Summertime is practically over and the college students are starting back to school.
Many unemployed are still looking for jobs and small businesses are thinking ahead to the upcoming shopping season. It is important to know what tax advantages you can take and what tax benefits and credits might be available.
Those looking for a new job in their current occupation or profession can deduct job searching expenses even if the person does not find a job. If you are looking for your first job, those expenses are not deductible. Expenses for education are deductible even if the education leads to a degree, if the education maintains or improves skills required for the taxpayer's present work or the education is required by the taxpayer's employer or by law.
If education expenses are deductible, the cost of local transportation between work and school is deductible. If the taxpayer is regularly employed and goes to school on a temporary basis, the cost of transportation from school to home is also deductible. This is true regardless of the distance to school, or whether school is attended on a nonwork day.
A temporary basis means attendance at school is expected to last one year or less. Temporary includes up to the point in time where the taxpayer determines that school initially expected to last one year or less will actually last more than one year. If the taxpayer uses a car for educational transportation, deduct actual expenses or the standard mileage rate for business.
Under the Work Opportunity Tax Credit employers can get a credit for hiring certain targeted groups of individuals. The credit can be as high as $9,600 per qualified veteran for for-profit employers on the company tax return. This affects qualified veterans who begin work before Jan. 1. Employers should contact their tax adviser to investigate how they can participate.
If you are an employer and you have work for your children, to help pay for their schooling you can hire them and pay them the maximum of the standard deduction for the year ($5,950) and the child will not have to pay any taxes and the business can deduct its wages as an expense.
Also, if the student is younger than 18 and works for their parent who is a sole proprietor, the child is exempt from pay the FICA (Social Security and Medicare) tax, which also saves the business money.
The Credit for Small Employer Pension Plan Startup Costs is still available. For an eligible small employer, the credit is 50 percent of the qualified startup costs paid or incurred during the tax year. The credit is limited to $500 per year for the first credit year and each of the following two tax years.
There are eligibility requirements so, consult with your tax adviser to ensure you are in compliance of the regulations.
There are many other "General Business" credits such as increasing research activities, providing disability access, employer provided child care facilities, low income housing credit and energy efficient credits.
To take maximum benefit of reducing taxes, businesses should be proactive to gather information for eligibility of any and all the benefits they are entitled to under the law. Congress has given businesses many opportunities to pay lower taxes, so go for it.
In the upcoming months, I will provide some tax saving information for businesses and investors in rental property.
Neil Shnider, MBA, CPA, is a special projects consultant for the Small Business Development Center at Florida Gulf Coast University. He can be reached at the SBDC center or at email@example.com Go to www.theshnidergroup.com for more small business information and tools.
The SBDC provides small business consultants, at no cost, to guide you through many of the business processes. These are experienced professionals who are working to benefit small businesses. The service is free. Call 239-745-3700 for an appointment.