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Tag Archive for Tax Credits

Important Things To Know About Tax Credits

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With the tax filing season quickly approaching, the Internal Revenue Service recommends taxpayers take time now to determine if they are eligible for important tax credits.

This is the second in a series of reminders to help taxpayers Get Ready for the upcoming tax filing season. The IRS recently updated its Get Ready page with steps to take now for the 2020 filing season.

Earned Income Tax Credit

The Earned Income Tax Credit (EITC) is a refundable federal income tax credit for working people with low to moderate incomes who meet certain eligibility requirements. Because it’s a refundable credit, those who qualify and claim EITC pay less federal tax, pay no tax or may even get a tax refund. EITC can mean a credit of up to $6,557 for working families with three or more qualifying children. Workers without a qualifying child may be eligible for a credit up to $529.

To get the credit, people must have earned income and file a federal tax return — even if they don’t owe any tax or aren’t otherwise required to file.

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Lowering A Corporation’s Effective Tax Rate With Tax Credits

Michael Korengold GOLD

Corporate Tax Directors are in a unique position to add immense value by exploring ways to lower their corporation’s effective tax rate.  Tax Directors must walk a fine line of getting this important mission accomplished or being too creative in taking unnecessary risks.

Insured Tax Credit Investments provide a practical option to lower a corporation’s effective tax rate with the downside covered by insurance.

How do Tax Credits work?

  • Tax credit programs are government sponsored initiatives designed to encourage taxpayers to help finance solar projects, historic building redevelopment and affordable housing
  • Corporate taxpayer repurposes tax payment reserves into qualifying tax credit projects
  • Taxpayer receives tax credits, project cash flows and an exit payment
  • Tax credit investors generate a return on their tax payments, thus boosting their after-tax income and lowering their effective tax rate
  • Returns are predominantly uncorrelated with project performance – taxpayers earn the tax credits as long as the project maintains regulatory compliance.
  • An insurance policy eliminates the compliance risk and, as such, allows a taxpayer to generate a yield on their tax payments without the risk of losing the tax credits 

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Tax Cuts And Jobs Act: Credits For Family Leave And Medical Expenses

Charles Woodson, Tax Credits For Family Leave And Medical Expenses

The Tax Cuts and Jobs Act that was passed last year included a new tax credit for employers that allows them to claim a credit based on wages paid to qualifying employees while they are on family and medical leave.

To qualify for the credit, an employer must have a written policy that provides at least two weeks of paid family and medical leave annually to all qualifying employees who work full time, which can be prorated for part-time. The wages paid during the leave period cannot be less than 50 percent of what the employee is normally paid.

The credit is variable. It begins at 12.5% and increases by 0.25%, up to a maximum of 25%, for each percentage point that the rate of payment exceeds 50% of the employee’s normal pay.

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IRS: Summer Tips For Temporary Jobs, Marriage, Deductions And Credits

IRS, IRS Tips

Before starting a summer job, taking a vacation or sending the kids off to camp, the Internal Revenue Service wants taxpayers to know that some summertime activities may qualify for tax credits or deductions. The IRS also recommends that taxpayers check the amount of their withholding taxes now to help avoid surprises next filing season.

Here are some tips from the IRS that may help taxpayers lower taxes and avoid issues with their taxes:

  1. Worker classification matters.  As with other workers, business owners must correctly determine whether summer workers are employees or independent contractors. Independent contractors are not subject to withholding, making them responsible for paying their own income taxes plus Social Security and Medicare taxes. Workers can avoid higher tax bills and lost benefits if they know their proper status.
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IRS Announces Six Large Business And International Compliance Campaigns

The IRS Large Business and International division (LB&I) has announced the approval of six additional compliance campaigns. LB&I announced on January 31, 2017, the rollout of its first 13 campaigns, followed by an additional 11 on November 3, 2017, and five more on March 13 of this year.

LB&I is reviewing legislation enacted on December 22, 2017, to determine which existing campaigns, if any, could be impacted as a result of a change in the controlling statutory framework. Information regarding any identified impact will be communicated after that analysis has been completed.

