Is Your Company Paying Too Much Tax?

Does your business usually defer taxes through various investments? These investments are usually not risk-free. There are multiple business credits that your company may be entitled to that you should consider. Unlike deferred taxes, business credit deductions permanently reduce your taxes.

There are many different business tax credits that can be claimed, but here are a few of the multiple business credits:

Investment Credit Property

The investment credit property is any depreciable or amortizable property that qualifies for the rehabilitation credit, energy credit, qualifying advanced coal project credit, qualifying gasification project credit, or qualifying advanced energy project credit. For instance, if the equipment you bought uses solar energy to generate electricity to heat or cool any structure of your Company, then you are entitled to a 30% credit of the purchase price. There is no maximum limit to this credit.

Work opportunity credit

The work opportunity credit promotes the hiring of individuals who qualify as members of target groups. Employers who hire these individuals can receive a federal tax credit incentive of up to $9,600. The target groups include, but are not limited to, the qualified recipients of temporary assistance to families in need, qualified veterans receiving Food Stamps, ex-felons hired no later than one year after conviction or release from prison, designated community residents (any individual, ages 18-39, who on the hiring date resides in an Empowerment Zone, or Rural Renewal County), vocational rehabilitation referrals (including the Ticket to Work program with an individual work plan developed and implemented by an Employment Network), qualified summer youth (employed between May 1 and September 15, youth ages 16 -17 who reside in an empowerment zone), qualified Food Stamp recipients (ages 18-39 on the hiring date), qualified recipients of supplemental security income, and long-term family assistance recipients.

Alcohol Fuel Credit

If you sell or use alcohol as a fuel, you may be eligible for an income tax credit. The alcohol fuel credit contains two types of credits: small ethanol producer tax credit, tax credit of 10 cents per gallon on up to 15 million gallons of ethanol per year for small ethanol producer, and the straight alcohol credit, eligible if you either used the alcohol as a fuel in your trade or business, or sold the alcohol at retail and placed it in the fuel tank of the buyer's vehicle.

Small Employer Pension Plan Startup Costs Credit

The small employer pension plan startup costs credit can equal up to half of the start-up costs (costs to set up and administer the plan as well as educate employees about the plan) acquired, not exceeding $550 in any tax year. It may be claimed for qualified costs incurred in each of the three years beginning with the tax year in which the plan became effective. An eligible small business is defined as one that has not employed more than 100 workers, who received at least $5,000 of compensation from that employer in the preceding year.

If you feel your company might be missing out on the credit opportunities presented above or if you need more information to see if you are entitled to any business credits, please contact us.

/posted by Anthony Aymerich