There was a recent upgrade to the New Markets Tax Credit that offers new tax credits that exceed $3.5 billion. The new part of this credit focuses on investing in underdeveloped rural communities.
The New Market tax credit is part of a seven year plan to stir economic growth in these small and low income cities. The credit is available for businesses investing in new businesses and projects in the specified areas and they will receive a credit for doing so.
There are tax credits for new market developement available from the federal government as well as your state for your investments. To be eligible for this credit, you must be investing in one of the areas that are listed as a community development entity.
There are some other eligibility factors as well:
- The total gross income received from the business will come directly from the low income community.
- The major portion of the business must be located within one of the stated areas.
- The major portion of the work completed must also be within the stated area.
Limits
You may only claim the credit for up to your total tax liability. It cannot exceed the amount of tax that you owe annually. Most states will also have a cap on how much of the credit they can give out each year so it is important to make sure you catch this one right away.
If you have any questions regarding the New Markets Tax Credit, then go ahead and ask the experts at TurboTax Online for free.
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