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Alpha-Mail

A Tax Professional's Guide to Credits and Incentives, Courtesy of Alpharesults
Vol. X No. 3 March 2016
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In this issue

Pattern Recognition for Tax Credits

Spotlight on Indiana Credits and Incentives

Hello!

Welcome to Alpha-Mail, the monthly newsletter about tax credits and incentives for tax professionals.

This month, learn how to recognize patterns in your clients' tax data to help identify tax credits! Also, some of you may have clients who own businesses in Indiana, so be sure to see our overview of Indiana credits and incentives. We hope you can use this information to strengthen your client relationships!

Thank you for reading Alpha-Mail -- please click reply to tell us what you think.

All the best, 

 Dale Stapler    Jim Tinsley
     Alpharesults, LLC 

Pattern Recognition for Tax Credits                           
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Your tax software may be able to help you find patterns in your client's tax data that could uncover tax credits! During tax season, everyone is busy collecting and reviewing client tax data. After it has been reviewed, this data is entered into the tax software, and the software usually helps guide you through the steps required to file the tax returns. 

But before the tax return is finalized, don't forget to check for potential tax credits. Since tax credits are based on your client's activities, it may not be immediately apparent, but their tax data could contain key indicators of tax credit qualifying activities.
 
Here are a few tax categories that could include indicators of potential tax credit activities:
Salaries and wages
Rents and operating leases
Depreciation, Section 179 deductions & bonus depreciation
Other deductions such as computer expenses, professional services, consulting, and outside services 
"Other costs"

Your tax software's reporting and business analytics capabilities may be able to assist with your analysis of current year and prior years.  For example, look at a 4-year trend of Section 179 items (such as equipment or software). Any slow steady growth, large blips or increases, or unusual trends?  A year-to-year increase of 20% or more may be worth drilling down into the details for further review. If you find something, talk with your client and ask a few questions! What about that employee training (Retraining Tax Credit or training grant program)? Was that large purchase used for manufacturing (Investment tax credits)? 

Your client will thank you for recognizing their patterns -- and for not being just another "tax return filer" outfit.  

 
  

Indiana Credits and Incentives            
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      As we've mentioned before, our Georgia clients frequently ask us to investigate potential credits and incentives in other states where they have operations, potential acquisitions or strong relationships with customers or vendors. In addition, private equity groups ask us about potential $$ for their portfolio companies.
 
We were recently asked about credits and incentives in Indiana, and their state economic development professionals gave us some details (Indiana EDC site click here).
 
Indiana offers a decent collection of credits and incentives for new and existing businesses.  CNBC ranked Indiana #13 in their 2015 America's Top States for Business  survey (Georgia was #5 in the same survey).     
 
Incentives and Credits include:  

Economic Development for a Growing Economy Tax Credit (EDGE):
Based on employment, the credit is calculated as a percentage of the  expected increased tax withholdings generated from new jobs created by a company.   This credit can be claimed regardless of whether the company  has a state income tax liability or not.

Skills Enhancement Fund (SEF):
Designed to help tailor a workforce that meets a company's needs. The grant reimburses a portion (typically 50%) of  eligible training costs over a period of two full calendar years from  the commencement of the project. Eligible expenses include everything  except: Orientation Related To New Hires and Federally Mandated Safety  Training (OSHA).

Hoosier Business Investment Tax Credit (HBI):
Corporate income tax credit calculated as a  percentage of the eligible capital investment needed to support the  project. Eligible capital investment includes new machinery and building  costs associated with the project. In order to claim this credit, a  company must have a state corporate income tax liability.

Headquarters Relocation Tax Credit (HRTC):
HRTC provides a tax credit to corporations that relocate their  headquarters to Indiana. The credit equals half the moving costs and is  assessed against the corporation's state tax liability.

Industrial Recovery Tax Credit:
Provides an incentive for  companies to invest in facilities requiring significant rehabilitation  or remodeling expense. The tax credit amount depends on the age of the  facility being rehabilitated. Eligible sites must have been in service  at least 15 years, with at least 5,000 interior square meters of space  that has been at least 75% percent vacant for one year or more.

Research & Development Incentives:

Two tax incentives targeted at encouraging  investments in research and development. Taxpayers may receive a credit  against their Indiana state income tax liability calculated as a  percentage of qualified research expenses. In addition, taxpayers may be  refunded sales tax paid on purchases of qualified research and  development equipment.

Compared to Georgia, Indiana has:
Slightly higher corporate but far lower personal income tax rates.
Higher combined state and local tax burden
A narrower range of incentives.
Pre-approval required for all incentives
To summarize, Indiana is about average for business tax incentives in a central Midwest location.

About Us-------------------------------------------------------------------------
Alpharesults has assembled a team with the specialized knowledge and approach required to obtain Georgia income tax credits.  We are not a public accounting firm.  Rather, our services complement those of public accounting firms and do not create conflicted loyalties, because our professionals do not perform attestation work or other external audit functions.  
We focus on small to medium-sized businesses and work exclusively in Georgia with a wide variety of in-state and out-of-state accounting firms.  For more information on our services, follow this link. 
 

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Alpharesults
Georgia DOR
Georgia DCA Job Tax Credits
Georgia Retraining Tax Credit Guide

Contact Information-------------------------------------------------------------------------
email:  alpha-mail@alpharesults.com                   phone: 770-667-1332 
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