End of Year Business Tax Savings Capital Review GroupAs the year enters its final quarter, the time has come for businesses to begin assembling paperwork and planning strategies to minimize their tax burdens for 2016. Many business tax incentives require extensive documentation that takes a great deal of time to prepare, so early action is recommended in order to secure optimal results at tax time.

In previous years, taxpayers faced substantial uncertainty regarding the tax extender provisions, which typically expired at the end of each year and were later renewed retroactively. Fortunately, the Protecting Americans from Tax Hikes (PATH) Act of 2015 either made permanent or implemented multi-year renewals of several tax extenders, including the Research and Development (R&D) Credit and the Work Opportunity Tax Credit (WOTC). However, the future of the §179D deduction for energy-efficient commercial buildings remains in question, as this valuable provision is currently due to expire on December 31, 2016.

As the end of the year looms on the horizon, here are some steps that businesses can take to prepare for maximum savings during tax season:

Install energy efficiencies and claim the §179D deduction. Although there is a chance that the §179D deduction will be renewed, commercial building owners and the primary designers—including architects and engineers—of government buildings should act swiftly to take advantage of this incentive before the end of 2016. Section 179D offers a deduction of up to $1.80 per square foot for energy-efficient improvements to commercial or government buildings. Specifically, taxpayers may seize deductions of up to $0.60 per square foot for improvements to lighting, $0.60 for HVAC, and $0.60 for the building envelope. Projects completed in 2016 must comply with ASHRAE Standard 90.1-2007 and must be certified by a third party with Department of Energy-approved software. In addition, taxpayers must support §179D claims with information such as floor plans showing the energy-efficient improvements, the cost of the project, and the date it entered service.

• Gather records of research and development activities. Businesses in several different industries—including architecture, engineering, and manufacturing—may be eligible for significant tax savings through the R&D Credit. Thanks to changes under the PATH Act, the R&D Credit is now available to more businesses than it was in previous years. However, to access the benefits of the credit, taxpayers must support claims with meticulous documentation detailing R&D activities from at least the past four years. Examples of the requisite documents include payroll reports for employees who worked on the activities, a project list with cost summary, and the company’s federal and state tax returns. Preparing these items is a time-consuming task, so businesses that think they may be eligible for the R&D Credit should consult a tax professional and begin the process sufficiently in advance of tax season.

• When recruiting new employees, consider candidates who would qualify under the Work Opportunity Tax Credit (WOTC). Although the deadline for the WOTC look-back period passed on September 28, employers may still claim WOTC when they hire a worker from one of the target groups—which include veterans, summer youths, and recipients of government assistance—and file Forms 8850 and 9061 with their state workforce agencies (SWAs) within 28 days of the new hire’s start date. With WOTC providing tax savings of up to $9,600 per qualifying employee hired, businesses should consider the credit as a way to substantially offset the costs of growing their workforces.

• Consult a professional to review sales tax records for possible overpayments. With sales tax rates and exemptions varying widely between different jurisdictions, it is common for businesses—particularly hotels and manufacturers that sell goods out of state—to pay more than they owe. Businesses can rectify this costly mishap by having a tax professional review their sales transactions, identify overpayments, and assist them with filing the paperwork needed to claim a refund.

As your business begins end-of-year preparations for the upcoming tax season, the experts at Capital Review Group are available to help you navigate the complexities of the tax code and ensure that you maximize your savings. Contact CRG today to schedule a pro bono analysis!