Are you leaving money on the table by not claiming the tax credits you’re entitled to? Tax credits and incentives were written in the law so that qualifying taxpayers can be awarded for certain activities such as job creation and promoting business growth. Let the IRS and the state revenue agency finance your growth by claiming the tax credits you have missed.
Tax credit is a benefit that IRS and the state revenue agencies allow to the taxpayers based on certain business activities and situations. Tax credit offsets the taxpayer’s tax liability on a “dollar-for-dollar” basis so it can create significant tax savings. A tax credit is better than a tax deduction, which only lowers the amount of taxable income. Therefore, tax credit should not be overlooked by taxpayers who have potential to take advantage of them. Incentive is a general term that encompasses the tax credits, special tax deductions and other tax benefits provided to the taxpayers
Federal Work Opportunity Tax Credit (WOTC) program rewards taxpayers who are
hiring from certain demographic groups. Federal Empowerment Zone (EZ)/Renewal Community (RC) programs promote business growth in certain economically-distressed areas of the country. Businesses located in the EZ or RC areas earn tax credits by hiring employees from the same federally-designated zone.
Businesses located in one of the state’s 42 Enterprise Zones can generate Hiring Credit and Sales/Use Tax Credit, which can significantly reduce their California income tax. A single qualifying employee can generate over $37,000 of Hiring Credit for its employer. Also, sales tax paid for machinery, equipment, computers and other qualifying personal assets being used in the “zone” will generate credit. We have clients in the zone all across the state, covering the Northern, Central and Southern California.
Banks (and lenders) that loan funds to the businesses located in any one of the 42 California Enterprise Zones do not have to pay California income tax on the net interest it earns from the “zone” borrowers. Hutchinson and Bloodgood can quickly review a bank’s loan portfolio to determine the Net Interest Deduction available for the Bank, which brings permanent state tax savings.