Two Weeks Until Tax Day – For Many Businesses Though, It’s Still Not Too Late to Benefit From Tax Credits

While the media is certainly hot on the topic of taxes as we approach April 15th, the topic of “tax credits” is one that our clients talk with us about all year long. In fact, our rush began around January 1 and ran through the deadline for the first quarterly filing date for corporations, which was March 15.

When it comes to business vs. individual tax returns, the biggest myth of all, is that April 15 is tax day. While true for individuals, corporations are on quarterly cycles, with March 15 ending the busiest time of all, for those in the corporate tax world. Many companies have other quarterly filing dates, but March 15 is the grand dad of them all. Can you claim tax credits year round? Certainly, if you are eligible for geographic, wage based credits. (FEZ/RC) But, that said, retroactivity only extends three years from the open tax year. So, once 2008 returns are filed, we would only be able to look back as far as 2006 for any credits that might have been available in those tax years. If the 2008 return has yet to be filed, we could go back as far as 2005, retroactively.

A year from now, tax credits will change, but it’s still too soon to tell what impact the stimulus package will have on jobs creation. If however, those shovel-ready jobs begin gaining traction, there will be many opportunities to generate credits, as a result of the jobs that will be created. More immediately though, there are two new categories for demographic credits (WOTC) that were born out of the stimulus bill and these WILL make a big difference. These categories are: unemployed veterans and disconnected youth. In general, an employer can earn from $2,400-$9,000 in tax credits for hiring a qualified unemployed veteran or disconnected youth who begins work for the employer during 2009 or 2010.

An unemployed veteran is any veteran who is certified as having been discharged from active duty at any time during the 5-year period ending on the hiring date; and being in receipt of unemployment compensation for not less than 4 weeks during the 1-year period ending on the hiring date.

A disconnected youth is any individual who is certified as 16 – 24 years old, not regularly attending any secondary, technical, or post-secondary school during the 6-month period preceding the hiring.

The bottom line is many businesses have tax credits available, but never claim them. That is why our business is so attractive to both potential clients and franchisees as well. Our tax credit administration process is second to none. While we cannot predict future tax credit trends, we definitely know how to maximize their potential, once we identify them and let our clients know that they are available.