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Does your client qualify for this $250K credit? Tax Strategy Scan

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Our weekly roundup of tax-related investment strategies and news your clients may be thinking about.

The $250,000 tax credit you could be using for your clients’ businesses
Small business owners can claim as much as $250,000 per fiscal year from the federal R&D tax credit, which was initially applied against Social Security taxes, according to the Entrepreneur. An update this year has allowed the credit to be applied against payroll taxes for up to five years, in addition to income taxes. However, clients should ensure their businesses have less than $5 million in gross receipts during a five-year period at most and qualified R&D expenses to qualify for the credit. They should also oversee R&D expense audits and file Form 6765, or the Credit for Increasing Research Activities, with their 2016 income tax returns. The credit could be claimed as soon as the next quarterly filing of payroll tax after Form 6765 filing.

Tax-avoiding mergers allowed U.S. companies to lower their initial tax bill by $45 million: CBO
A new analysis by the Congressional Budget Office has found that U.S. firms that merged with foreign companies to avoid taxes saved $45 million on average in the first year after the merger, according to the Washington Post. Future tax-avoiding transactions could reduce corporate tax receipts by 2.5%, or $12 billion, in 2027, the study found. However, the CBO voiced optimism that fewer companies will engage in similar deals in the future because of several factors, such as benefits not outweighing the costs and difficult regulations in foreign countries.

Fifteen tax planning tips from analysts and industry experts advisers may consider in 2017.
December 5

How prepping for retirement is like prepping for a hurricane
Planning for retirement needs a lot of technical and mental preparation, just like getting ready for a hurricane, according to Florida Today. One must balance IRA withdrawals and after-tax savings and manage marginal tax rates. Take note that Social Security benefits may be taxable depending on total income. One can also look at reverse mortgage payouts that are tax free but there are several restrictions.

Check pay records to make sure you’re getting proper benefits
Clients should regularly review their Social Security earnings record so that there would be no issues once they collect benefits, according to the Everett Herald. Go to the Social Security Administration website to view your statement and taxed earnings. Clients should check their own records such as tax returns and W-2s sooner rather than later because tax documents may get lost and employers may no longer exist to provide correct payroll information.

6 states that are the most likely to tax your Social Security income
Thirteen states have laws that tax Social Security benefits, but seven of them have high-income exemption limits, Motley Fool reports. This means that many Social Security beneficiaries in these states will be exempted from taxes. This also means that those who have no high limits, such as Minnesota, North Dakota, Vermont, West Virginia, Colorado and Montana, will very likely tax retirees' Social Security benefits.

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