Reconciling the small business credit

If your business and occupation (B&O) tax liability is below certain thresholds, you are entitled to the small business credit (SBC). The amount of SBC you may claim varies and is automatically calculated when you file electronically.
 
The SBC may need to be adjusted based on your annual reconciliation. Our system will not automatically adjust the SBC when you file your reconciliation. This means the estimated tax balance on the reconciliation may change. The department will review the reconciliation and adjust the SBC as necessary.

Example 1: 

Period	Tax Classification	Original Tax	Original SBC	Original Amount Due	Reconciled Tax	Reconciled SBC	Reconciled Amount Due	Difference
Q1 2023	Service and Other Activities	1,200	-	1,200	850	110	740	(460)
Q2 2023	Service and Other Activities	100	100	-	800	160	160	640
Q3 2023	Service and Other Activities	1,700	-	1,700	850	110	740	(960)
Q4 2023	Service and Other Activities	300	300	-	800	160	640	640
		3,300	400	2,900	3,300	540	2,760	(140)

In this example, the taxpayer originally qualified for an SBC in the amount of $400. Based on their reconciliation, the taxpayer now qualifies for an SBC in the amount of $540. While the tax amounts will be accounted for in the reconciliation, the SBC adjustments will be made by the department when the reconciliation is reviewed. In this situation, the taxpayer will get a refund of $140, plus interest. 

Example 2: 

Period	Tax Classification	Original Tax	Original SBC	Original Amount Due	Reconciled Tax	Reconciled SBC	Reconciled Amount Due	Difference
Q1 2023	Service and Other Activities	500	460	40	1,000	-	1,000	960
Q2 2023	Service and Other Activities	700	260	440	100	100	-	(440)
Q3 2023	Service and Other Activities	500	460	40	1,000	-	1,000	960
Q4 2023	Service and Other Activities	500	460	40	100	100	-	(40)
		2,200	1,640	560	2,200	200	2,000	1,440

In this example, the taxpayer originally qualified for an SBC in the amount of $1,640. Based on their reconciliation, the taxpayer now qualifies for an SBC in the amount of $200. While the tax amounts will be accounted for in the reconciliation, the SBC adjustments will be made by the department when the reconciliation is reviewed. In this situation, the taxpayer will get a bill of $1,440, plus interest.