On 07/27/20, Senate Majority Leader Mitch McConnell announced the HEALs Act, which supported by Senate Republicans who are striving to proceed to “Phase 4” of economic relief. The primary goal of the HEALs Act is to preserve the business' and household liquidity and help businesses recover and reopen.
The Heals Act creates a new provision providing refundable tax credits (named “Clean Start: Back to Work Tax Credit Act” ) for businesses spending money on COVID-19 testing, PPE, and cleaning supplies or services. It offers a refundable payroll tax credit equal to 50% of an employer’s qualified employee protection expenses, including COVID-19 testing, cleaning supplies and service, and protective personal equipment.
The purpose of the refundable tax credit
This new provision is to compensate responsible business owners who will do everything to protect employees and customers from contracting COVID-19. This tax credit will help businesses afford cleaning services and supplies and also back up the economic reopening. The amount of tax credits is determined by the number of employees, which serves the HEALs Act’s primary goal of hiring and retaining employees.
Refundable Tax Credits vs. Tax Deduction
Refundable tax credits give you a tax refund when you don’t owe any tax. Tax credits directly reduce the amount of tax you owe. However, a tax deduction reduces how much of your income is subject to taxes. Generally speaking, refundable tax credits are better than a tax deduction.
Who will be qualified?
Business, non-profit organizations, independent contractors, and self-employed individuals.
How much tax credits will I receive?
The amount of credit will depend on the average number of employees. The allowance of credit would be 50% of the amount paid by the business owners in qualified cleaning expenses during such a year. In each calendar quarter, the expense is capped at or below $1000.00 per employee for the first 500 employees, an additional $750.00 per employee between 500-1000 employees, and $500.00 more for each employee over 1000.
We want to help Corpus Christi small business owners to create a safe, healthy, and green environment for employees and customers. Making your customers feel comfortable going to your business paces is the best way to be back to normal business operations. Tax credits give you another good reason for hiring a trustworthy cleaning company to do cleaning jobs.