Our friends at Habif, Arogeti & Wynne, LLP sent us a killer rundown of available tax credits that are must-knows for any business (but especially pertinent for scalable technology folks like yourself). Habif, Arogeti & Wynne, LLP is the largest accountancy firm in the state of Georgia, as well as one of the largest firms in the United States, so they really know their stuff. Check out the credits and tips below:
Job Tax Credit
Companies that are engaged in strategic industries, such as manufacturing, warehousing & distribution, processing, telecommunications, broadcasting, tourism and R&D may qualify for Georgia’s Job Tax Credit. Depending on the county’s economic status, companies can claim up to $5,250 per job created, per year, for a total of ﬁve years. This is an income tax credit and under certain criteria it may be used to oﬀset withholding tax. Companies in other industries may qualify for the credit if they are located in a designated opportunity zone.
Quality Jobs Tax Credit
Companies that create at least 50 new jobs in a 12- month period and pay wages that are at least 110 percent of the county average are eligible to receive a tax credit of up to $5,000 per job, per year, for up to five years. This is an income tax credit and can be used to oﬀset withholding tax.
Investment Tax Credit
The Investment Tax Credit is available to existing manufacturing or telecommunications businesses that have operated a facility in Georgia for three years prior to an investment of $50,000 or more. This income tax credit ranges between one and eight percent depending on the county’s economic status. Higher credit ranges are available for investment in recycled or pollution control equipment and for conversion of a defense plant to manufacturing a new product.
Retraining Tax Credit
A company’s direct expenses in certain training programs for experienced employees can be claimed as a tax credit. The income tax credit is available to all Georgia businesses that ﬁle a Georgia income tax return. The credit is for 50 percent of the employer’s direct cost, up to $500 per full-time employee, per approved training. The total amount of the credit cannot exceed $1,250 per employee, per year. Qualiﬁed training programs must be approved by the Technical College of Georgia.
Research and Development (R&D) Tax Credit
R&D expenditures incident to the development or improvement of a product can qualify for a dollar- for-dollar reduction of federal and state income taxes owed. The Georgia R&D Credit can be used to oﬀset up to 50 percent of a company’s Georgia income tax liability. Any excess R&D credit can be applied to the company’s state payroll withholding.
This specific tax credit, which was “enacted in 1981 as an incentive for American innovation”, has been one of HA&W’s most impactful tax credit for businesses specifically in Georgia. Georgia also has “a separate R&D tax credit of up to 10% for companies who increase their R&D spending from year to year”. In order to most fully maximize this credit benefit, the folks at HA&W have created a methodology specifically for obtaining this credit.
- Educate company personnel on activity qualiﬁcation criteria. Companies need to perform qualiﬁed research, undertaken for the purpose of discovering information that is technical in nature and is intended to be useful in the development of a new or improved business component.
- Investigate qualiﬁed activities and associated qualiﬁed costs within the company. An initial research credit study requires the investigation of prior years’ activities. The success of an investigative study can be measured on the quality of the information revealed.
- Calculate the credit. Since its initial enactment in 1981, there have been several changes to the credit calculation. We will leverage our technical expertise in preparing a calculation that maximizes your beneﬁt.
- Summarize our ﬁndings in an executive report. Our ﬁndings will also serve as audit support in the event the credit claimed is audited by taxing authorities.
For more on this tax credit, check out the Q&A on Mitchell Kopelman (partner-in-charge of the tax practice and the technology and bio-sciences group at HA&W) where he talks more on this evolving credit that is benefiting so many tech companies here in Georgia.