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The IRS has information on 29 different types of business tax credit that are available to businesses. The business tax credits that businesses may apply to their taxable income are:
Information on each of these 29 business tax credits can be found on the IRS.gov website. There you can click on a form number or download an instruction form for an applicable business tax credit. This article will discuss in more detailed the Investment Credit, Work Opportunity Credit and Welfare-to-Work Credit, which apply to a larger percentage of businesses.
The General Business Credit is Form 3800 that is used to account for each of the allowable credits for a business. This form is used to determine the total amount of credits and deduct them from the business’s net income.
Investment Credit
The Investment Credit, which is filed on IRS Form 3468, is the sum of all credits available to a business for investment purposes. This includes an energy credit and a rehabilitation credit for buildings such as those restored in a natural disaster or flood zone or a historic structure destroyed by a natural disaster. The amount of credit that a business is permitted to receive depends on the scope of the rehabilitation and or energy improvements made by a business.
Work Opportunity Credit
The work opportunity credit is used to provide businesses with an incentive to higher employees that are members of certain targeted groups. The credit, which can be claimed on Form 5884, is allowable for qualified wages of targeted employees who work at least 120 hours but less than 400, at least 400 hours or are recipients of long-term family assistance (i.e. welfare).
Welfare-to-Work Credit
Employers that hire target workers who are recipients of long-term family assistance are permitted to take credit for a portion of 1st or 2nd year wages paid. An employer claiming this credit uses IRS Form 8861.
- General Business Credit
- Investment Credit
- American Samoa Economic Development Credit
- Work Opportunity Credit
- Credit for Alcohol Used for Fuel
- Credit for Increasing Research Activities
- Low-Income Housing Credit
- Recapture of Low-Income Housing Credit
- Orphan Drug Credit
- Disabled Access Credit
- Qualified Electric Vehicle Credit
- Renewable Electricity Production Credit
- Empowerment Zone Employment Credit
- Indian Employment Credit
- Credit for Employer Social Security and Medicare Taxes Paid on Certain Employee Tips
- Credit for Contributions to Selected Community Development Corporations
- Welfare-to-Work Credit
- Biodiesel and Renewable Diesel Fuels Credit
- New Markets Credit
- Credit for Small Employer Pension Plan Startup Costs
- Credit for Employer-Provided Childcare Facilities and Services
- Low Sulfur Diesel Fuel Production Credit
- Qualified Railroad Track Maintenance Credit
- Distilled Spirits Credit
- Nonconventional Source Fuel Credit
- Energy Efficient Home Credit
- Alternative Motor Vehicle Credit
- Alternative Fuel Vehicle Refueling Property Credit
- Mine Rescue Team Training Credit
Information on each of these 29 business tax credits can be found on the IRS.gov website. There you can click on a form number or download an instruction form for an applicable business tax credit. This article will discuss in more detailed the Investment Credit, Work Opportunity Credit and Welfare-to-Work Credit, which apply to a larger percentage of businesses.
The General Business Credit is Form 3800 that is used to account for each of the allowable credits for a business. This form is used to determine the total amount of credits and deduct them from the business’s net income.
Investment Credit
The Investment Credit, which is filed on IRS Form 3468, is the sum of all credits available to a business for investment purposes. This includes an energy credit and a rehabilitation credit for buildings such as those restored in a natural disaster or flood zone or a historic structure destroyed by a natural disaster. The amount of credit that a business is permitted to receive depends on the scope of the rehabilitation and or energy improvements made by a business.
Work Opportunity Credit
The work opportunity credit is used to provide businesses with an incentive to higher employees that are members of certain targeted groups. The credit, which can be claimed on Form 5884, is allowable for qualified wages of targeted employees who work at least 120 hours but less than 400, at least 400 hours or are recipients of long-term family assistance (i.e. welfare).
Welfare-to-Work Credit
Employers that hire target workers who are recipients of long-term family assistance are permitted to take credit for a portion of 1st or 2nd year wages paid. An employer claiming this credit uses IRS Form 8861.
