The Delaware Form 700 is a crucial document used for claiming various income tax credits in the state of Delaware. This form is specifically designed for taxpayers, including corporations and individuals, to report their eligibility for credits related to economic development, green industries, and research and development, among others. Understanding how to accurately complete this form can significantly impact tax liability, so it is essential to fill it out correctly.
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The Delaware 700 form plays a crucial role in the state's tax credit system, particularly for businesses and individuals seeking to benefit from various income tax credits. This form is specifically designed for reporting Delaware income tax credits, which include Economic Development Credits, Green Industries Credits, Research & Development Credits, and several others aimed at promoting community development and conservation efforts. Taxpayers must provide essential information such as their Federal Employer Identification Number or Social Security Number, along with their name and address. The form requires a detailed computation of credits, allowing taxpayers to carry over credits from previous years and calculate current year credits based on their business structure—whether they are a C corporation, S corporation, partnership, or sole proprietor. Each section of the form guides users through the process of aggregating credits, ensuring they accurately report their Delaware income tax liabilities. Ultimately, the Delaware 700 form serves as a vital tool for taxpayers to maximize their potential tax savings while supporting the state’s economic and environmental initiatives.
Filling out the Delaware Form 700 can seem daunting, but keeping a few key tips in mind can make the process smoother. Here’s a handy list of what to do and what to avoid:
By following these guidelines, you can help ensure that your Delaware Form 700 is filled out correctly and efficiently. Happy filing!
STATE OF DELAWARE FORM 700
DELAWARE INCOME TAX CREDIT SCHEDULE
DIVISION OF REVENUE
820 North French St.
P.O. Box 8911
Wilm., DE 19899-8911
PART A -- NAME AND ADDRESS OF TAXPAYER
1.
Enter Federal Employer Identification Number or Social Security Number
Tax Period Ending Date
Federal Employer Identification Number:
1 ---
---
( MM / DD / YY )
Social Security Number:
2
_______ / _______ /_______
2.
Name of Taxpayer
PART B – DELAWARE INCOME TAX CREDIT COMPUTATION
ECONOMIC DEVELOPMENT CREDITS
1. Credit carryover from previous year
2.Current year credits approved for a qualified:
(a)C corporation (Enter the total amount of approved current year credit)
(b) S corporation (Multiply total credit by percentage of stockholder ownership)
(c) Partnership (Multiply total credit by percentage ownership of partnership)
(d) Sole Proprietor (Enter the total amount of approved current year credit) 3. Total current year credits (Add Lines 2(a) through 2(d)) 4. Total Economic Development Credits (Add Line 1 and Line 3)
GREEN INDUSTRIES CREDITS
5.Credit carryover from previous year
6.Current year credits approved for a qualified:
(b)S corporation (Multiply total credit by percentage of stockholder ownership)
(d) Sole Proprietor (Enter the total amount of approved current year credit)
7.Total current year credits (Add Lines 6(a) through 6(d))
8. Total Green Industries Credits (Add Line 5 and Line 7)
RESEARCH & DEVELOPMENT CREDITS
9. Credit carryover from previous year
10. Current year credits approved for a qualified:
(a) C corporation (Enter the total amount of approved current year credit)
11. Total current year credits (Add Lines 10(a) through 10(d))
12.Total Research & Development Credits (Add Line 9 and Line 11)
13.Add Lines 4, 8 and 12
14.Enter 50% of the current year Delaware income tax liability
15.Enter the smaller of Line 13 or Line 14
LAND & HISTORIC RESOURCE CONSERVATION CREDITS
16.Credit carryover from previous year
17.Current year credits approved for a qualified:
(c)Partnership (Multiply total credit by percentage ownership of partnership)
(d)Sole Proprietor (Enter the total amount of approved current year credit)
(e)Estate/Trust (Multiply total credit by percentage of beneficiary ownership)
(f)Decedent Estate (Enter the total amount of approved current year credit)
18.Total current year credits (Add Lines 17(a) through 17(f))
19.Total Land & Historic Resource Conservation Credits (Add Line 16 and Line 18)
HISTORIC PRESERVATION CREDITS
20.Credit carryover from previous year
21.Current year credits approved for a qualified:
22.Total current year credits (Add Lines 21(a) through 21(f))
23.Total Historic Preservation Credits (Add Line 20 and Line 22)
TRAVELINK TRAFFIC MITIGATION CREDITS (Corporate Income Tax Credit Only)
24.Credit carryover from previous year
25.Current year credits approved for a qualified:
26.Total Travelink Traffic Mitigation Credits (Add Line 24 and Line 25(a))
NEIGHBORHOOD ASSISTANCE TAX CREDITS (Corporate Income Tax Credit Only)
27. Credit carryover from previous year
28. Current year credits approved for a qualified:
(a)C corporation (Enter the lesser of $100,000 or 50% of the amount invested in a community-based development program)
29. Total Neighborhood Assistance Credits (Add Line 27 and Line 28(a))
30. Add Lines 19, 23, 26 and 29
31. Enter 100% of the current year Delaware income tax liability
32. Subtract Line 15 from Line 31
33. Enter the smaller of Line 30 or Line 32
34.TOTAL DELAWARE INCOME TAX CREDITS. Add Line 15 and Line 33.
(Read the general and specific instructions to determine proper placement of credits on your Delaware income tax return)
SPECIFIC INSTRUCTIONS
Delaware Form 700 must be completed by the person actually claiming the credits on the Delaware income tax return. A qualified and approved C corporation or Sole Proprietor will claim the credit directly on their respective Delaware income tax return. A Partnership or S corporation does not directly claim the Delaware income tax credits because the entities are classified as pass-through entities. The partners of the partnership or the shareholders of the S corporation will be required to file Delaware Form 700 with the individual Delaware personal income tax returns and claim a percentage of the total credit approved for the partnership or S corporation based upon the partner’s or shareholder’s percentage ownership in the pass-through entity.
