Business Education Tax Credit

A business education tax credit is available for those seeking to begin or continue education in the form of two types of deductions. These credits allow families to deduct certain amounts from taxes on a yearly basis, but not both types in one year. People who need assistance in the form of loans from the government will be pleased to know also that interest on loans are deductible. The wonderful thing about a business education tax credit in any form is that it doesn't reduce the amount of income on which tax is paid, but it reduces the tax itself! In fact, taxes can be reduced down to zero, but not more than that. In other words, there won't be any refunds. Let's dig in and learn more benefits of these deductions.

Those who decide to utilize the business education tax credit, can deduct up to $1,650 per year on tax returns, but only if income is below $47,000. If income is above this amount, then it will gradually be phased out, until income reaches $55,000. This deduction can be taken for each eligible student in the household, so it can add up if the whole family is engaged in educational pursuits at a post-secondary or vocational institution. However, families cannot deduct more than $4,000 per year. What a boon to savings! Families should be encouraged at the thought of being able to save at least this amount of money each year. Take advantage of all the help available.

A business education tax credit can be applied to eligible educational institutions such as vocational schools, colleges and universities or a variety of post-secondary schools as long as the schools are accredited, non-profit or profit-making organizations, and even private schools. The expenses that can be deducted are books, tuition, room and board, equipment and supplies. The guidelines for eligibility apply to two kinds of deductions as outlined in IRS publications. However, students must be enrolled at least half-time at the educational institution to be eligible. An additional advantage of educational deductions is that claims can be up to $2,000 and can be taken for numerous years, as long as the education is at a qualified institution. Understand that both deductions cannot be taken in the same year. For example one can be taken one year, and the other type the following year.

Who can take these deductions? Deductions can be taken for those who pay educational expenses for college, or any other higher educational pursuit, if paying for an eligible student, or if the student is anyone in the family, including the head of the household. In other words, those people who can be claimed as exemptions. If however, a couple files separate income tax returns, the credit(s) cannot be taken. Also, the income cannot be over $80,000 per year for one earner or double that for two earner households. So review the rules for taking a business education tax credit in the form of the two types discussed above prior to completing returns to be sure all have been entered correctly and are legitimate. Be wise about how matters are handled. He that handleth a matter wisely shall find good: and whoso trusteth in the Lord, happy is he (Proverbs 16:20 KJV).

There is more assistance for people needing money to help support the family, in the form of family tax credits. These assist families who have children of any age, up to age 18, and who make less than $22,645 per year total. Also, there are stipulations on the minimum number of hours that must be worked in a week to qualify. The amount of family tax credits received depends on how many children are in the household, the ages of the children and the family income. There are actually three types available, but all three are similar and provide assistance for slightly different aspects of family support. All one needs to do is to follow the guidelines closely to ensure that qualifications are fully met. In general, a family must work a minimum of 30 hours per week if both parents work, and a minimum of 20 hours per week if the household has one working parent. If other types of assistance are being enjoyed, then the qualifications will not be met. Understand that the family tax credits spoken of here are available only in the United Kingdom. For assistance regarding families in the United States of America, it is best to consult the publications of the Internal Revenue Service.

In the United States, family tax credits are available for children in the amount of $1,000 for each child under the age of 17. This assistance was meant for families in very low wage ranges, specifically below $11,000 per year. Other types of assistance focus on families with higher wage rates and higher deductions for each year. Many of these types of benefits were begun in 2001, and there is discussion continually about how to improve these programs so that families are helped out of poverty situations. In general, as the family income increases, the assistance begins to reduce and is finally diminished. Discussions are underway to think about reducing the requirement of wage earners downward in order to include more families, perhaps in the millions.

It seems that no matter what type of assistance is needed,families in both the United Kingdom and the United States of America have recourse and relief available, depending on the need at hand. Family tax credits go a long way towards making the future brighter for millions of people.

