About Tax Credits

What Is A Tax Credit?

tax credit (‘taks ‘kred-ət ) n
  1. It is a tool above all else. An incentive, reward, enticement or compensation the government uses to achieve a valuable public purpose.
  2. An income source that over 90% of qualifying companies are not claiming or are not claiming to their fullest extent.

The government wants to give a big “thank you” for the benefits your business has brought to your community.

  • Area Revitalization and Development
  • Lower Unemployment
  • Job Creation
  • Increase in Tax Revenues
  • Decreased Use of Welfare, Food Stamps and other Public Programs
  • Reduced Crime
  • Investment in R&D and Technological Innovation

Frequently Asked Questions About Tax Credits

What are the specific actions my business can be rewarded for?

  • Locating and remaining in challenging areas
  • Employing those who live in difficult areas or those in difficult circumstances (e.g. Veterans, Food Stamp Recipients, Retrained Workers, etc.)
  • Purchasing Machinery and Equipment
  • Expanding Facilities
  • Research and Development

How are tax credits applied?

A tax credit dollar can be used to pay a dollar of income tax that is due. For example, if a business has a Net Profit of $1,000,000 there will generally be income taxes that are due. And, that tax liability can be paid by applying the tax credits against the tax liability. In the end, you pay fewer dollars out of your business’ pocket.

What form do you receive payment in?

If the tax credits you receive are for past years of taxes already paid, then you receive a check to be deposited into your business’ bank account.

If the tax credits are for the current year then they are applied against your current tax bill.