Mining Tax Credits

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Tax credits are among the most valuable features of any tax system because they represent a dollar-for-dollar reduction in the amount of tax liability. In some cases, they may even generate a refund. The problem is that many available tax credits are complicated and not well known by taxpayers. As a result, many credits at both the federal and state level go unused. This course is designed to help you build a strategy for identifying applicable tax credits and maximizing their use. 

Topic covered include:

  • The earned income tax credit
  • The child tax credit
  • Energy-related tax credits
  • Business incentive tax credits
  • The foreign tax credit
  • State tax credits
  1. Introduction
  2. Topics Covered 00:03:36
  3. The Nature Of Tax Credits 00:06:41
  4. Tax Deductions Vs. Tax Credits 00:09:10
  5. Tax Credit Basics 00:10:57
  6. Nonrefundable Credits 00:13:22
  7. Refundable Credits 00:14:14
  8. Partially Refundable Credits 00:15:02
  9. Spectrum Of Tax Credits 00:16:04
  10. The Earned Income Credit 00:18:24
  11. Qualifications 00:20:12
  12. 2022 Earned Income Credit 00:21:11
  13. State EITC Issues 00:22:59
  14. State-Level EITCs In 2022 00:25:11
  15. Connecticut 00:26:05
  16. Washington DC 00:26:29
  17. Hawaii 00:28:00
  18. Illinois 00:28:35
  19. Maine 00:28:46
  20. New York 00:28:58
  21. Oregon 00:29:09
  22. Utah 00:29:17
  23. Vermont 00:29:30
  24. Virginia 00:29:39
  25. The Child Tax Credit 00:30:35
  26. Qualifications 00:32:13
  27. Basic Dependency Qualifications 00:34:21
  28. Qualifying Child 00:35:47
  29. Qualifying Child Continued 00:36:38
  30. Qualifying Relative 00:37:02
  31. Qualifying Relative Continued 00:38:05
  32. Last Year Vs. This Year 00:38:42
  33. Last Year Vs. This Year Continued 00:40:33
  34. Energy-Related Tax Credits 00:51:23
  35. Business Energy Credits 00:51:47
  36. Energy Investment Credit 00:53:56
  37. Solar Tax Credit 00:55:30
  38. Database of State Incentives for Renewables & Efficiency 00:57:36
  39. Business Incentive Tax Credits 00:59:43
  40. Research And Development 01:00:00
  41. Research And Development - Main Calculation Method 01:01:42
  42. Research And Development  - Payroll Credit 01:03:25
  43. Activities Qualifying For Credit 01:04:10
  44. Costs That Qualify For The Credit 01:04:43
  45. Research And Development - Specific Qualifications 01:05:24
  46. Research And Development - Specific Qualifications Continued 01:06:31
  47. Employer Tax Credits 01:08:31
  48. Employer Tax Credits Continued 01:09:11
  49. Work Opportunity Tax Credit 01:09:24
  50. WOTC Targeted Groups 01:11:20
  51. WOTC Targeted Groups Continued 01:12:33
  52. Empowerment Zone Credit 01:13:45
  53. 2022 Empowerment Zones 01:15:03
  54. State Hiring Tax Credits 2022 01:15:36
  55. Employer Tax Credits 01:16:25
  56. Employer-Provided Child Care 01:17:08
  57. Small Business Health Care 01:18:57
  58. Mine Rescue Team Training 01:22:37
  59. Retirement Plan Start-Up 01:23:31
  60. Employer Tax Credits 01:25:09
  61. Differential Wage Payment 01:25:31
  62. FICA Tip Credit 01:28:19
  63. Credit For Family And Medical Leave 01:30:05
  64. The Foreign Tax Credit 01:32:38
  65. Foreign Tax Credit Basics 01:34:58
  66. Foreign Tax Credit Basics Continued 01:35:35
  67. Foreign Tax Credit Complications 01:36:36
  68. Foreign Tax Credit Complications Continued 01:37:57
  69. State Tax Credits 01:39:29
  70. Virginia Tax Credits 01:40:10
  71. Maryland Tax Credit Programs 01:40:51
  72. California Credits 01:41:09
  73. Florida Tax Incentives For Businesses 01:41:27
  74. Presentation Closing 01:43:26

  • Chuck Borek

    Chuck Borek

    Chuck Borek is a practicing attorney and founder of  the Borek Group, LLC. Chuck is also a CPA, and his background includes  five years as a partner in a public accounting firm. He received his law degree and MBA summa cum laude from the University of Baltimore in 1993, where he was editor [...]

