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2019 Time Sensitive Tax Breaks

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Time Sensitive Tax Breaks

 

By Debbie Gregory.

LinkedIN Debbie Gregory VAMBOA VAMBOA Facebook VAMBOA Twitter

 

Did you know that some tax breaks have a limited life span? Recent changes to the US tax laws have placed an expiration date on certain tax provisions that were originally slated to last longer. If you qualify for any of the following, grab your tax break while you can.

 

Here are 3 major tax credits that expire December 31, 2019:

 

1.) Credit for electric powered vehicles

If you purchase an electric-powered vehicle you may be eligible for a tax credit up to $7,500. If the vehicle is being used for business, the business can also claim the tax credit.

 

2.) Credit for paid family and medical leave

If you own a business and offer your employees paid leave, you may quality for a tax credit. To qualify, you must have a written policy that you provide at least two weeks of paid leave and that you pay at least 50% of wages normally paid to an employee. The credit amount ranges from 12.5% to 25% of wages, depending on what you pay. However, this tax credit only applies to employees that earn less than $72,000 a year.

 

3.) Work opportunity credit

If you own a business and you are looking to hire some new employees, your business may be able to take a tax credit up to $9,600 as long as the people you hire fall into certain targeted categories.

 

The targeted groups are as follows:

  • Long-term family assistance recipient
  • Qualified recipient of Temporary Assistance for Needy Families (TANF)
  • Qualified Veteran
  • Qualified ex-felon
  • Designated community resident
  • Vocational rehabilitation referral
  • Summer youth employee
  • Supplemental Nutrition Assistance Program (SNAP) benefits (food stamps) recipient
  • SSI recipient
  • Qualified long-term unemployment recipient

 

To qualify, your business must submit form 8850 (https://www.irs.gov/pub/irs-pdf/f8850.pdf) to your state workforce agency no later than 28 days after the new qualifying employee begins work.

 

For more information on these tax breaks as well as any others you or your business may qualify for please refer to the IRS website at https://www.irs.gov/.

The IRS Dirty Dozen

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IRS Dirty Dozen

By Debbie Gregory.

LinkedIN Debbie Gregory VAMBOA VAMBOA Facebook VAMBOA Twitter

What does the IRS have to say?

Every year the IRS releases a list of the most common taxpayer scams to help the general public identify and hopefully avoid falling victim to. The following is the list for 2019.

 

The IRS’ “Dirty Dozen” worst scams for 2019 (grabbed right from the IRS’ website):

  • Abusive tax shelters, trusts, and conservation easements – See IR-2019-47
  • Frivolous tax arguments – See IR-2019-45
  • Failure to report offshore funds – See IR-2019-43
  • Improper claims for business credits – See IR-2019-42
  • Scams involving disasters and charitable causes – See IR-2019-39
  • Inflating deductions and/or credits – See IR-2019-36
  • Falsifying income and/or creating bogus documents – See IR-2019-35
  • Promises of inflated tax refunds – See IR-2019-33
  • Tax return preparer fraud – See IR-2019-32
  • Identity theft – See IR-2019-30
  • Phone scams – See IR-2019-28
  • Pervasive phishing schemes –  See IR-2019-26

 

The IRS also has a quick intro video about the Dirty Dozen list:

 

For more information or to read the full text on any of the Dirty Dozen listed above, check out the official IRS website:

https://www.irs.gov/

 

VAMBOA, the Veterans and Military Business Owners Association encourages its members and supporters to be on the alert and protect all of your information.

Research & Development Tax Credits

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By Debbie Gregory.

LinkedIN Debbie Gregory VAMBOA VAMBOA Facebook VAMBOA Twitter

Governments typically incentivize private industry to produce research and development (R&D) as a strategic tool to advance their economies. The United States government also does so. The  Research & Experimentation Tax Credit (R&D Tax Credit) was first introduced in 1981 as a two-year incentive, and has remained part of the tax code ever since.

The rules of the Research & Development Tax Credit can be found under Internal Revenue Code (IRC) section 41 and the related regulations. The R&D tax credit may apply to any taxpayer that incurs expenses for performing Qualified Research Activities (QRA) on American soil.

It’s not only high-tech or life sciences companies with dedicated research departments that qualify for the R&D tax credit. Some other common industries that qualify include, but are not limited to:

  • Aerospace & Defense
  • Architecture
  • Automobile
  • Chemical & Formula
  • Engineering
  • Environmental
  • Food Science
  • Foundries
  • Life Sciences & Pharmaceutical
  • Machining
  • Manufacturing & Fabrication
  • Software Development
  • Tool & Die Casting

To qualify, you must be able to prove that the activities rely on are hard science, such as engineering, computer science, biological science, or physical science;  that they relate to the development of a new or improved business component; and that your activities constitute a process of experimentation involving testing and evaluation of alternatives to eliminate technological uncertainty.

The potential R&D credit benefits include a dollar-for-dollar reduction in your federal and state income tax liability; improved cash flow; look back studies that recognize unclaimed credits for open tax years(generally for three or four years); and up to 13.5 cents of R&D tax credit for every qualified dollar spent.

Whether you’ve already filed your return or filed an extension, the R&D credit is a powerful tool to help lower your tax rates. If you are uncertain as to whether you qualify for the R&D tax credit, there are numerous professionals that can guide you through the process.

 

Veteran and Military Business Owners Association, VAMBOA.

By Debbie Gregory.

Equifax is set to receive $7.25 million to help the IRS identify taxpayers and prevent fraud under a no-bid contract. Equifax is currently embroiled in a massive security breach that exposed the personal information of some 145 million Americans.

The IRS needed to outsource this work because it’s handling a dispute on a different contract that affects its ability to fulfill these duties.

According to the Federal Business Opportunities database, the contract is a “sole source order,” meaning Equifax is the only company deemed capable of providing the service.

The partnership between the IRS and Equifax has received bipartisan flak from both sides of the aisle. Lawmakers feel that it is irresponsible for the IRS to turn over millions in taxpayer dollars to a company that in the midst of one of the most massive data breaches in a decade.

“The Finance Committee will be looking into why Equifax was the only company to apply for and be rewarded with this,” said Sen. Ron Wyden (D-OR.) “I will continue to take every measure possible to prevent taxpayer data from being compromised as this arrangement moves forward.”

The IRS took a defensive position, saying that Equifax told the agency that none of its data was involved in the breach.

Equifax already provides similar services to the IRS under a previous contract.

While Equifax’s September data breach has mostly subsided, but the actual damage will play out for years. Attackers initially got into the affected customer-dispute portal through a vulnerability in the Apache Struts platform, an open-source web application service popular with corporate clients. Apache disclosed and patched the relevant vulnerability some six months earlier.

Additionally, Equifax stored sensitive consumer information in plain text rather than encrypting it.

Equifax is one of three major credit reporting bureaus whose data determine consumer credit. This includes those trying to qualify for mortgages, auto loans, credit cards, etc.

Do you think the IRS made the right decision?

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