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Tax Credits to Check with Your Accountant

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By Debbie Gregory.

LinkedIN Debbie Gregory VAMBOA VAMBOA Facebook VAMBOA Twitter

 

Now is the time to take advantage of a few tax breaks that expire as the decade comes to an end.   You will need to check with your financial advisor.   Below are three use-it-or-lose-it opportunities for tax breaks that might make sense for you and your company.

 

  • Paid Family and Medical Leave Tax Credit:

Employers with 50 or more employees are required by law (the Family and Medical Leave Act) to provide up to 12-weeks of time off for certain family matters. There is no law that says those weeks must be paid time off. If your company offers that time off paid, and that policy is in writing, you may be eligible for a federal tax credit so check with your accountant and determine if you are eligible to file. The amount of the credit, which is figured on IRS Form 8994, is a minimum of 12.5% of the paid leave amount up to a maximum of 25%.

 

  • Tax Credit for Electric Powered Vehicle:

This credit applies to plug-in electric vehicles and is calculated on IRS Form 8936. If the vehicle is purchased for business use, the tax credit is then part of the general business credit. This credit was designed to encourage people to purchase and use electric powered, clean-fuel, vehicles. The credit amount can be a maximum of $7,500. Certain vehicle manufacturer restrictions apply.

 

  • Work Opportunity Tax Credit:

This credit is a federal tax incentive to hire a person who falls within a targeted group (as defined by the tax law). This incentive only applies to people who fall within one of the 10 eligible groups (listed below with a link to the IRS site about it) and who begins work before January 1, 2020. The credit can range from $2,400 to $9,600 per hire.   The Work Opportunity Tax Credit is usually renewed each year.

 

The targeted groups are as follows:

  • Summer youth employees
  • Recipient of SNAP benefits (food stamps)
  • SSI recipient
  • Member of a family receiving Temporary Assistance for Needy Families (TANF)
  • Qualified Veteran (there are 5 subcategories)
  • Qualified ex-felon
  • Designed community resident
  • Vocational rehabilitation referral
  • Long-term family assistance recipient
  • Long-term unemployed

 

In order to take advantage of this tax credit you will need to prove the employee falls within a targeted group and submit IRS Form 8850 to the state workforce agency within 28 days of the first day of that person’s employment with you. The basic credit for this is 40% of first year wages up to $6,000 (for a top credit of $2,400), as long as the employee works at least 400 hours. However, the credit for a veteran with a service-connected disability, who is employed for at least 6 months, is 40% of their wages up to $24,000 (for a top credit of $9,600). Not only is it the right thing to hire Veterans who make outstanding employees, but it makes financial sense.

 

If any of these three tax incentives are applicable for your business, jump on them now and discuss with your financial professional.

 

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.

Tax Credits Available for Hiring Veterans

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Military Connection Tax Credits
Military Connection Is Getting the Word Out to Employers About Tax Credits Available for Hiring Veterans.

 

MilitaryConnection.com, the go-to site of the military and Veteran communities, is pleased to let employers know that the tax credit for hiring Veterans has been extended until 2019.

The tax credit, known as the Work Opportunity Tax Credit (WOTC), is available to employers who hire veterans. The WOTC is a workforce program that incentivizes workplace diversity and facilitates access to good jobs for American workers, including those who have served.

With a focus on employment, MilitaryConnection.com is in a unique position to see the benefits of the tax credit from both sides. Employers who hire veterans not only receive the valuable monetary perks from the federal tax credit that can offset the cost of recruitment, advertising and training, they also capture employees with a multitude of skills and an exceptional work ethic. The very nature of being in the military has given them attributes unlike those that civilians gain through most other types of employment.

“Those who serve in the military seldom have the luxury of long analysis when it comes to making a decision regarding a specific situation,” said Debbie Gregory, CEO of Military Connection. “This decisiveness, coupled with their tenacity and initiative, make veterans an obvious choice for potential new hires.”

Additionally, most veteran employees have proven that they can work individually, as part of a team, or in a leadership role.

The WOTC reduces an employer’s cost of doing business and requires little paperwork. The WOTC can reduce an employer’s federal income tax liability by as much as $9,600 per veteran hired, and there is no limit on the number of veterans that an employer can hire. To read more about the benefits of the tax credit, visit http://www.militaryconnection.com/veteran-hiring-tax-credits.

About MilitaryConnection.com
MilitaryConnection.com has been named a Top 100 Employment Webs Site by the International Association of Employment Web Sites for the prior five years. Additionally, in 2015, the website received the prestigious Users’ Choice Award. MilitaryConnection.com takes great pride in using its significant reach to assist, provide resources and facilitate win/win partnerships with wonderful non-profits, associations and government agencies serving military and veterans. MilitaryConnection.com features thousands of pages of resources and information. There is something for everyone including, but not limited to: a Job Board and Virtual Job Fair, comprehensive Post 9/11 GI Bill education information, a directory of thousands of scholarships, a Veteran school directory, news, press releases, special events, pay charts, benefits, service directories, commissaries & exchanges, golf courses and more.

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