Business & Individual Tax Credits

Individual & Business Tax Credits Every Taxpayer Should Know About

When it comes to reducing tax liability, many taxpayers—both individuals and business owners—overlook one of the most powerful tools available: tax credits. Unlike deductions, which reduce the amount of taxable income, tax credits reduce the tax you owe dollar-for-dollar. Whether you’re preparing your own return or working with a professional, understanding which tax credits you may qualify for can result in substantial savings.

At The Law Office of Pietro Canestrelli A.P.C., we help individuals and businesses maximize their tax benefits, navigate IRS compliance, and reduce the risk of audits. With offices in Temecula and San Diego, California, and clients throughout the U.S., our team is committed to empowering taxpayers with the knowledge they need to take control of their finances.

In this article, we’ll highlight some of the most valuable individual and business tax credits available, explain who qualifies, and offer insight into how to take full advantage of these opportunities.

Why Tax Credits Matter

Tax credits are among the most powerful tools available for reducing your tax burden. Unlike deductions, which merely lower the amount of your taxable income, tax credits provide a direct reduction in the actual amount of tax you owe. This distinction makes them incredibly valuable for individuals and businesses seeking to maximize savings and minimize liabilities.

Let’s say your total tax liability for the year is $5,000. If you qualify for a $2,000 tax credit, that amount is subtracted directly from your tax bill—lowering your total owed to just $3,000. In some cases, tax credits can even result in a refund, putting money back in your pocket.

Tax credits come in two main forms:

• Refundable Tax Credits: These credits are particularly advantageous because they can result in a refund even if you don’t owe any taxes. For example, if you qualify for a $1,200 refundable credit but only owe $800 in taxes, the IRS will issue you a refund for the remaining $400. This is especially helpful for lower-income earners or taxpayers who may have had limited taxable income during the year.

• Non-Refundable Tax Credits: These credits can reduce your tax bill to zero but cannot take your liability below that point. If you owe $1,000 in taxes and qualify for a $1,500 non-refundable credit, you can only use $1,000 of that credit, and the remaining $500 is forfeited (unless it can be carried forward to future tax years, which some credits allow).

Tax credits are also categorized based on their purpose or the taxpayer’s situation. Some credits are broadly available, such as the Earned Income Tax Credit (EITC) or Child Tax Credit, which are designed to support working families and individuals with dependents. Others are industry-specific or behavior-driven, targeting actions that the government wants to encourage—such as hiring disadvantaged workers, investing in renewable energy, or conducting research and development.

For businesses, tax credits can be a key part of long-term financial strategy and operational planning. A well-executed tax credit plan can increase available capital, improve cash flow, and boost profitability. For individuals, they can provide significant relief from rising living costs, education expenses, or retirement savings obligations.

Understanding which credits apply to your unique circumstances—and how to properly claim them—is essential to making the most of your annual tax return. Unfortunately, many eligible taxpayers miss out on these savings simply because they’re unaware of the options or find the process too complex to navigate alone.

That’s why partnering with a knowledgeable tax attorney or advisor is critical. At The Law Office of Pietro Canestrelli A.P.C., we help both individuals and businesses identify all eligible credits, file correctly, and defend their claims if audited by the IRS. Whether you’re trying to offset the cost of childcare or reduce your corporate liability through the R&D Tax Credit, our legal expertise ensures no opportunity goes unexplored.

Essential Business Tax Credits

1. Research and Development (R&D) Tax Credit

The R&D Tax Credit rewards companies for investing in innovation, including software development, engineering, or manufacturing improvements. Even small businesses and startups may qualify if they engage in eligible research activities, regardless of industry.

At The Law Office of Pietro Canestrelli A.P.C., we specialize in helping California-based and national clients identify qualifying R&D expenses and substantiate their claims to avoid scrutiny from the IRS.

2. Work Opportunity Tax Credit (WOTC)

Employers who hire individuals from targeted groups—such as veterans, ex-felons, long-term unemployed individuals, or SNAP recipients—may claim up to $9,600 per employee in credits. The WOTC incentivizes diversity in hiring and provides financial support to inclusive employers.

3. Disabled Access Credit

Small businesses that make their facilities accessible to people with disabilities can receive a credit of up to $5,000. Eligible expenses include installing ramps, widening doors, or improving communication access.

