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How to Obtain Tax Benefits with the General Business Credit 
by kmhagen September 14, 2005

There is a series of tax credits available to small businesses, that can directly reduce federal income taxes. These credits, grouped together under the General Business Credit, provide incentives to taxpayers who engage in certain activities that benefit the community and serve other useful purposes.

The General Business Credit is actually a group of individual credits, each with its own  requirements, qualifications, tax benefits and tax schedule or form.  The credits are summarized as the General Business Credit, on Form 3800.  These credits can be taken directly by self-employed individuals or taxpayers who have rental property, or they can be passed through to individual taxpayers by partnerships, S corporations, estates, and trusts.

The tax benefits of these various individual credits, summarized under the general business credit can be carried forward from prior tax years, and in addition, your general business credit for the current year may be increased later by carrying back business credits from subsequent years.

How To Claim the General Business Credit

First you will have to get together and complete the forms for any of the credits that apply in your case.  You may also have to complete Form 3800, General Business Credit.

Who Has to Complete Form 3800

You will have to complete Form 3800 if any of the following apply:

  • You have more than one of the credits.  But if you have any one of the following credits, you can have more than one credit and still not have to file Form 3800:
    • Empowerment zone and renewal community employment credit (Form 8844),
    • Renewable electricity and refined coal production credit (Form 8835, Section B).
  • You have a carryback or carryforward of any of the credits, except for the credits mentioned above (Forms 8844, or 8835, Section B).
  • Any of the credits, except for the ones mentioned above, are from passive activities (a trade or business in which you do not materially participate, or a rental activity, even if you do materially participate, unless you are a real estate professional).

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