Taking credit

Congress has a long history of using the Tax Code to encourage certain types of behavior. The Tax Code has many tax credits, deductions and other incentives — some well-known, some obscure — hidden within it, potentially unlocking significant tax savings.

Bonus depreciation has greatly increased the incentive for certain types of real estate investments. Property eligible for the deduction includes most tangible personal property, computer software and qualified leasehold improvement property. Despite the economic benefits of the incentive, a number of states have opted out of bonus depreciation, most likely due to revenue concerns.

The new Small Employer Health Insurance Credit is so complicated that many businesses forego the credit. The credit is offered to eligible small employers, which are employers with no more than 25 full-time-equivalent employees, and whose employees have average annual wages of no more than $50,000. Both the full-time employees and the average annual wages are calculated according to varying formulas. The credit is worth up to 35 percent of a small business' premium costs in 2010 and increases to 50 percent in 2014.

To read more credits, deductions and incentives, visit Accounting Today.