O'Reilly logo

J.K. Lasser's Small Business Taxes 2013: Your Complete Guide to a Better Bottom Line by Barbara Weltman

Stay ahead with the world's most comprehensive technology and business learning platform.

With Safari, you learn the way you learn best. Get unlimited access to videos, live online training, learning paths, books, tutorials, and more.

Start Free Trial

No credit card required

Employment Tax Credits

Tax credits are even better than tax deductions. A tax deduction is worth only as much as the tax bracket you are in. For example, if you are in the top federal income tax bracket for individuals, 35% in 2012, a $100 deduction saves $35 in taxes. Tax credits reduce your taxes dollar-for-dollar. A $100 tax credit saves $100 in taxes.

Employer’s Employment-Related Tax Credits

There are a number of tax credits related to the employment of workers. These tax credits reduce your deduction for compensation dollar-for-dollar. For example, if your deduction for compensation is $40,000 and you are entitled to claim a $2,000 employment tax credit, you may deduct only $38,000.

Employment-related tax credits reduce your deduction for wages paid to your employees.

WORK OPPORTUNITY CREDIT

To encourage employers to hire certain individuals from specially targeted groups, there is a tax credit called the work opportunity credit. The credit of up to $9,600 for 2012 applies to certain veterans.

Prior to 2012, there was a much broader credit, which may be extended retroactively for 2012. If extended, then the following information applies for 2012: The credit applies to such targeted groups as Aid to Families with Dependent Children (AFDC) recipients, food stamp recipients, ex-felons, high-risk youth, and those in areas that suffered certain population decline. The credit is 25% of the first $6,000 of wages ($3,000 of wages for summer youth) for those who work between 120 and ...

With Safari, you learn the way you learn best. Get unlimited access to videos, live online training, learning paths, books, interactive tutorials, and more.

Start Free Trial

No credit card required