The valuable tax credits that 94% of business owners don’t know about.

Are you a small business owner? Do you have employees and pay taxes every year? If you fit that broad description then you might be missing out on some tax credits that could potentially save you thousands of dollars every year. However, a recent survey of small business owners in California revealed that 94% of them were still not familiar with these legitimate tax programs, like the Research & Development Credits (R&D), the Work Opportunity Tax Credit (WOTC), and the California Competes credit and New Employment Credit (NEC) in California.

In fact, utilizing these legal and ethical write-offs and tax programs when eligible can make the difference between a healthy, consistently profitable business – or a money pit.

You’re probably thinking that you use a good CPA already. I’m sure they’re doing a fantastic job and you should keep using their services. But the fact is that this year’s tax codes span 74,608 pages – and that’s just the federal tax codes, which is 187 times longer than they were a century ago. In addition, there are new amendments, supplements and other changes ever year.

But the good news is that within that massive volume of tax codes lays some hidden gems that can save significant money for most business owners with employees.

According to Noah Carrazco of Innovative Tax Solutions in Sacramento, California, “Just about anyone with employees can see the benefits from these hiring incentives and credits, whether big or small. But for a large portion of our business owner clients, we’ve been able to generate a significant amount of tax credits, saving them money and really helping their bottom line.”

There are scores of business & individual tax credits and hiring incentives available like the Research & Development Credits (R&D), but today we’ll introduce you to one of the most prominent ones that help chiropractors, a Federal Hiring Credit called the Work Opportunity Tax Credit (WOTC).

(You can see the IRS page on the WOTC here.)

The WOTC was first enacted with the Small Business Job Protection Act of 1996 in an effort to promote hiring among certain target demographics. The WOTC is now administered directly by the Federal Internal Revenue Service (IRS) Department, which maintains several WOTC Centers throughout the U.S.

The benefit? The WOTC issues a tax credit that can be used to offset an entity’s (or individual’s) Federal income tax liability, offering a dollar for dollar reduction in your tax liability with up to $9,600 of qualified credits for each employee that meets the criteria. The WOTC can be carried forward for up to 20 years and carried back for 1 year.

Let me reiterate that fact: you can still file for the WOTC on a prior year return, so it’s possible that you haven’t missed the boat if you’ve already filed your 2015 taxes (we certainly hope you have!).

There are also plenty of tax incentive programs on the state level, like the California Competes Tax Credit (CCTC), a state tax incentive available to businesses that locate, expand or remain in California. If you’re business is creating jobs, you may qualify for a dollar-for-dollar reduction in your state tax liability, which can be carried forward up to five years.

Additionally, businesses should explore the New Employment Credit (NEC) in California, which generates a 35% employment credit on qualified wages over a 5-year period for certain employees from target demographics.

There are also similar tax savings programs and credits in each state. What does it all add up to for the 6% of business owners that are taking advantage of these existing credits?

“We see a significant reduction in tax liability for our clients,” adds Carrazco, who’s firm is one of the industry leaders in tax credits, working for a spectrum of clients from Fortune 500 companies to mom-and-pop small businesses. “I don’t know why more business owners don’t take advantage of these available credits.”

That leads to a great question: why don’t more people know about these tax credits and take advantage of them?

Of course, the IRS isn’t going to spend time and money publicizing these credits themselves, effectively taking revenue out of their own pockets. Additionally, with the complexity of just the basic tax codes, it’s nearly impossible for the average CPA or tax preparer to handle compliance (tax preparation) work AND specialize in niche tax credits, like the WOTC, R&D & many others. That would be like being a family physician and a neurosurgeon at the same time. In fact, many well-established and larger tax firms do offer tax credit work, but they often outsource it to firms like Innovative Tax Solutions, working in tandem as a team to leave no stone unturned when it comes to saving their clients money.

So to be very clear, we encourage you to KEEP your current CPA or tax preparer, but use a reputable firm (you want to be careful to avoid the tax credit “consultant” firms in the industry that only pick the lowest hanging fruit when it comes to these credits, but charge more) to piggyback on their compliance work, finding and utilizing these highly specialized credits.

A good firm will work on a contingency basis, which means you only pay IF and WHEN they find you tax credits that you’re eligible for. Basically, you only pay a percentage of the dollar amount you save or get back – a no-risk proposition. If you don’t save money, you pay nothing.

But just like with any financial advice, don’t take our word for it (we’re certainly not tax experts!). Instead, do your own research and ask plenty of questions. Feel free to broach this subject with your current CPA but remember that many of them aren’t up to date on the intricacies of the federal and state hiring incentives and credits – or may not even be aware of them at all.

