Tax Credits Archives - Think Outside the Tax Box

Tax Credits

By Annette Nellen, CPA, CGMA, Esq.

Inflation Reduction Act 2022 Energy Tax Incentive Considerations

The Inflation Reduction Act of 2022 (P.L. 117-169; 8/16/22) could easily have been named the Energy Incentives Act of 2022. Over 20 provisions in the Act provide tax credits or special deductions to encourage the production and use of clean energy. The cost of these energy provisions over ten years is about $271 billion. In contrast, the ten-year revenue projection for the corporate AMT and one percent excise tax on certain stock buybacks is about $296 billion.

Most of the energy credits are for businesses and are specialized such as for the production of clean hydrogen or sustainable aviation fuel or zero-emission nuclear power production. Four credits are designed for individuals including three revised credits and one entirely new one (§25E, Previously-owned clean vehicle credit).

This article highlights key aspects of the credits and special energy provisions as a whole, offers tips for dealing with the complexities that exist in these IRA 2022 rules, and provides suggestions to help individuals obtain the greatest tax savings from the new and revised energy credits and rebates. A few charts are included to aid in understanding these credits.

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Inflation Reduction Act — The Residential Clean Energy Credit

Your clients may think that business owners get all the tax breaks and incentives. But that’s not quite true. We see that with the expansion of clean energy tax credits in the Inflation Reduction Act. One of the goals of the Inflation Reduction Act is to address climate change. The bill does this by helping taxpayers save green for using green energy. Taxpayers can not only enjoy tax benefits from riding clean the next 10 years. Your environmentally conscious clients can also reduce their tax bill as they make clean energy changes to their home. What client do you have right now that would enjoy claiming 30% of the costs of their home improvements for a tax credit? Not sure? Well get your pen and paper to make a list while we go over how this new credit can save them this tax year until 2034.

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Client Alert

Tax Disaster Relief – More Than Just Return Extensions

Evie and I withdrew from active tax practice in 2018, but she maintains a sort of family and friend's freebie practice using Drake. I help a little. We have been struggling with difficulty getting the information for one of our “clients” as we watch the ultimate October 15 deadline creeps up on us. She is in Florida in one of the counties covered by President Biden’s disaster declaration relative to Hurricane Ian. So it was sort of a relief to find out that we have another three months to get the return done. In this case it is not a huge benefit since interest will still clock if there turns out to be a balance due, since the payment was due on April 18. “Certain deadlines” falling on or after September 23, 2022 and before February 15, 2023 are postponed through February 15, 2023. Read on to learn more!

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The Inflation Reduction Act Overview: A Brief Guide for the Non-Tax Professional

Question: How can I explain the recently passed Inflation Reduction Act to my tax planning clients? Answer: The simplest solution I've found so far is to break the Act into three components: tax credits for electric vehicles, tax credits for home improvements, and how the IRS will use the new funds allocated to them. From there, it's a simple matter of identifying some of the core concepts behind each category. To save you some trouble, I've created new client alerts to illustrate how one might do that! Keep reading to learn more!

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The Inflation Reduction Act Tax Credits Course

The Inflation Reduction Act of 2022 expanded existing energy credits and created brand new ones. There are now several new ways tax professionals can help taxpayers save thousands of dollars a year by planning for these tax credits. In this webinar, we will cover the credits likely to be used by individuals and small businesses. We will also discuss tax planning considerations and areas in need of additional guidance.

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The Inflation Reduction Act Town Hall

We’re hosting a live open discussion forum to help educate you on the new Inflation Reduction Act! The recently passed Inflation Reduction Act (IRA) makes some big promises: lower energy costs, provide tax credits for electric vehicles, negotiate cheaper medications for seniors, deliver faster tax refunds, and create more responsive IRS agents! How all these promises are paid for and how they impact the average American are already the topic of intense debate and, in some cases, the cause of outright fear! In fact, there has been so much concern and debate around this new bill that we’ve decided to hold a town hall on the subject! Keep reading to get all the details...

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10 Reasons Your Clients Should Get a Tax Divorce

As a married individual, you can select a tax filing status as either married filing jointly or married filing separately, and in some cases neither of these statuses achieve what is possible for two single taxpayers each filing their own tax return. In many cases it can seem you are getting penalized for being married in the U.S. You may get frustrated that you seem to keep getting hit with “wealth taxes or penalties.” Of course, you may not refer to it that way. But when you see things like the Alternative Minimum Tax, The Net Investment Income Tax, the Additional Medicare Tax, and a whole variety of other taxes that are higher for married filers than they are for two single people…you may be tempted to think about a divorce. And “live in sin”? No matter your personal beliefs there are at least 10 tax attributes that cost married filers more than two single people. In some instances, children are in the mix, as they relate to specific credits. Some of these situations only apply to wealthy couples. Some only apply to those earning $50,000 or less or seniors. These attributes, commonly known as the so-called “marriage penalty” refer to situations where it may pay to file as two single individuals rather than as a married couple. However to qualify, you cannot legally be married as of December 31. To learn more about these penalties and find out how to work around them, continue reading.

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Make Tax Magic with a Health Savings Account

Congress created one of the best tax savings vehicles in 2003. It wasn’t the individual retirement account (IRA). It wasn’t the Roth IRA.It was the health savings account (HSA). The HSA is the only tax-preferred savings vehicle in which a taxpayer potentially gets both an upfront tax deduction in addition to tax-free and penalty-free distributions. The IRS wrote the HSA rules to give taxpayers maximum flexibility in how they use their HSAs for medical expenses. Strategic use of the HSA can lead to lifelong tax savings opportunities. Let’s review the basic rules as to how an HSA operates, the little-known rules that create tax savings opportunities, and examples of how the HSA can be used to provide tax-free and penalty-free distributions when the taxpayer has a cash need.

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Client Alert

Enjoy Decades of Tax-Free Growth With a 529A

If you’re disabled or support someone who is, a 529A plan can be a powerful way to save for the future. Potential earnings grow tax-free, and you won’t have to pay taxes when you withdraw, as long as the withdrawals meet qualifications. Also known as Qualified ABLE (Achieving a Better Life Experience) programs, these will not only assist you next time you are playing Tax Code Jeopardy but help you create a tax advantaged savings account. One reason you may not hear much about these tax vehicles is that there really is no way I can discern that advisers can make money on them. But since you and I are members of the same club as tax practitioners, I’m confident you will tell your clients about things that can help regardless of whether there is any profit in it. As my first managing partner the late Herb Cohan used to say, “The world is longer than a day.” To learn more about future tax-free money, keep reading.

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