:help
Hi, i wanted to know if anyone could tell me about the benefits of tax credits. I was told that every new business gets $10k a year for 5 years for starting cost. I have somebody that said they would buy my tax credits so I would not have tax credits for 5 years. Is this possible? If so, how?
And also When you write off business expenses, is that using tax credits? :help
I don’t think the IRS is handing out $50k in tax credits to every new business owner, someone is pulling your leg. A business must qualify for tax credits. Writing off business expenses is just terminology, qualified business expenses are used to offset business income in arriving at taxable income. Every dollar in business expense basically saves your marginal tax rate (say 25%) of every dollar in income. Tax credits on the other hand are a true dollar for dollar offset.
Thank you 71tr for your response. Very helpful.
I think what you were told is that a new company has to AMORTIZE its start up costs over five years. If you spend $50K in start up expenses, you can’t take all $50K as a business expense in the first year. You have to spread it out over five years. There may be some annual $10K limit, or maybe anything over $10K has to be amortized. Mark Wagner will have to clarify for us.
This is not a tax credit, but simply a cost recovery of your initial expenses – analogous to depreciating an equipment purchase.
that’s old law.
you can deduct up to $5k in the first year (limits if the total is over $50k) and amortize the rest over 15 years.