4. Credit for Employer-Provided Childcare Facilities and Services

To support work-life balance, businesses that offer on-site childcare or contract with licensed facilities may claim up to 25% of the facility expenditures and 10% of resource referral expenses.

5. Paid Family and Medical Leave Credit

Employers who provide paid family or medical leave may receive a credit of 12.5% to 25% of the wages paid during the leave period. This credit encourages humane workplace practices while offsetting the financial burden.

6. Energy-Efficient Commercial Buildings Deduction (Section 179D)

Businesses that invest in qualifying energy-saving improvements, such as LED lighting, HVAC upgrades, or improved building envelopes, can benefit from this deduction. It’s especially useful for architecture firms, contractors, and building owners.

7. Employee Retention Credit (ERC) — Caution Required

Although originally introduced during the pandemic, many businesses are still amending returns to claim the ERC. However, IRS scrutiny has increased due to fraudulent claims, so it’s essential to work with a trusted tax law firm like ours to ensure eligibility and compliance.

Key Individual Tax Credits

1. Earned Income Tax Credit (EITC)

One of the most significant credits for low- to moderate-income workers, the Earned Income Tax Credit can provide thousands of dollars in savings. The amount depends on your income, marital status, and number of qualifying children.

To qualify, your earned income must be below a certain threshold, which adjusts annually. Many eligible individuals miss out on the EITC because they don’t realize they qualify.

2. Child Tax Credit (CTC)

The Child Tax Credit offers up to $2,000 per qualifying child under the age of 17, with up to $1,600 potentially refundable. The credit phases out for higher-income earners, but recent legislation has made it more accessible to a broader range of families.

3. Child and Dependent Care Credit

This credit helps working parents offset the cost of child care or dependent care services. You may be eligible for a percentage of up to $3,000 in care expenses for one child/dependent or $6,000 for two or more.

4. American Opportunity Tax Credit (AOTC)

For students pursuing higher education, the AOTC provides up to $2,500 annually for the first four years of college. The credit covers tuition, fees, and required course materials, with 40% potentially refundable.

5. Lifetime Learning Credit

This education credit offers up to $2,000 per return for qualified education expenses, including undergraduate, graduate, and professional degree courses. Unlike the AOTC, there’s no limit on the number of years you can claim it.

6. Retirement Savings Contributions Credit (Saver’s Credit)

If you contribute to an IRA or employer-sponsored retirement plan and meet income limits, you may qualify for a credit worth up to $1,000 ($2,000 for joint filers). This encourages taxpayers to plan for their future while enjoying a current-year tax benefit.

7. Residential Energy Credits

Taxpayers who install solar panels, energy-efficient windows, insulation, or heat pumps may qualify for the Residential Clean Energy Credit. This credit is worth 30% of qualifying installation costs and can be carried forward if unused in a single year.

Why Work With a Tax Law Firm?

Navigating tax law is complex. Each credit has its own eligibility rules, phase-outs, recordkeeping requirements, and forms. Even tax software can mislead or omit opportunities, especially for businesses with multiple revenue streams or operations in different states.

At The Law Office of Pietro Canestrelli A.P.C., we offer:

• Strategic tax planning for both individuals and corporations

• R&D credit studies and substantiation

• IRS audit representation and defense

• Support with amended returns and retroactive claims

• Year-round guidance to ensure compliance and optimization

Serving Clients in Temecula, San Diego, and Across the U.S.

Our firm has proudly served individuals, startups, and established corporations throughout California and nationwide. From tax season readiness to long-term planning, we help our clients seize the credits they deserve and protect themselves from IRS penalties or missteps.

Whether you’re a parent seeking education benefits, a retiree investing in energy-efficient upgrades, or a business owner exploring innovation credits, our team is here to help.

Don’t Leave Money on the Table

Understanding and utilizing tax credits isn’t just smart—it’s essential. These credits represent opportunities to save money, support your family, grow your business, and contribute to a more inclusive and sustainable economy.

If you’re unsure which tax credits apply to your situation, contact The Law Office of Pietro Canestrelli A.P.C. today. With offices in Temecula and San Diego, and clients served nationwide, we’re here to help you navigate every credit, deduction, and IRS requirement with confidence.

Let’s make sure every dollar you’ve earned works harder for you.