4 Critical Ways CPAs Help Their Clients Qualify For More Tax Credits

Written by Taz Singh, CPA. Updated Mar 3, 2015.

cpas-help-qualify-for-more-tax-creditsThe complex, ever-changing tapestry of intricately woven tax rules and regulations looms large above the heads of small business owners. Federal, state and local tax policies have a direct effect on how these entrepreneurs conduct their business activities from year to year. However, it’s often a lack of insight into the details of this fabric — which is designed to prop up the SMB community — that holds many business owners back from receiving the tax credits they deserve. 

As a CPA, you’re tasked with guiding your clients through current and future taxation burdens. Staying on top of every update, every regulation change and every filing requirement, in every category of tax credits and incentives on all levels, is daunting

What is the best process for identifying and claiming tax credits and incentives for your clients? Learn the following four ways tax experts track and trace the most direct trails towards true tax savings: 
  1. Work closely with clients and be aware of changes to their businesses.

    There’s no simple way around it: You need to know your clients’ businesses intimately to provide them with winning tax credits and incentives game plans. [Link to: About CTI / Our Process] Any change in how a client hires employees, conducts research and development, develops and depreciates property or improves energy efficiency may have a significant impact on tax credit qualifications.

  2. Conduct an annual review of activities involving employment, research and development, operations and facilities adaptations.
    At the very least, you need to oversee yearly reviews of your clients’ business activities involving the following four main tax credit categories:

    Employment: 
    Are your clients taking full advantage to the available employment-based tax credits that encourage hiring, training and retaining employees? From credits to financing and grants, there are a wide variety of employment-based tax credits on both the federal and statement level. Your clients should know about every applicable program and how to meet the qualification requirements.

    Research And Development (R&D): 
    The area most businesses are unsure of are R&D tax credits, never pursue them and end up leaving money on the table. Many businesses are eligible for R&D tax credits, such as those that invest in developing or improving a product, process, technique, formula, invention or software. Eligible businesses could receive up to $150,000 in tax credits on every $1 million spent, and may be claimed for any open tax year. 

    Cost Segregation: 
    Cost segregation is an important component to a business’s tax-savings strategy. Critical to capturing every potential tax credit and incentive is incorporating an engineering-based segmentation study into the mix for your clients who own or plan to own property. Diving deep into cost segregation studies results in enhanced cash positions based on your clients’ real estate assets.

    Green Building: 
    Today, there are many federal and state tax credits and incentive programs that encourage business owners to go green and implement energy efficient alternatives. While lower energy usage is easier on a business’s utility bill, it’s also easier on the power grid and diminishing natural resources. Engineering tax experts help businesses make the right choices to qualify for green building tax credits and incentives. 

  3. Compare the physical presence of a client’s operations with available tax credit and incentives programs.
    Especially when it comes to state and local tax credits and incentives, it’s important to consider the physical presence of a client’s operations. As technology evolves, businesses now operate more freely across state borders, and a business’s “location” is more sensitive to tax considerations. 

    Whether or not your client has a physical presence in a particular state (or even overseas), the rules and regulations of state tax credits and incentives are going to change as our society becomes more reliant on the digital economy.

  4. Bring in qualified tax experts to review possible credit and incentive opportunities.
    Outsourced tax consultants aren’t providing services to steal your clients. These tax experts have hard-won, specific knowledge and experience in areas of tax credits that are flat-out confusing or complicated. 

    The right outsourced tax consultants understand that there is no one-size-fits-all approach to tax credits and incentives, and provide a tailored service to each of your client engagements. When looking to partner with an outsourced tax expert, determine if their process functions like a partnership to your CPA firm. 

The key to your clients’ success with tax credits and incentives is simplifying the process. That’s why you need additional support so someone is advocating on your behalf. The end result is top-quality work, personalized service and maximized tax savings for your clients. 

Ready to learn more about best practices for finding your clients the tax credits and incentives they deserve? Call 866-444-4880 or click here to speak directly with an experienced tax expert at Corporate Tax Incentives.
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Topics: R&D Tax Credit, Employment Incentives, Cost Segregation

Taz Singh, CPA

Written by Taz Singh, CPA

Taz has 20 years of experience in tax and business incentives. Prior to establishing CTI, Taz served as a corporate tax auditor for the California Franchise Tax Board. During his tenure, Taz specialized in auditing tax credits, including manufacturers’ investment credits, research & development credits and credit limitations (IRC 382 Limitation) due to ownership changes.