Tax Incentives Blog

Capturing green building tax incentives is a valuable opportunity for contractors, architects, designers and building owners to improve their budgets and maximize tax savings. Beneficial tax incentive programs such as the 179D tax incentive and 45L tax credit should be pursued by eligible businesses. 

While the 179D tax incentive and 45L credit have not yet been extended for 2015, legislation is likely to extend these credits in 2015. What does this mean for your business? Companies who make investments in properties that qualify should continue to prepare for capturing these credits once they become available. 

While implementing energy-efficient changes in your building has direct cost benefits due to decreased energy bills, there are also valuable tax incentives associated with energy efficiency. Incentive programs such as the 45L tax credit offer builders and developers the opportunity to maximize tax savings. 

Through the Section 45L credit program, contractors earn a $2,000 tax credit for each energy-efficient dwelling unit sold or leased between January 1, 2012 and the end of 2014. 

Employment tax credits are a valuable business incentive many qualified businesses fail to take advantage of. Between the various federal and state employment credits, businesses of all sizes have the opportunity to pursue these tax solutions. 

Without the help of a tax expert, it is difficult for your clients to know what tax incentives they qualify for. Conducting research on tax credits and learning more about which of your clients qualify for employment tax credits is a beneficial decision for CPA firms interested in helping businesses improve their tax budget. 

Learn about the five most important federal and state employment credits you must capture for your clients. 

Federal employment credits are valuable tax solutions many CPA tax experts work to capture for their clients. By taking advantage of the Work Opportunity Tax Credit (WOTC), CPA firms are able to help clients claim significant tax savings. 

The WOTC is one of the most overlooked avenues of capturing employment credits. Although the benefit is an income tax credit, the company capturing this credit is required to have the employee answer several qualification questions at the time of hire, so the process relates to the company’s HR department as opposed to the accounting and finance department. By working with their clients to incorporate a point-of-hire process for screening new employees, a CPA brings significant value by capturing the WOTC and other similar state-level hiring credits.   

Some people choose to implement energy efficiency changes into their homes and buildings solely out of concern for the environment. However, there are many cost-saving benefits that should not be overlooked when outfitting a green building. 

Besides saving you money on energy expenses, green building incentives make energy efficiency an effective tax solution when your company is focused on finding innovative ways to earn tax credits. 

How can green building tax-savings strategies benefit your business?

One reigning myth of cost segregation is that conducting a study could result in owing more tax when choosing to sell your property. This myth is derived from text within the Internal Revenue Code (both Section 1245, personal property and Section 1250, real property) that deals with depreciation recapture. 

The IRS procedure for depreciation recapture is to collect income tax on a gain realized by a taxpayer when the taxpayer disposes of an asset (such as real estate) that provided an offset to ordinary income for the taxpayer through depreciation. 

While outsourcing was once considered a “trend,” more and more companies across all industries are now moving towards outsourcing as a smart, cost-effective business plan. By now, you likely already know that many CPA firms are outsourcing various processes to achieve greater efficiency and strategic aim. 

CPA firms are continuously turning towards outsourced tax experts for their wealth of expertise in a particular segment of the industry. Also, the right outsourced tax service comes equipped with state-of-the-art technology created and refined by the experts themselves, who use the software daily and with a variety of clients. 

Have you claimed the California enterprise zone credit? Have you so far escaped being audited by the Franchise Tax Board (FTB)? 

You may be feeling relieved, however, you are still at risk of an audit. 

The FTB is able to look back to the preceding four taxable years – sometimes even further back – to recoup invalid CA enterprise zone tax credits. Early identification of these tax hazards ensures you don’t lose your CAEZ tax credit. 

The California Enterprise Zone (EZ) program was repealed for employees hired and equipment purchased after December 31, 2013. What does the repeal mean if your business is in a CA enterprise zone? For starters, you cannot make any more CAEZ-qualified hires or purchases. 

The following six factors of the CA Enterprise Zone program repeal will help you navigate this major tax credit change: 

Cost segregation is described by the IRS as the most preferred method for accurately measuring and classifying lump sum costs for depreciation purposes. Anyone tuned in to cost segregation understands that the IRS scrutinizes these studies during audits. 

The major flaw the IRS is searching for is a lack of factual information upon which the cost segregation conclusions are based. Section 6662 of the Tax Code underscores the need for total accuracy in a cost segregation analysis: The negligence penalty is 20% of the underpayment in tax.