Bankers and Tax Credits

Your clients may be planning for business growth and expansion, and to make it happen, they may need bank financing. Guess what?  Much, or at least some of this financing will likely be used for activities that qualify for tax credits.

For example:

  • Line of Credit: increased payroll costs from adding employees = Job Tax Credits
  • Loan for computer systems: replacing or upgrading key business software = Retraining Tax Credit
  • Loan for capital: new or expanded land, facilities and equipment = Investment Tax Credit
  • Operating lease: new software, new or expanded buildings = Retraining and Investment Tax Credits
  • Other activities including R&D, energy, and others

As you work with clients on their year-end tax planning, ask about their expansion plans for the next few years and their means of financing it.  There is a good chance that their banking needs may provide hidden tax credits that really help them.

Talk with commercial bankers about their existing and prospective business clients. Discuss how you may be able to help strengthen their competitive advantage, using tax credits to help them close more business.

Educating bankers on tax credits for their clients will help you solidify referral relationships with them, ultimately bringing more new clients your way!



Year-End Tax (Credit) Planning

Now that the October 15 tax deadline is behind us, the fun begins withreaching out to your clients about year-end (2013) and next year (2014) tax planning. After you have finished your psychotherapy/Dr. Phil discussions, then you can get down to what matters – helping your clients minimize their taxes. And state tax credits can potentially be a big part of their strategies.

Commercial bankers are telling us that more and more companies are borrowing money to upgrade their business software. This may include Enterprise Resource Planning (ERP), Customer Relationship Management (CRM), Document Management Systems (DMS) and other company wide systems. The bankers say that many companies are accelerating adoption of e-Commerce, mobile apps and other new technologies.

With all of these changes, clients need your advice about alternatives best suited for them. After you have discussed deductions, accelerated depreciation, and upcoming 2014 tax changes, don’t forget training tax credits. If your client starts their implementation soon, they may be able to maximize their tax credits in 2013 AND 2014 (in Georgia it’s $1,250 per employee per year). PS – Don’t forget about your own firm for tax credits – you many have already done something that qualified & didn’t realize it!



Investment Tax Credit Overview

The ITC could be a great option for your manufacturing or telecommunications clients.  This tax credit is based on the costs of additions to property, plant and equipment assets, and includes capitalized items and operating leases.

The tax credit $ amount is a percentage of the costs (1%, 3% or 5%), based on the county (Tier 1, 2, 3 or 4) where the assets are located.  For example, a $1,000,000 plant expansion in Gwinnett County (Tier 4 = 1%) will generate a $10,000 tax credit.

The ITC application (Form IT-APP) must be approved by DOR before the credit can be utilized.  Since the ITC is taken the year after assets are booked, you can look back 4 years for qualifying investments.  This credit is limited to 50% of income tax liability each year, but unused credits may be carried forward ten years. To download the PDF form and details, click here.