Work Opportunity Tax Credit

The Work Opportunity Tax Credit is a program created by the government to encourage companies to hire individuals who are participating in federally initiated programs. These individuals may need some type of assistance such as food stamps, monetary support for dependents, financial assistance for veterans, ex-offenders and offenders in certain stages of release. Individuals being hired could also be active in programs for vocational rehabilitation, youth programs, people who live in parts of the country ravaged by hurricanes and floods, people on social security, etc. The government wants to give these individuals a boost economically, and so is giving companies incentives to do so by providing tax credits of anywhere from $2400 up to $9000. This working tax credit could be a life saver to those desperate to find work where there is none, due to disasters or other misfortunes of life.

Perhaps a small to medium sized company decides to do business in an area of a city where crime is high and wages are low. This company would be eligible for a working tax credit of some sort. A company located in an area such as this is called an Empowerment or Enterprise Zone. Not only is a Work Opportunity Tax Credit available, but so are credits from state and local governments. Corporations who provide child care programs and services are eligible for up to a 50% credit for these types of expenses. Credits are available for companies to invest in areas ravaged by natural disasters like hurricanes, volcano eruptions, fires and floods in order to provide revitalization to the area. Businesses can take advantage of sales and use credits, gross receipt exemptions, low income financing and more.

Corporations taking advantage of a Work Opportunity Tax credit program utilize also what is termed as Point of Hire on-boarding. This refers to those hired from the programs discussed above. In order for companies to be eligible to take these credits for hiring these people, the new hires have to stay employed for a certain period of time, or the company does not receive credit. For example, if someone on a welfare program is hired, and work less than 119 hours that year, the business will receive no tax benefit as a result. The longer the person is hired, the higher percentage credit the company will receive, up to $9000 over a two-year time frame. Also, the new hire has to have participated in the welfare program for a certain number of months, usually about 15 months or more for the company to take advantage of hiring that person. God tells us not to criticize or mock poor people. "Whoso mocketh the poor reproacheth his Maker: and he that is glad at calamaties shall not be unpunished" (Proverbs 17:9 KJV).

The advantage to this Federal program for businesses is that there is no limit on the number of qualified individuals that can be hired! The working tax credit can save companies thousands of dollars. In addition, benefits can be claimed for more than one year for each individual hired from targeted groups. Financial managers within businesses would be advised to fully understand all the ins and outs of the WOTC programs in order to be able to take full advantage of all the tax incentives being offered. Why not save money? These benefits actually reduce the tax liability!

The Work Opportunity Tax Credit program was signed into law in an earlier format during the mid 1990's, and has recently been extended to August of 2011. A number of changes to the program have been made in order to make it more user friendly for both businesses and participating individuals. Some of these changes are that a former program called "Welfare to Work" was merged with the WOTC. The qualified veterans program has now included disabled veterans, making it much more comprehensive. Credits in the welfare to work program have been increased for first year participation to 40%, and the length of time to file the forms to begin participating in the WOTC program has been extended from 21 days to 28 days. Lastly, ex-offenders no longer have the burden of proving income requirements to become eligible. All of these changes only serve to allow more people to participate and benefit for a better community and work/life experience in economically depressed areas.

A program from the Federal government such as this is noteworthy, because it works to actually reduce the tax liability of companies, while providing the needed incentive to take social responsibility for the communities in which business is carried on. The relationships between corporations and individuals can now be seen in more of a positive light, since assistance comes through those companies participating. Both sides benefit and the economy of depressed areas is lifted to a higher level. The working tax credit is an opportunity that should be brought to the attention of all companies and those within who are responsible for handling the taxes and hiring within firms. Also, individuals within economically declining communities should be made aware of these programs so that change can occur not only within businesses, but also from without.

If a business is interested in taking advantage of these programs, then IRS Form 8850 should be filed, as well as Form 9061 from the Department of Labor. The information is readily available online at the touch of a button. Information can also be easily obtained at local job and family services organizations within any city. All one need do is to pick up the phone and inquire. Utilizing these programs can assist individuals on to a better way of life by lifting them out of poverty. Every company can be proud of having done that!





Copyright© 1996-2015 ChristiaNet®. All Rights Reserved.