What Tax Credits and Incentives Can My Company Use?
Tax credits and incentives can help lower the amount of taxes your business owes. There are many tax credits and incentives your company can take advantage of, but you may need help identifying which credits or incentives are applicable to your unique situation.
State Credit Reviews
Many tax credits are statutory, low-risk opportunities that are often overlooked. Such tax credits include both above-the-line benefits and income tax benefits that may lower your overall effective tax rate. With a complimentary Cherry Bekaert credit review, your company can benefit from previously unidentified state credits that are available to you.
Typically, a one-day state credits and incentives review is more successful if conducted onsite at your location. Otherwise, the data for a feasibility review may be provided to us. Generally, feasibilities are conducted at no cost or at a significantly reduced rate.
The Credit Review Services process helps you identify opportunities for:
- Relevant and applicable statutory state credits
- Refundable or transferable state credits
- Potential state credits that can be converted into cash
- Location-based credits, grants or refunds
- Handling unused, misused or missed credits
A feasibility review will consist of discussions with management and a review of tax returns, fixed assets, apportionment data, projected capital expenditure budgets, headcount increases and business locations.
State and Local Incentives
Much like tax credits, state and local governments may award discretionary incentives to qualifying companies that enhance the local economy. Discretionary incentives may be available for certain business expansions, relocations, or rehabilitations that create new jobs or capital expenditures. They are awarded only at the discretion of the state and local authorities. These incentives may include free land, cash grants, low-interest financing, tax abatements, etc. Qualifying projects often need to be approved by the state in advance of the hiring and capital spend and may require the project to be competitive with another state or country. Cherry Bekaert performs a review of discretionary incentives in conjunction with a state credits review.
Payroll is still the single largest expense most businesses incur, but your payroll tax department can still deliver huge savings. Recovering overpaid taxes, complying with tax law requirements, and detecting potential issues before the IRS does can greatly affect your bottom line. Are you sure your payroll department is doing all this?
Cherry Bekaert’s Employment Tax specialists can work with your HR and payroll professionals to reduce your risk and address your critical issues as they occur. You can get assistance with:
- Identifying, quantifying, and recovering overpaid payroll taxes
- Complying with federal and state tax law requirements during mergers, acquisitions and restructurings
- Securing abatement of penalties for payroll-related assessments
Your team will work closely with our professionals to address payroll concerns before they become significant tax issues.
The Work Opportunity Tax Credit (“WOTC”)
The Work Opportunity Tax Credit (“WOTC”) program is a long-standing federal tax program designed to encourage companies to employ more workers who have traditionally faced barriers to employment. Examples of worker groups include the long-term unemployed individuals, individuals participating in welfare programs, veterans and ex-felons.
As a federal tax credit open to all employers, the WOTC is designed to encourage your business to hire individuals from certain targeted groups. These credits range between $2,400 and $9,600 for each qualified new employee. Some companies earn thousands of dollars each year in credits. These are dollar-for-dollar credits, not just deductions. The credits may even be carried forward if your company is unable to use them in the current year.
Thus, if your organization hires individuals from one of the targeted group categories, you may be eligible for tax credits under this program. Previously, claiming these credits may have seemed cumbersome, paper intensive and even time consuming. That’s why successful organizations turn to Cherry Bekaert to manage the screening process and the tax credit computation necessary for the WOTC to generate tax benefits for their ever-changing workforce.