tax credit - Linkenheimer LLP CPAs & Advisors

Work Opportunity Tax Credit Extended Through 2025

Are you a business owner thinking about hiring? Be aware that a recent law extended a credit for hiring individuals from one or more targeted groups. Employers can qualify for a tax credit known as the Work Opportunity Tax Credit (WOTC) that’s worth as much as $2,400 for each eligible employee ($4,800, $5,600 and $9,600 for certain veterans and $9,000 for “long-term family assistance recipients”). The credit is generally limited to eligible employees who began work for the employer before January 1, 2026.

Generally, an employer is eligible for the credit only for qualified wages paid to members of a targeted group. These groups are:

Qualified members of families receiving assistance under the Temporary Assistance for Needy Families (TANF) program,
Qualified veterans,
Qualified ex-felons,
Designated community residents,
Vocational rehabilitation referrals,
Qualified summer youth employees,
Qualified members of families in the Supplemental Nutritional Assistance Program (SNAP),
Qualified Supplemental Security Income recipients,
Long-term family assistance recipients, and
Long-term unemployed individuals.

You must meet certain requirements

There are a number of requirements to qualify for the credit. For example, for each employee, there’s also a minimum requirement that the employee must have completed at least 120 hours of service […]

By Linkenheimer LLP|2021-03-01T20:20:12+00:00March 1st, 2021|New Tax Laws, tax credit|0 Comments

The Power of the Tax Credit for Buying an Electric Vehicle

Although electric vehicles (or EVs) are a small percentage of the cars on the road today, they’re increasing in popularity all the time. And if you buy one, you may be eligible for a federal tax break.

The tax code provides a credit to purchasers of qualifying plug-in electric drive motor vehicles including passenger vehicles and light trucks. The credit is equal to $2,500 plus an additional amount, based on battery capacity, that can’t exceed $5,000. Therefore, the maximum credit allowed for a qualifying EV is $7,500.

The EV definition

For purposes of the tax credit, a qualifying vehicle is defined as one with four wheels that’s propelled to a significant extent by an electric motor, which draws electricity from a battery. The battery must have a capacity of not less than four kilowatt hours and be capable of being recharged from an external source of electricity.

The credit may not be available because of a per-manufacturer cumulative sales limitation. Specifically, it phases out over six quarters beginning when a manufacturer has sold at least 200,000 qualifying vehicles for use in the United States (determined on a cumulative basis for sales after December 31, 2009). For […]

By Linkenheimer LLP|2021-02-03T22:48:29+00:00February 3rd, 2021|credit, tax credit|0 Comments

Can Your Business Benefit From The Enhanced Employee Retention Tax Credit?

COVID-19 has shut down many businesses, causing widespread furloughs and layoffs. Fortunately, employers that keep workers on their payrolls are eligible for a refundable Employee Retention Tax Credit (ERTC), which was extended and enhanced in the latest law.

Background on the credit

The CARES Act, enacted in March of 2020, created the ERTC. The credit:

Equaled 50% of qualified employee wages paid by an eligible employer in an applicable 2020 calendar quarter,
Was subject to an overall wage cap of $10,000 per eligible employee, and
Was available to eligible large and small employers.

The Consolidated Appropriations Act, enacted December 27, 2020, extends and greatly enhances the ERTC. Under the CARES Act rules, the credit only covered wages paid between March 13, 2020, and December 31, 2020. The new law now extends the covered wage period to include the first two calendar quarters of 2021, ending on June 30, 2021.

In addition, for the first two quarters of 2021 ending on June 30, the new law increases the overall covered wage ceiling to 70% of qualified wages paid during the applicable quarter (versus 50% under the CARES Act). And it increases the per-employee covered wage ceiling to $10,000 of qualified […]

By Linkenheimer LLP|2021-01-14T22:57:48+00:00January 14th, 2021|cares act, covid-19, New Tax Laws|0 Comments

The COVID-19 Relief Law: What’s In It For You?

The new COVID-19 relief law that was signed on December 27, 2020, contains a multitude of provisions that may affect you. Here are some of the highlights of the Consolidated Appropriations Act, which also contains two other laws: the COVID-related Tax Relief Act (COVIDTRA) and the Taxpayer Certainty and Disaster Tax Relief Act (TCDTR).

Direct payments

The law provides for direct payments (which it calls recovery rebates) of $600 per eligible individual ($1,200 for a married couple filing a joint tax return), plus $600 per qualifying child. The U.S. Treasury Department has already started making these payments via direct bank deposits or checks in the mail and will continue to do so in the coming weeks.

The credit payment amount is phased out at a rate of $5 per $100 of additional income starting at $150,000 of modified adjusted gross income for marrieds filing jointly and surviving spouses, $112,500 for heads of household, and $75,000 for single taxpayers.

By Linkenheimer LLP|2021-01-05T19:34:59+00:00January 5th, 2021|covid-19, New Tax Laws|0 Comments

SB 1447 Credit Opened Up (And Going Fast)

We wanted to make sure you were aware of a potential California credit that just opened up that you might qualify for. If you do qualify, we recommend filing ASAP as the credit is on a first come first served basis and will go fast.

Credit only applies to California small businesses that meet the following qualifications:

Employed 100 or fewer employees as of December 31, 2019, and

Suffered a 50 percent decrease or more in income tax gross receipts (generally, all income less returns and allowances), when comparing second quarter 2020 to second quarter 2019.

Employers may receive a credit of $1,000 for each net increase in qualified employees from April 1, 2020 through June 30, 2020, compared to July 1, 2020 through November 30, 2020

For more information, see below or contact your Linkenheimer CPA:

https://www.cdtfa.ca.gov/taxes-and-fees/SB1447-tax-credit.htm

By Linkenheimer LLP|2020-12-04T20:37:36+00:00December 4th, 2020|small business|0 Comments