Just remember your good friends at The Alfano Group Real Estate Agency when you keep more of your hard-earned money at tax time – and invest in real estate!

Are you overpaying on your taxes? Try these 10 most underutilized income tax deductions.

Every year come April 15 (or the 16^th) Americans owe approximately $1.4 trillion in income taxes to the IRS. While that’s a lot of coin, did you know that the average U.S. citizen only plays an actual income tax rate of 10.1 percent? That’s the revelation of a study by the U.S. Congress’s Joint Committee on Taxation. If that number seems a little low compared to our higher standard tax brackets, it should highlight the fact that a lot of people are utilizing write-offs, deductions, and other tax shelter strategies to reduce their personal tax liability.

So if you’re paying higher than 10.1 percent or just want to see if you can save money, where should you get started? After all, the IRS tax codes for personal income span almost 12,000 pages over six volumes, which would take a lifetime for a regular person to read and decipher. And with codes, laws, and rules changing every year, the business of reducing tax liability is best left to the experts. But what we can encourage is for we - the hard working and tax-paying people - to take advantage of every legal and ethical deduction available. Here are the 10 most commonly overlooked personal income tax deductions (and of course, consult your CPA or tax professional for specifics).

1. Charitable Donations

Did you clean out your closet, garage, or attic and donate things to your local Goodwill or shelter this year? Or do you regularly tithe or donate at your church, mosque, or temple? If so, you are entitled to take a deduction for charitable contributions – but only to qualified organizations (not individuals) and for monetary gifts up to $250. You can even deduct the fair market value of any property or goods you donate!

2. Mileage Deductions

You may know by now that people who are self-employed can deduct a certain percentage of their mileage to and from work, but in fact, the IRS also allows mileage deductions for medical purposes, moving, and when doing service for a charity. If you drive a lot for any of these purposes, the savings could add up!

3. Energy Efficiency Tax Credits

If you invested in energy efficient products or home upgrades, there are a handful of great tax credits available for some. These include the Residential Energy Property Credit for a credit on energy-efficient doors, windows, insulation, roofing, heating and cooling systems, the Residential Energy Efficient Property Credit, Plug-in Electric Vehicle Credit, Credit for Conversion Kits, and the Treatment of Alternative Motor Vehicle Credit as a Personal Credit Allowed Against AMT.

4. New Vehicles Sales Tax Deduction

If you bought a new car this year, you may be entitled to a special tax deduction for the sales or excise taxes on that transaction. In the past, the deduction was for vehicle purchase prices up to $49,500, and even included some other fees or taxes imposed by the state or locality in certain cases. The rules on this deduction change frequently, so ask your tax pro!

5. State Tax Deduction

If you itemize your tax deductions on Schedule A of your tax forms, you can probably deduct either state and local income taxes or state and local general sales taxes. Even if you didn’t save your receipts (most of us don’t have receipts for every single purchase throughout the year!) you can opt to use a standard amount for your state.

6. Mortgage Deductions

If you paid “points” on your mortgage closing (charges paid to obtain a lower interest rate or pay closing costs or fees), these points can be deductible. These apply for a both a purchase loan and refinances, and are on top of the standard mortgage interest deduction homeowners enjoy.

7. Unemployment Deductions

Are you currently between jobs but actively looking for work? If that’s the case, you may be entitled to certain credits and deductions, such as the Earned Income Tax Credit, as well as deducting expenses related to your job search. These include employment agency fees, funds spent on resume preparation and post, and some travel expenses if the trip is taken primarily for a job search.

8. Tax Preparation Credit

Did you purchase software to file your own taxes (hopefully not!), or go to a Certified Public Accountant, Enrolled Agent, or other professional tax agency for tax preparation (much better)? Those fees may be fully deductible, even down to the convenience fees charged for the electronic payment of your taxes.

9. Parental Repayment of Student Loans

If parents are paying back their child’s student loan, the IRS considers this a gift to the child. So as long as the child is no longer claimed as a dependent, Mom or Dad can deduct up to $2,500 of student-loan interest they pay each year. That might make you rethink how you pay off your student loans!

10. Working Parents Credits

If you paid for the care of a qualifying individual (usually a child, but it could even be your spouse!) so you could either look for work or go to work, you can claim a credit for those expenses. Eligible costs include monies paid to a cook, maid, babysitter, housekeeper, or cleaning person, dependent care centers, elective pre-schools, before and after school programs, and day camps.

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We hope that learning about these most underutilized tax credits will help you at least ask more questions when you’re in your professional tax preparer’s office, and hopefully save some money!