Tag Tax Credits

Are You Taking Advantage of These New Hiring Incentives?

0 comments By TRMoore Filed in General, Tax Tagged with , , , January 30th, 2012 @ 5:05 pm

In an effort to get unemployed veterans working, two new credits were included in the American Jobs Act, signed into law by President Obama in November 2011. The Returning War Heroes Act provides businesses with a maximum tax credit of $5,600 per hired veteran, while the Wounded Warriors Tax Credit offers a maximum credit of $9,600 per veteran with service-related disabilities.

Read the CCH tax update below for more information, and contact us for assistance in making these credits part of your tax savings strategy:

The Three Percent Withholding Repeal & Job Creation Act (2011 Heroes Act) expands tax incentives that encourage employers to hire military veterans. The 2011 Heroes Act enhances the Work Opportunity Tax Credit (WOTC) by creating the Returning Heroes Tax Credit and the Wounded Warriors Tax Credit.

In general, the WOTC rewards employers with a tax credit for hiring individuals from targeted groups. The WOTC was extended by the Tax Relief, Unemployment Insurance Reauthorization & Job Creation Act of 2010 (2010 Tax Relief Act) through the end of 2011. The targeted groups eligible for the WOTC as extended by the 2010 Tax Relief Act are:

  • Families receiving Temporary Assistance for Needy Families (TANF)
  • Qualified veterans (certain veterans receiving food stamps and certain veterans with service-connected disabilities)
  • Qualified ex-felons 
  • Designated community residents
  • Vocational rehabilitation referrals
  • Qualified summer youth employees
  • Qualified food stamp recipients
  • Qualified Supplemental Security Income recipients 
  • Long-term family assistance (TANF) recipients

However, the 2011 Heroes Act expands the WOTC to include:

  • Employers that hire veterans who have been looking for employment for more than six months may be eligible for a Returning Heroes Tax Credit of up to $5,600 per employee; employers that hire veterans who have been looking for employment for less than six months may be eligible for a credit of up to $2,400 per employee.
  • Employers that hire veterans with service-connected disabilities who have been looking for employment for more than six months may be eligible for a Wounded Warriors Tax Credit of up to $9,600 per employee.

The Returning Heroes and Wounded Warriors credits apply to individuals who begin work after Nov. 21, 2011, and on or before Dec. 31, 2012. However, the 2011 Heroes Act does not extend the Dec. 31, 2011, sunset date on the WOTC provided by the 2010 Tax Relief Act for any targeted group except for qualified veterans.

Exempt Organizations. The 2011 Heroes Act also makes the Returning Heroes Tax and Wounded Warriors Tax credits, as well as the credit for veterans receiving food stamps and veterans with service-connected disabilities who do not meet the criteria for the Wounded Warrior Credit, available to tax-exempt employees. A tax exempt employer for purposes of this extension is an organization described in Code Sec. 501(c) and exempt from taxation under Code Sec. 501(a).

Contact us for assistance in making these credits part of your tax savings strategy.

5 Tax Minimization Strategies to Consider

0 comments By TRMoore Filed in Tax Tagged with , , , May 26th, 2011 @ 5:07 pm

Tax minimization is consistently a top priority for the business owners with whom we work, and this rang true for attendees at our recent Business on Target workshop. Here are five tax minimization strategies discussed:

