Federal Income Tax Credits Available

The federal tax laws contains some fairly generous tax credits, for those who are lucky enough (or smart enough) to be able to take advantage of them. The credits can generally be divided into these categories:

• Small employer health care tax credit A small employer with fewer than 25 full-time equivalent employees, that pays an average wage of less than $50,000 (as adjusted for inflation beginning in 2014) a year, and pays at least half of employee health insurance premiums may benefit from this tax credit.
• Credits for certain taxes credits are permitted to offset the sting of certain taxes, including FICA taxes on tips for food and beverage establishment employees, foreign taxes, a portion of prior alternative minimum tax (AMT) liability, and gasoline taxes paid by farmers or off-highway-vehicle users.
• Credits for activities that benefit disadvantaged or low-income persons there are a number of credits designed to encourage employment or investment that benefits certain groups: the disabled access credit, the empowerment zone employment credit, the Indian employment credit, the low income housing credit, the credit for contributions to community development corporations, and the work opportunity tax credit.
• Credits for activities that benefit the environment currently, the largest group of credits are those for investment in equipment or processes that save energy or protect the environment in some way: the alternative fuels credit, the reforestation credit, the energy credit, the alcohol fuel credit, the enhanced oil recovery credit, and the renewable resources electricity production credit.
• Credits for certain other investments the smallest group of credits relates to certain investments that are deemed socially beneficial: the rehabilitation credit for old or historic buildings, and the research and development credit.

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