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Tax Credits Can Mean A Refund for Individual Taxpayers

Taxpayers who are not required to file a tax return may want to do so. They might be eligible for a tax refund and don’t even know it. Some taxpayers might qualify for a tax credit that can result in money in their pocket. Taxpayers need to file a 2017 tax return to claim these credits.

Here is information about four tax credits that can mean a refund for eligible taxpayers:

  • Earned Income Tax Credit. A taxpayer who worked and earned less than $53,930 last year could receive the EITC as a tax refund. They must qualify for the credit and may do so with or without a qualifying child. They may be eligible for up to $6,318. Taxpayers can use the 2017 EITC Assistant tool to find out if they qualify.

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Tax Deductions Vs. Tax Credits

Tax Credits and Deductions are probably the most exciting part when preparing your tax return. They both help you save money by reducing your overall income tax liability. So, you should take a full advantage of all the tax credits and deductions you qualify for.

Tax Credits and Deductions are probably the most exciting part when preparing your tax return. They both help you save money by reducing your overall income tax liability. So, you should take a full advantage of all the tax credits and deductions you qualify for.
As many still get confused about the difference between tax credits and tax deductions, here’s a simple introduction to the these two in the light of the New Tax Reform that just has been approved.  Read more

2018 Pocket Tax Guide Online Edition

It has been a busy time for tax-related news and upcoming changes. We have compiled many of the tax changes, deductions and tax rates for easy reference year round. It is more important than ever to plan ahead and review your options to maximize your financial results. Also please visit our side-by-side comparison of 2017 tax law and and the recently enacted “Tax Cuts and Jobs Act.”

HIGHLIGHTS OF THE CHANGES AFFECTING 2018

Congress in December of 2017 passed the Tax Cuts and Jobs Act that made sweeping changes to the tax laws. The issues impacting individuals and small businesses are included throughout this pocket tax guide. The following are changes not covered elsewhere in the guide.  Read more

Federal Tax Reform Is Nearing The Finish Line

Thomas Zaino, Tax Connections

On December 15, 2017, the Tax Cuts and Jobs Act (H.R. 1) conference committee members signed and released a Conference Agreement reconciling the different tax bills passed by the U.S. House and the U.S. Senate. The U.S. Senate passed the bill on December 19, 2017, and the U.S. House passed the final version of the conference committee report on December 20, 2017. President Trump is expected to sign the bill into law.On December 15, 2017, the Tax Cuts and Jobs Act (H.R. 1) conference committee members signed and released a Conference Agreement reconciling the different tax bills passed by the U.S. House and the U.S. Senate. The U.S. Senate passed the bill on December 19, 2017, and the U.S. House passed the final version of the conference committee report on December 20, 2017. President Trump is expected to sign the bill into law. Read more

U.S. Expat Tax Saving Strategies

U.S. expats are required to file a U.S. federal tax return reporting their worldwide income, wherever in the world they live. Expats have to comply with the tax laws in the country where they live too, leaving them exposed to the risk of double taxation, having to pay tax to two countries on the same income. Many Americans living abroad aren’t in fact 100% sure which country they should be paying tax to on what income. Read more

Tax Incentives And Credits In Maine

Monika Miles, Maine, Multistate taxes

This month we travel all the way to the northeast corner of the country to the state with the rocky coastline and maritime history of Maine, the Pine Tree State.

Maine is the northeasternmost state in the contiguous United States. It is known for its jagged rocky coastline, low, rolling mountains, heavily forested interior, picturesque waterways, and its seafood cuisine, especially clams and lobster. Read more

A Rundown Of Oklahoma’s Tax Climate

This month brings us to the Sooner State of Oklahoma. The state lies between the Great Plains to the West and the Ozark Plateau to the East and is in the Gulf of Mexico watershed, generally sloping from the high plains of its western boundary to the low wetlands of its southeastern boundary. With small mountain ranges, prairies, mesas and eastern forests, most of the state lies in the Great Plains, Cross Timbers, and the U.S. Interior Highlands, a region prone to severe weather. Read more