  1. Bonus Depreciation: This tax savings method grants an extra write-off to all types of businesses because it provides a 50 percent bonus incentive for new, qualified property acquired and placed in service after Dec. 31, 2007, and before Jan. 1, 2013, and a 100 percent bonus incentive for new property that is placed in service after Sept. 8, 2010, and before Jan. 1, 2012.
  2. Cost Segregation Study: Business owners who own a building worth more than approximately $1 million are encouraged to consider a cost segregation study to increase the company’s depreciation deduction. Cost segregation often allows a property owner to accelerate depreciation by 50 percent to 75 percent on qualifying property, thus reducing federal income taxes for prior years. In most cases, qualified assets include decorative fixtures, security fixtures, parking lots and landscaping. 
    • Consider this cost segregation example: A $10 million retail shopping center placed into service 10 years ago had an original depreciation method of 39-year straight line over the building. A cost segregation study resulted in $1 million in assets reclassified as five-year property and another $1.5 million reclassified as 15-year property. The tax savings? More than $475,000.
  3. Research & Development Tax Credit: Businesses can benefit from a tax credit of 13 percent to 14 percent on expenditures related to the development or improvement of a product, including its formula, invention, pilot model, process or technique. The most recent tax act extended the R&D tax credit to Dec. 31, 2011, and businesses can also file for or carry the credit back to all open tax years. Sample savings include:
    1. An oilfield service company with $30 million in annual revenues received a $300,000 tax credit.
    2. A metals manufacturer with $16 million in annual revenues received a $125,000 tax credit
  4. Domestic Production Deduction: Manufacturers producing goods in the United States are encouraged to take advantage of this deduction because the deductable amount for 2010 and beyond  is 9 percent of the lesser of taxable income or qualified production activities income. A company’s qualified production activities include any lease, rental, license, sale, exchange or other disposition made by the taxpayer.
  5. Interest Charged Domestic International Sales Corporation (IC-DISC): Consider forming an IC-DISC if you are a U.S. manufacturer that exports. An IC-DISC eliminates annual double taxation, resulting in a 15 percent to 20 percent savings on operating profits, as well as significant potential tax savings in the in the eventual sale or transition of the business. This tax savings method is valid for 2011 and 2012, and pending legislation, may get extended beyond that. 

Contact us for more information on tax savings strategies.

Tax Savings Strategies Before Year-End

0 comments By TRMoore Filed in General, Tax Tagged with , , , September 22nd, 2010 @ 12:53 pm

by Mary Torres, Tax Division, TR Moore & Company

As year-end nears, it’s time to focus on tax savings planning to ensure you’re taking advantage of the savings opportunities available to you and your business. Failing to do so can mean leaving valuable deductions on the table, paying tax that could have been deferred or falling into tax traps. Strategies to explore include:

  • Deferring income into next year if your business uses the cash-basis method of accounting.
  • Accelerating deductions into the current year and making an estimated state tax payment before Dec. 31, if you are a cash-basis taxpayer.
  • Section 179 expensing election, which is available through 2010 and allows you to deduct equipment purchases.
  • Two tax breaks that may be extended beyond 2009: bonus depreciation and a shortened recovery period for qualified leasehold and restaurant improvements.
  • Tax credits such as the Work Opportunity Tax Credit, available through August 2011, and the Research & Development credits, which is likely to be extended.
  • The manufacturers’ deduction, up to 9 percent in 2010 from 6 percent in 2009.
  • Employee benefit considerations.
  • And more.

TR Moore & Company is conducting tax planning to review these strategies with our clients now. Visit our Web site, where you’ll find specific planning tips for manufacturers, wholesalers and service companies, and our 2010 – 2011 Online Tax Planning Guide for general business and personal planning.

Looking for a Tax Credit? More Than 350,000 Texas Workers Available for HIRE

0 comments By TRMoore Filed in Tax Tagged with , September 10th, 2010 @ 12:05 am

Texas ranks second behind California among states with the most workers qualifying for business tax incentives through the HIRE Act, according to a recent Treasury Department report. This is good news for Houston businesses looking to add employees while subtracting from their tax burden: the total tax savings per employee tops out at $3,480.

How does it work? The HIRE Act provides employers an incentive to hire workers who have been unemployed for 60 days or longer by exempting wages paid to these workers from the employer’s 6.2 percent contribution of Social Security payroll taxes for the remainder of 2010.

In addition, the HIRE Act allows employers to claim a tax credit of up to $1,000 for each newly hired qualifying worker who is retained for one year.

So, for example, an employer hires an unemployed worker and pays that worker $40,000 in salary this year, the HIRE Act tax exemption will reduce the employer’s payroll tax obligations by up to $2,480 this year (6.2 percent of $40,000), and, if the employer retains that worker for 52 weeks, the employer will receive in addition a $1,000 tax credit, bringing the total tax savings to as much as $3,480.

Employers can claim the HIRE Act tax exemption for all wages paid to qualifying employees through the remainder of 2010.  Read more about the act.

Have you taken advantage of this hiring incentive? Tell us your story in the comments section.

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