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IRS Credit

Preparer Tax Identification Number
  • Business Incentive Tax Credit 00:59:44
  • Child Tax Credit 00:30:46
  • EITC - Earned Income Tax Credit 00:18:28, 00:23:09
  • Empowerment Zone Credit 01:13:48, 01:15:05
  • Energy Investment Credit 00:53:56
  • Federal Insurance Contributions Act (FICA) 01:28:19
  • Foreign Tax Credit 01:32:42, 01:35:01
  • Nonrefundable Tax Credit 00:13:27, 00:13:39
  • Qualified Research Expenditure (QRE) 01:01:37
  • Refundable Tax Credit 00:14:17, 00:14:23
  • Solar Tax Credit 00:55:33, 00:55:46
  • Tax Bracket 00:10:08
  • Tax Credit 00:10:15
  • Tax Deduction 00:09:31
  • Work Opportunity Tax Credit (WOTC) 01:09:20

Business Incentive Tax Credit: Provide companies with a direct reduction in tax liability in return for taking a particular action.

Child Tax Credit: A child tax credit is a tax credit for parents with dependent children given by various countries. The credit is often linked to the number of dependent children a taxpayer has and sometimes the taxpayer's income level.

EITC - Earned Income Tax Credit : The United States federal earned income tax credit or earned income credit is a refundable tax credit for low- to moderate-income working individuals and couples, particularly those with children. The amount of EITC benefit depends on a recipient's income and number of children.

Empowerment Zone Credit: Is an incentive to businesses that are located in an empowerment zone (EZ) to hire and retain employees who also live in the EZ.

Energy Investment Credit: Is a government-sponsored incentive that reduces the cost for people and businesses to use alternative energy resources.

Federal Insurance Contributions Act (FICA): The Federal Insurance Contributions Act is a United States federal payroll contribution directed towards both employees and employers to fund Social Security and Medicare—federal programs that provide benefits for retirees, people with disabilities, and children of deceased workers.

Foreign Tax Credit: Is a U.S. tax credit used to offset income tax paid abroad. U.S. citizens and resident aliens who pay income taxes imposed by a foreign country or U.S. possession can claim the credit.

Non-Refundable Credit: A non-refundable tax credit is a tax credit that can only reduce a taxpayer's liability to zero. 1? Any amount that remains from the credit is automatically forfeited by the taxpayer. A nonrefundable credit can also be referred to as a wastable tax credit, which may be contrasted with refundable tax credits.

Nonrefundable Tax Credit: Is a credit that is applied to taxes payable that only reduces a taxpayer's liability to a minimum of zero.

Qualified Research Expenditure (QRE): An in-house research expense of the taxpayer or a contract research expense of the taxpayer is a qualified research expense only if the expense is paid or incurred by the taxpayer in carrying on a trade or business of the taxpayer.

Refundable Credit : Refundable tax credits are called “refundable” because if you qualify for a refundable credit and the amount of the credit is larger than the tax you owe, you will receive a refund for the difference. For example, if you owe $800 in taxes and qualify for a $1,000 refundable credit, you would receive a $200 refund.

Refundable Tax Credit: Is a tax credit that is refunded to the taxpayer no matter how much the taxpayer's liability is.

Solar Tax Credit: Is a tax credit that can be claimed on federal income taxes for a percentage of the cost of a solar PV system paid for by the taxpayer.

Tax Bracket: The range of incomes taxed at given rates, which typically differ depending on filing status.

Tax Credit: Is an amount of money that taxpayers can subtract, dollar for dollar, from the income taxes they owe.

Tax Deduction: An item you can subtract from your taxable income to lower the amount of taxes you owe.

Work Opportunity Tax Credit (WOTC): Is a federal tax credit available to employers who invest in American job seekers who have consistently faced barriers to employment.

