Reduce Your Tax Bite With Some of These Credits

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construction; government contractor and technology; not-for-profit; real estate; emerging growth companies tax; business advisory

By: Anne Elliott

Abstract:

If your business is located in an empowerment zone (EZ) or renewal community (RC), you might be eligible for several tax-savings opportunities. Businesses in these areas, which include parts of Baltimore, Norfolk, and Washington, DC, can take an increased Section 179 deduction on eligible equipment purchases of up to $35,000 over the normal limit. Certain capital gains are also excluded from income for EZ- and RC-based businesses.

Additionally, these businesses can obtain tax credits of up to $1,500(RC) or $3,000(EZ) for each employee that lives and works in the applicable zone or community. These benefits are currently available through December 31, 2009; however, President Barack Obama has asked Congress to consider extending them beyond 2009.

Tax credits for businesses in empowerment zones or renewal communities are available through 2009.

Businesses that are not located in these areas can also benefit by receiving up to $2,400 for hiring 18- to 39-year-old new employees who live in an EZ or RC. This Work Opportunity Tax Credit also targets a variety of other employee groups, such as certain veterans, some youths between 16 and 25, qualified summer youth employees, qualified ex-felons, and vocational rehabilitation referrals, among others.

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