Sean O’Connell, a PBMares Tax Service Line Leader, is presenting “Top 10 Tax Opportunities for Virginia Businesses” at the Virginia Society of CPAs Business and Industry Conference.

Here’s a sneak preview of Sean’s Top 10:

10. The Affordable Care Act imposes two types of penalties on businesses with more than 50 employees: A)  For businesses that do not offer minimum essential coverage to at least 95% of their employees and their dependent children, the penalty is $2,160 annually for each full time employee in excess of 30, and B)  Even those that offer such coverage are subject to an annual penalty of $3,240 for each employee who receives a premium tax credit.
All businesses with more than 50 employees need to make an annual assessment of their group health coverage offerings, taking into account the new cost of penalties (which are not tax deductible).

9. The average cost of a four-year education now ranges from $83,384 for an in-state public university to $180,680 at a moderately priced private school. Virginia residents receive an individual state income tax deduction when they run these costs through a Virginia 529 plan. If our friends and neighbors fail to do so, they wind up paying 5.75% too much!

8. Our tax code provides numerous options for saving for retirement. Working with a professional advisor, business owners can accumulate significant wealth in a tax-efficient manner by optimizing their qualified retirement plans.

7. Since 2013, the Net Investment Income Tax has imposed a 3.8% charge on passive and investment income. Exceptions when income is from an “active” trade or business provide numerous planning opportunities to minimize exposure to this tax.

6. Recent Capitalization Regulations have altered the landscape for expensing improvements and depreciating property. Because the Regs are applied retroactively, re-imagining fixed asset schedules can result in a significant “catch-up” depreciation deduction in 2016.

5.  For income tax purposes, the cost of real property is depreciated over 27.5 years (if residential) or 39 years (if commercial). However, land improvements and special components are depreciated much faster.  When a building costs $1 million or more, a “cost segregation study” can more than pay for itself, considering the present value of the resultant income tax savings.

4.  Our federal government offers a long list of tax credits to U.S. businesses. Several of the credits that were set to expire at the end of 2014 have been extended for five years by the PATH Act. Each business needs to establish and maintain a process to constantly and thoroughly explore available credits and incentives.

3. State tax laws continue to change as technology and business practices evolve. Companies with operations in multiple states are required to make allocations to determine their income in each one. Analyzing outcomes of various apportionments can result in significant state income tax savings.

2. The Commonwealth of Virginia offers numerous credits and incentives that are often overlooked. There are even state credits that taxpayers can purchase from other Virginians at a discount. Being aware of these opportunities and capitalizing on them results in state income tax savings.

1. Companies of any size that develop a new or improved product or internal process are entitled to generous Research and Development income tax credits. With our federal government offering to pay 6% for innovation, and Virginia covering 15%, identifying the internal costs of experimenting with or implementing a new idea can provide huge savings.