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Frequently Asked Questions

Understanding the distinction between tax credits and tax deductions is fundamental to effective tax planning. A tax deduction reduces your taxable income, so its value depends on your marginal tax rate—a $1,000 deduction saves a taxpayer in the 22% bracket $220, while the same deduction saves a taxpayer in the 37% bracket $370. A tax credit, by contrast, provides a dollar-for-dollar reduction in your actual tax liability regardless of your tax bracket—a $1,000 tax credit reduces your tax bill by exactly $1,000. This makes credits significantly more valuable than deductions of equal dollar amounts. Tax credits are further categorized as nonrefundable (can reduce your tax liability to zero but not below), refundable (can reduce your liability below zero, generating a refund), or partially refundable (a hybrid of both). Because of their direct impact on tax liability, identifying and maximizing applicable tax credits—at the federal, state, and local level—should be a priority in any comprehensive tax planning strategy for individuals and businesses. Many valuable credits go unclaimed simply because taxpayers and their advisors are unaware of them.
The Work Opportunity Tax Credit (WOTC) is a federal tax credit available to employers who hire individuals from targeted groups that have consistently faced barriers to employment. Targeted groups include recipients of TANF (Temporary Assistance for Needy Families), qualified veterans, ex-felons, vocational rehabilitation referrals, summer youth employees from empowerment zones, recipients of SSI or food stamps, long-term unemployment recipients, and others as defined by the IRS. The credit amount varies by target group and ranges from 25% to 40% of first-year qualified wages, up to a maximum credit of $2,400 to $9,600 per eligible employee depending on the category. To qualify, employers must complete IRS Form 8850 and submit it to the State Workforce Agency within 28 days of the new hire's start date—missing this deadline forfeits the credit. WOTC is a valuable but frequently overlooked business incentive tax credit, particularly for employers in industries with high-volume hiring such as retail, food service, manufacturing, and logistics. Accounting professionals who incorporate WOTC screening into client onboarding processes can generate substantial, recurring tax savings for eligible employers.
The Research and Development (R&D) tax credit is one of the most valuable and widely underutilized business incentive tax credits available under the federal tax code. It rewards companies for investing in qualified research activities—work that involves developing new or improved products, processes, software, or formulas that require experimentation and involve technical uncertainty. The credit is calculated as a percentage of Qualified Research Expenditures (QREs), which include wages paid to employees engaged in research, supplies consumed in research, and contractor research costs. The regular calculation method applies a percentage to QREs exceeding a base amount; an alternative simplified credit method is also available. For startup companies with limited tax liability, the Payroll Credit provision allows eligible small businesses to apply up to $250,000 of the R&D credit against payroll taxes. Many businesses in technology, manufacturing, engineering, pharmaceuticals, food processing, and even software development qualify without realizing it. Accounting professionals who proactively analyze client activities for R&D credit eligibility can deliver substantial tax savings that often exceed the cost of the analysis itself.
Energy-related tax credits provide significant incentives for both individuals and businesses to invest in renewable energy and energy efficiency improvements. The Solar Tax Credit (Investment Tax Credit) allows taxpayers to claim a percentage of the cost of solar photovoltaic systems installed on residential or commercial properties, with federal credit percentages phasing down over time but remaining substantial. The Business Energy Investment Credit covers a broader range of energy property including fuel cells, wind turbines, and geothermal systems. For businesses, energy-related credits can offset a meaningful portion of capital investment in qualifying equipment. At the state level, the Database of State Incentives for Renewables and Efficiency (DSIRE) catalogs hundreds of additional state-specific incentives—rebates, tax credits, and grants—that stack on top of federal credits to make clean energy investments even more attractive. Accounting professionals advising clients on capital expenditure planning should proactively evaluate whether energy investments qualify for available credits, as the combination of federal and state incentives can dramatically improve the economics of projects that might otherwise appear marginal on a pre-tax basis.
The Foreign Tax Credit (FTC) is a U.S. tax credit designed to prevent double taxation of income earned abroad. U.S. citizens, resident aliens, and domestic corporations that pay income taxes to a foreign country or U.S. possession can claim the credit on their federal return. The FTC offsets U.S. tax liability dollar-for-dollar for foreign taxes paid, subject to a limitation that prevents the credit from exceeding the U.S. tax that would be owed on the same foreign income. The limitation is calculated separately for different categories of income (passive income, general income, foreign branch income, etc.), and unused credits can generally be carried back one year or carried forward ten years. Complexity arises in several areas: the sourcing of income and expenses between U.S. and foreign categories, the treatment of high-tax foreign income, and the interaction with other international tax provisions. Taxpayers with foreign income below a certain threshold may elect to use the simpler foreign tax credit deduction instead. For accounting professionals advising clients with international investments, foreign employment income, or cross-border business operations, understanding the Foreign Tax Credit rules is essential for delivering comprehensive, accurate tax planning and compliance services.