Many of us have a Pavlovian response to the word "taxes," and for good reason. So, in the interest of you enjoying this story, try replacing the dreaded "t" with another one word— "windfall."
This story is about little known tax secrets that can often be retroactive, adding up year over year, and yes, possibly even resulting in a real windfall. The one thing that all of these tax benefits have in common is that if you have filed tax returns and missed the benefits, there is still the opportunity to go back and recoup tax from prior years (aka, the windfall.)
We've consulted leading Tax Professional, Greg Kniss, CPA and a partner at KBKG, Inc. in Pasadena, California for his top tax tips for business owners.
Kniss's Top Tax Tips:
- Uncovering Hidden Treasures
Employment Tax Credits and other benefits can be found just about everywhere across the country. There are federal credits, including Renewal Community, Empowerment Zone, Work Opportunity, and Welfare to Work that are designed to develop impoverished areas and help disadvantaged individuals by giving tax breaks to businesses that operate in low-income communities. These same types of credits and other benefits can be taken advantage of at the state level where approximately 42 states have programs in 2,840 zones.
- Making more Green by Going Green
Green Building Tax Incentives are federal tax benefits rewarding taxpayers for reducing energy use of a building's HVAC and/or lighting systems and more. The deductions, up to $1.80 per square foot, can be substantial for building owners, architects and designers; whereas the credit benefits of $2,000 per unit are targeting developers of residential apartment buildings.
- Inventing, Improving and Investing
Research & Development (R&D) Tax Credits are federal tax benefits (also available in many states) designed to promote technological innovation in American companies. The credit provides incentives to companies that invest in activities for the development of new and improved products, software, and manufacturing processes, thereby reducing tax liability and increasing funds available for future innovation. Newer legislation substantially broadens the number of taxpayers eligible to benefit from R&D credits. Companies engaged in development, improvement or refinement of products, processes and formulas may qualify.
- Cashing in on Cost Segregation
Cost Segregation enables companies and individuals who have constructed, purchased, expanded, or remodeled any kind of real estate to increase cash flow by accelerating depreciation deductions and deferring federal and state income taxes. While it sounds a bit confusing, tax professionals can translate the concept into plain English. In essence, cost segregation doesn't create more deductions but leverages existing deductions in the early years to increase cash flow in the present.
In these current economic times it makes sense to look at all the available tax planning opportunities that exist to help create savings and cash flow for your business. Companies like KBKG offer free business tax webinars. Other government organizations like the Small Business Association (SBA) and IRS offer additional resources.
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