The Sun is Setting on Several Big Tax Credits…Are You Eligible?

November 18, 2011

Several key business tax breaks will expire on December 31, 2011. You may be eligible, so we wanted to ensure that you were aware of certain credits before they expire at the year’s end (2011). If you believe you are eligible, contact us to discuss further.

Research Credit—offers a credit of up to 20% of qualifying research expenditures, and applies to amounts paid or accrued before January 1, 2012.

Work Opportunity Tax Credit (WOTC)—allows a credit to employers who hire members of certain targeted groups: up to 40% of first-year wages and up to $6,000 per employee ($12,000 for qualified veterans and $3,000 for qualified summer youth employees). Where the employee is a long-term family assistance (LTFA) recipient, the WOTC allows a percentage of first and second year wages: up to $10,000 per employee.

New Markets Tax Credit (NMTC)—allows taxpayers who hold a qualified equity investment in a qualified community development entity (CDE) a NMTC of 39% of the qualified equity investment during a seven-year credit period. Under current law, the last NMTC dollar limitation is for 2011.

Differential Wage Payment Credit for Employers—enables eligible small business employers that pay differential wages to claim a credit equal to 20% of up to $20,000 of differential pay made to an employee during the tax year. Differential wages are payments to employees for periods when they are called to active duty with the United States (uniformed) services (for more than 30 days). This credit will not be available for differential wages paid after December 31, 2011.

New Energy Efficient Home Credit—allows eligible contractors to claim a credit of $2,000 or $1,000 for each qualified new energy efficient home either constructed by the contractor or acquired by a person from the contractor for use as a residence during the tax year. The credit will not apply to homes acquired after December 31, 2011.

Please contact us if you have questions.

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