tax credit - Linkenheimer LLP CPAs & Advisors

Get Tax Breaks for Energy-Saving Purchases This Year Because They May Disappear

The Inflation Reduction Act (IRA), enacted in 2022, created several tax credits aimed at promoting clean energy. You may want to take advantage of them before it’s too late.

On the campaign trail, President-Elect Donald Trump pledged to “terminate” the law and “rescind all unspent funds.” Rescinding all or part of the law would require action from Congress and is possible when Republicans take control of both chambers in January. The credits weren’t scheduled to expire for many years, but they may be repealed in 2025 with the changes in Washington.

If you’ve been thinking about making any of the following eligible purchases, you may want to do it before December 31.

1. Home energy efficiency improvements

Homeowners can benefit from several tax credits for making energy-efficient upgrades to their homes. These include:

Energy Efficient Home Improvement Credit: This credit covers 30% of the cost of eligible home improvements, such as installing energy-efficient windows, doors, and insulation, up to a maximum of $1,200 this year. There’s also a credit of up to $2,000 for qualified heat pumps, water heaters, biomass stoves or biomass boilers.
Residential Clean Energy Credit: This credit is available for installing solar panels, wind turbines, […]

By Linkenheimer LLP|2024-12-11T23:18:54+00:00December 11th, 2024|energy, tax credit|0 Comments

Understanding the $7,500 Federal Tax Credit for Buying an Electric Vehicle

Electric vehicles (EVs) have become increasingly popular. According to Kelley Blue Book estimates, the EV share of the vehicle market in the U.S. was 7.6% in 2023, up from 5.9% in 2022. To incentivize the purchase of EVs, there’s a federal tax credit of up to $7,500 for eligible vehicles.

The tax break for EVs and fuel cell vehicles is called the Clean Vehicle Tax Credit. The current version of the credit was created under the Inflation Reduction Act. Here are answers to some frequently asked questions.

Which vehicles qualify for the credit?

To qualify for the full $7,500, there are several requirements. For example:

The vehicle must be a new plug-in electric or fuel cell vehicle.
It must have a battery capacity of at least seven kilowatt hours.
It must meet critical mineral and battery component requirements for vehicles placed in service on or after April 18, 2023. (If the vehicle meets only one of the two requirements, the buyer is eligible for a $3,750 credit.)
The vehicle must undergo final assembly in North America and have a gross vehicle weight rating of less than 14,000 pounds.
It must be purchased for personal use […]

By Linkenheimer LLP|2024-09-11T19:56:23+00:00September 11th, 2024|EV, tax credit|0 Comments

Tax Relief for American Families and Workers Act of 2024

The House of Representatives recently passed House Bill 7024, known as the Tax Relief for American Families and Workers Act of 2024, with significant bipartisan support. This landmark legislation aims to realign America’s tax code to bolster economic growth, support working-class families, and provide certainty for American businesses in a climate of economic recovery and innovation.

Key provisions of H.R. 7024 include an expansion of the child tax credit, significant support for American innovation through expanded Research & Development (R&D) expensing, and enhanced measures to improve the competitive stance of U.S. businesses internationally. Specifically, the bill proposes to:

Increase access to housing by providing more flexibility on bond financing requirements and increasing state tax credit allocations.
Eliminate the penalty in the child tax credit for families with more than one child, alongside increasing the refund amount and indexing these amounts to inflation starting in 2024.
Offer “time-limited and limited in scope” disaster tax relief for communities affected by recent calamities, including hurricanes and wildfires.
Ends ERC program early on January 31, 2024, adds penalties for certain COVID-ERC promoters and extends statue of limitations to 6 years.
Increases maximum amount for section 179 expensing with a slight raise in expensing limit allowance […]

By Linkenheimer LLP|2024-02-06T18:04:34+00:00February 5th, 2024|disaster, tax credit, taxpayer relief act|0 Comments

Does Your Business Have Employees Who Get Tips? You May Qualify for a Tax Credit

If you’re an employer with a business where tipping is routine when providing food and beverages, you may qualify for a federal tax credit involving the Social Security and Medicare (FICA) taxes that you pay on your employees’ tip income.

Credit fundamentals

The FICA credit applies to tips that your staff members receive from customers when they buy food and beverages. It doesn’t matter if the food and beverages are consumed on or off the premises. Although tips are paid by customers, for FICA purposes, they’re treated as if you paid them to your employees.

As you know, your employees are required to report their tips to you. You must:

Withhold and remit the employee’s share of FICA taxes, and
Pay the employer’s share of those taxes.

How the credit is claimed

You claim the credit as part of the general business credit. It’s equal to the employer’s share of FICA taxes paid on tip income in excess of what’s needed to bring your employee’s wages up to $5.15 per hour. In other words, no credit is available to the extent the tip income just brings the employee up to the $5.15-per-hour level, calculated monthly. If you […]

By Linkenheimer LLP|2024-01-12T17:05:38+00:00January 12th, 2024|tax credit|0 Comments

Pocket a Tax Break for Making Energy-Efficient Home Improvements

An estimated 190 million Americans have recently been under heat advisory alerts, according to the National Weather Service. That may have spurred you to think about making your home more energy efficient — and there’s a cool tax break that may apply. Thanks to the Inflation Reduction Act of 2022, you may be able to benefit from an enhanced residential energy tax credit to help defray the cost.

Eligibility rules

If you make eligible energy-efficient improvements to your home on or after January 1, 2023, you may qualify for a tax credit up to $3,200. You can claim the credit for improvements made through 2032.

The credit equals 30% of certain qualified expenses for energy improvements to a home located in the United States, including:

Qualified energy-efficient improvements installed during the year,
Residential “energy property” expenses, and
Home energy audits.

There are limits on the allowable annual credit and on the amount of credit for certain types of expenses.

The maximum credit you can claim each year is:

$1,200 for energy property costs and certain energy-efficient home improvements, with limits on doors ($250 per door and $500 total), windows ($600 total) and home energy audits ($150), as […]

By Linkenheimer LLP|2023-08-16T19:19:40+00:00August 16th, 2023|energy, tax credit|0 Comments