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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 Home Office Deduction: Actual expenses vs. the simplified method

If you run your business from your home or perform certain functions at home that are related to your business, you might be able to claim a home office deduction against your business income on your 2018 income tax return. There are now two methods for claiming this deduction: the actual expenses method and the simplified method.

Basics of the deduction

In general, you’ll qualify for a home office deduction if part of your home is used “regularly and exclusively” as your principal place of business.

If your home isn’t your principal place of business, you may still be able to deduct home office expenses if 1) you physically meet with patients, clients or customers on your premises, or 2) you use a storage area in your home (or a separate free-standing structure, such as a garage) exclusively and regularly for your business.

Actual expenses

Traditionally, taxpayers have deducted actual expenses when they claim a home office deduction. Deductible home office expenses may include:

Direct expenses, such as the cost of painting and carpeting a room used exclusively for business,
A proportionate share of indirect expenses, such as mortgage interest, property taxes, utilities, repairs and insurance, and
A depreciation allowance.

But keeping […]

By Linkenheimer LLP|2020-09-03T20:04:16+00:00February 19th, 2019|business, deduction, deductions, expensing, tax planning|0 Comments

Substantiating Expenses

Statutory requirements require taxpayers to provide specific detailed information to substantiate expenses for the following:

Travel expenses (including meals and lodging while away from home);

Any item with respect to an activity that is of a type generally considered to constitute entertainment, amusement, or recreation, or with respect to a facility used in connection with such an activity;
Business gifts (which are limited to $25); and
Expenses with respect to any listed property, i.e., autos, (as defined in Sec. 280F(d)(4)).

A recent case, Garza, demonstrates that this is an all-or-nothing scenario, as a lack of substantiation will disallow these expenses, even if the court believes that a legitimate expenditure was made. In Garza, the court said that “While we believe that petitioner had business travel expenses in relation to his employment, the Court must heed the strict substantiation requirements of section 274(d).” To support its ruling, the court cited DeLima, in which the Tax Court indicated that it had no doubt that the taxpayer used a vehicle for business purposes, but it was bound to deny the vehicle expense deduction because she failed to follow the statutory and regulatory requirements.

Listed property, covers assets that are used by many closely-held […]

By Linkenheimer LLP|2020-09-03T20:05:34+00:00January 7th, 2015|expensing|0 Comments