by talking to your CPA or a tax strategist about the credits we’ve covered. Review your last three years of returns to see if you’ve missed anything. And most importantly, act now. Every month you wait is money you’ll never get back.
Ready to Keep More of What You Earn?
Tax credits aren’t just for the “big guys.” They’re for entrepreneurs like you who are working hard to grow their businesses. The wealthy don’t just make money—they keep more of it by playing the tax game strategically. Now you know how to do the same.
Want to dive deeper? Check out Tiffany’s book, Your Biggest Expense: How to Legally Pay Less in Taxes to Keep More Wealth, for a step-by-step guide to claiming every credit you qualify for and structuring your business to minimize taxes year after year. Grab your copy at yourbiggestexpense.com and start keeping more of what you earn today.
Because when it comes to your business, it’s not about how much you make—it’s about how much you keep.
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