Are you running a business that is making good profits this year? If it is the case, you are quite happy about the financial condition of your company. After all, making profits means that you have already made a respected position in the sector and thriving hard to grow more.
But, do not think that you are the only one who is happy with the profits that you are making. Someone will be happier if you earn more- The IRS. Running a profitable business means that you should also pay the taxes. But, if you want to minimize tax liability, you can take help from a CPA expert or tax consultant who can help you in this process.
With the help of both the tax credits and tax deductions, you can reduce the company’s tax liabilities. However, there is a slight difference between the two. The tax credits are said to be the 1:1 reduction in the taxes. On the other hand, tax deductions are the percentage of dollars that you spent on tax rates to reduce taxable income.
Here Are Some Of The Ways In Which The Tax Credits Of Your Business Help You To Take Benefits Of Reduce Tax Liabilities.
Do Federal Research and Design Tax Credit
Your business might be doing Research and Design activities without even realizing it. The R&D tax credit is the 1:1 reduction against all the taxes paid. Almost all the states have their own R&D credit programs that resemble the federal rules and they are available in various incentive amounts. So, if your company is making new products or technologies, you might be qualifying for the substantial tax savings.
Alternative Motor Vehicle Credit
If your business has bought vehicles with the fuel cells as, like the electric cars that use fuel cells in place of the battery, you can qualify for the tax credits. Some of the credits get reduced at the time of initial rollout depending upon the car’s model and year of manufacturing.
So, if your business has purchased the alternative fuel cars, automatic eligibility for this credit is not guaranteed. You should know that there are several benefits of driving on alternative fuel vehicles.
Employer-provided Childcare Facilities
Does your company construct, rehabilitate, acquire or expand properties that are particularly used as the child care facility for the employees? Or might be you have started a scholarship program or offering employees with childcare training and compensation. All these indicate a major part of your business. Be sure to consult with the tax professional who can consider these credits when you think to reduce tax liability.
As the tax credits, tax deductions are also beneficial for your business. The tax deductions change with the type of businesses you have. This type of deduction helps to reduce the taxable income and then also reduce your tax liabilities. The amount of such deduction will be taken from the income. Thus, reducing your taxable income means that you can reduce the tax bills too.