The Marcum 2016 Year-End Tax Guide continues our tradition of providing timely tax guidance for the upcoming year.
Investment Tax Credit
This credit provides for a 0.5% credit against the State income tax for investments made in qualified property that is placed in a River Edge Redevelopment Zone (RERZ). The credit is only available in the taxable year in which the property is placed into service in the appropriate zone.
Film Production Services Credit
This credit allows taxpayers to claim a film production services credit. The amount of the tax credit is equal to:
(A) 30% of the Illinois production spending for the taxable year; plus
(B) 15% of the Illinois labor expenditures for employees who earn more than $1,000 on the production and live in areas of high poverty.
The state requires an application process and may require the hiring of Illinois college students as part of the program.
Live Theater Production Tax Credit
Similar to the film production credit, taxpayers are able to claim a live theater production credit against income tax. The amount of the tax credit is equal to:
(A) 20% of the Illinois labor expenditure for the year; plus
(B) 20% of the Illinois production spending for each tax year; plus
(C) 15% of the Illinois labor expenditures for employees of high-poverty geographic areas.
Student Assistance Contribution Credit
Expiring on December 30, 2020, this program allows a credit equal to 25% of matching contributions towards an individual Illinois College Savings Pool Account or Illinois Prepaid Tuition Trust Fund account. The credit cannot exceed $500 per contributing employee per taxable year.
Economic Development for a Growing Economy (EDGE) Tax Credit
Provides an income tax credit to businesses creating new jobs and making capital investments. The amount of the credit varies and is agreed upon between the taxpayer and the Department of Commerce. To qualify, a company must show that there is competition with another state and agree to make an investment of at least $5 million in capital improvements. The company must also create a minimum of 25 new full-time jobs in Illinois. If the company employs fewer than 100 people, the threshold for the credit is lowered to an investment of $1 million and the creation of five new full-time jobs in the state.
High Impact Business
This credit is designed to encourage large-scale economic growth and development activities by providing tax credits to companies that make substantial capital investments and create jobs. The credits that a company can be eligible for include: investment tax credits and a state sales tax exemption on business material, purchases of personal property used in the operation, and utilities.
To be eligible, the project must involve a minimum $12 million investment causing the creation of 500 full-time jobs, or an investment of $30 million with the retention of 1500 full-time jobs.
Additionally, a retailer who sells building materials to a company that will be become a High Impact Business can deduct receipts from the corresponding sales when calculating SALT.
Illinois Affordable Housing Tax Credit
Expiring in December 2016, a taxpayer who makes a donation under the Illinois Housing Development Act for affordable housing development is eligible for an income tax credit. The credit amounts to 50% of the donation.
River Edge Redevelopment Zone site Remediation Tax Credit
This credit applies to income for certain amounts paid for unreimbursed remediation costs. These costs must be approved by the IEPA and be paid for remediation within a River Edge Redevelopment Zone. The credit is not available if the taxpayer or any related party caused or contributed to a release of any substance in the site. The credit is equal to 25% of the unreimbursed eligible remediation in excess of $100,000 per site.
Property Tax Credit
This is a credit on the taxpayer's individual tax return equal to 5% of the Illinois Property Tax paid on a principal residence. The taxpayer must own the residence to take this credit.
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