How Do Tax Credits Work?
Tax season is here, yet that doesn’t mean you have to go into panic mode. Guidance from an accomplished tax planning attorney in West Monroe, LA will help your business make the most of available tax credits through strategic tax planning.
However, if you are like most business owners in the greater West Monroe area, you aren’t exactly sure how tax credits work. Here’s the inside scoop on tax planning in 2023, how to work out tax credits, and why the assistance of Niswanger Law’s tax planning attorney can help you a lot.
What are Tax Credits?
Tax credits decrease the income tax owed to the government. The purpose of tax credits is to provide positive reinforcement for actions taken by a business that advance the greater good of the economy and society as a whole.
Tax credits are even provided as a means of positive reinforcement for actions that benefit the environment. In certain instances, tax credits apply to expenses paid throughout the year, carrying nuanced requirements that must be met before the point at which they can be claimed.
How Tax Credits Work
Tax credits reduce business revenue or personal income on a dollar-for-dollar basis.
Consider a situation where the aggregate tax on a business tax return for a calendar year is $10,000, yet the company is eligible for $10,000 tax credits. The tax owed and tax credits even out, ensuring the net liability decreases to zero.
Certain credits, including the tax credit known as the earned income credit, can be refunded. This means the total credit amount is received even if that credit surpasses the entirety of the tax bill.
Legal Aspects of Tax Credits
All sorts of tax credits are available to taxpayers pertaining to a plethora of expenses. For example, adding solar panels to businesses or homes sets the stage for a lucrative tax credit. Even adding one electric car or a fleet of such environmentally-friendly vehicles can qualify you or your business for a sizable tax credit.
Tax credits are also available to families to offset childcare costs, education costs, adoption, and more.
The challenge lies in identifying all the tax credits available to you or your business within the confines of state and federal tax law, claiming those credits appropriately, and satisfying bureaucratic red tape requirements for full compliance. Don’t worry, Niswanger Law is here to help.
Learn More About Tax Credits and Tax Planning with Niswanger Law
Our tax planning attorney knows the ins and outs of tax credits for local businesses. If you own a business in the greater Monroe, LA area, it is in your interest to seek the guidance of a tax planning professional.
Our tax planning team will help you identify all of the available tax credits, maximize their value, minimize your tax liability, and ultimately help your business preserve its hard-earned revenue for continued scaling. Invest in tax planning today, and you’ll reap exponentially larger financial rewards at tax time and also across posterity.
Contact us today at (318) 953-0071 to schedule a consultation. Or visit our office at 3814 Cypress Street, West Monroe, LA 71291.