Corporate Tax Incentives

Regardless of industry, corporate tax incentives present opportunities to save money and reclaim revenue for you and your business. Utilizing a specialized provider ensures your incentives are maximized all the while remaining legally compliant. As such, KC & Associates’ services offers complete audit protection at no additional cost.

KC & Associates specializes in various types of corporate tax incentives and are further detailed below.

Federal Credit for Increasing Research ("R&D Tax Credit")

The Federal Credit for Increasing Research Activities (R&D Tax Credit) under Internal Revenue Code (IRC) §41 and 174 was enacted to incentivize businesses to invest in the development of new or improved business components, to create new jobs in the U.S., and to remain competitive in the world marketplace.

The federal R&D credit rate is 20% (14% for Alternative Simplified Credit calculations) of qualified research and development expenses. Additionally, most states have incentives for research and development activities that can increase benefits for research expenditures.

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R&D Tax Credit Payroll Offset

Does your startup company know the power of the R&D payroll offset provision? Even startups that have yet to turn a profit and pay income tax can garner savings on their payroll tax.

Using the federal R&D payroll tax offset provision, a startup company can claim a credit against their employer-paid payroll taxes up to $250,000. In 2023, the amount will increase to $500,000.

A qualified small business is defined as a business with less than $5 million in gross receipts in the credit year and within the first five years of operation.

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Employee Retention Tax Credit

The Employee Retention Credit (ERC) is a refundable payroll tax credit intended to assist businesses impacted by the COVID-19 pandemic. ERC is available to employers, including tax-exempt and certain government organizations that satisfy one of the following criteria:

Work Opportunity Tax Credit

The work opportunity tax credit (WOTC) program is a federal government initiative designed to increase employment opportunities for people who typically experience certain barriers to employment, such as veterans, public assistance recipients, or ex-felons.

The credit amount for WOTC can be up to $9,600 for each qualified new hire, depending upon the new hires’ WOTC target group. The credit is equal to a percentage of the eligible employee’s wages, and the employee must work at least 120 hours for the employer to receive credit.

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State-Specific Tax and R&D Credit Programs

Over 30 States throughout the U.S. contain provisions that permit companies to claim tax credits or refunds.

Worthy of note is that each State contains various nuances and calculation methods. For example, the State of Virginia permits a singular application per tax year that requires specific reporting requirements. By contrast, the State of California permits up to four years of tax amendments (contrasted with the Federal amending period of three years) in addition to multiple calculation methodologies to maximize your benefit.

At KC&A, we assess any and all State-specific programs to ensure your credit claims are maximized and properly calculated.

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