Enter the credit carryover and the current year credits on the appropriate lines for the Economic Development, Green Industries and Research & Development credits. Enter the aggregate of the three credits on Line 13. Enter on Line 14 50% of the Delaware income tax liability of the entity actually claiming the credits. Enter on Line 15 the smaller of Line 13 or Line 14. These credits are limited to 50% of the Delaware income tax liability.
Enter the credit carryover and the current year credits on the appropriate lines for the Land & Historic Resource Conservation, Historic Preservation, Travelink Traffic Mitigation and Neighborhood Assistance credits. Enter the aggregate of the four credits on Line 30. Enter on Line 31, 100% of the Delaware income tax liability of the entity actually claiming the credits. Enter on Line 32 the remainder of the Delaware income tax liability not used to claim the Economic Development, Green Industries or Research & Development credits. Enter on Line 33, the smaller of Line 30 or Line 32. These credits are limited to 100% of the Delaware income tax liability. To determine the aggregate of the approved Delaware income tax credits to be claimed during the current year, add Line 15 and Line 33 and enter the result on Line 34. Enter the amount from Line 34 on the appropriate Delaware income tax credit line based upon your filing requirement. IF THE ENTITY CLAIMING THE DELAWARE INCOME TAX
CREDITS IS A:
1.C corporation - Enter the amount from Line 34 on Form 1100, Page 1, Line 17.
2.S corporation - Enter the amount from Line 34 on Form 1100S, Schedule A-1, Line 23.
3.Partnership - If a resident partner, enter the amount from Line 34 on Form 200-01, Page 1, Line 11. If a nonresident partner, enter the amount from Line 34 on Form 200-02, Page 1, Line 45.
4.Resident Individual/Sole Proprietor - Enter the amount from Line 34 on Form 200-01, Page 1, Line 11.
5.Nonresident Individual/Sole Proprietor - Enter the amount from Line 34 on Form 200-02, Page 1, Line 45.
6.Resident & Nonresident Estate/Trust - If a resident beneficiary, enter the amount from Line 34 on Form 200-01, Page 1, Line 11. If a nonresident beneficiary, enter the amount from Line 34 on Form 200-02, Page 1, Line 45.
7.Resident & Nonresident Decedent Estate - Enter the amount from Line 34 on the appropriate line of Form 900.
The Delaware 700 form is similar to the IRS Form 1065, which is used by partnerships to report income, deductions, gains, and losses. Both forms require detailed information about the entity’s financial activities and the distribution of credits among partners. Just as the Delaware 700 form specifies how credits are allocated based on ownership percentages, Form 1065 outlines how income and deductions are shared among partners. This ensures that each partner reports their correct share on their individual tax returns.
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Another document that shares similarities with the Delaware 700 form is the IRS Form 1120S, which is used by S corporations. Like the Delaware 700, Form 1120S requires the reporting of income, deductions, and credits. S corporations, similar to partnerships, pass income and credits through to their shareholders. The Delaware 700 form details how credits are distributed based on stockholder ownership, just as Form 1120S allocates income and deductions to shareholders according to their ownership percentages.
The IRS Form 990 also bears resemblance to the Delaware 700 form, particularly in the context of non-profit organizations. Form 990 requires non-profits to disclose their financial information, including revenue and expenses, similar to how the Delaware 700 form details income tax credits and their allocation. Both forms aim to provide transparency about financial activities, ensuring that stakeholders can assess the organization’s financial health and compliance with tax regulations.
Additionally, the IRS Form 8862, which is used to claim the Earned Income Tax Credit after a prior disallowance, shares procedural similarities with the Delaware 700 form. Both forms require taxpayers to provide specific information about their eligibility for credits. Just as the Delaware 700 outlines how to calculate and claim various tax credits, Form 8862 guides taxpayers through the process of re-establishing their eligibility for a previously denied credit.
Lastly, the IRS Form 1040, the individual income tax return, is another document that parallels the Delaware 700 form. While Form 1040 is used for reporting personal income, it also includes sections for claiming various tax credits. Both forms require taxpayers to detail their income and any credits for which they qualify. The Delaware 700 form serves a similar purpose for business entities, ensuring that they accurately report and claim tax credits based on their financial activities during the tax year.
Incorrect Identification Number: Failing to enter the correct Federal Employer Identification Number (FEIN) or Social Security Number (SSN) can lead to delays or rejections.
Missing Tax Period Ending Date: Not providing the tax period ending date can result in confusion and processing issues.
Improper Calculation of Credits: Errors in calculating the current year credits for C corporations, S corporations, partnerships, or sole proprietors may lead to incorrect credit amounts being claimed.
Neglecting to Include Carryover Credits: Forgetting to include credit carryovers from previous years can affect the total credits available for the current year.
Incorrect Line Additions: Failing to accurately add the various lines for total credits can result in an incorrect total being reported.
Not Following Instructions for Pass-Through Entities: Partnerships and S corporations must ensure that individual partners or shareholders file the form correctly, as they do not claim credits directly.
Overlooking the Limitation on Credits: Not being aware of the limitations on how much credit can be claimed based on the Delaware income tax liability can lead to claiming more than allowed.
The Delaware Form 700 is an important document used for claiming various income tax credits. Along with this form, several other documents may be required to ensure accurate reporting and compliance. Here’s a brief overview of some key forms that often accompany the Delaware Form 700.
These forms work together to ensure that taxpayers accurately report their income and claim all eligible credits. Understanding the relationship between these documents can simplify the filing process and help maximize potential tax benefits.
Filling out the Delaware 700 form is a straightforward process, but it requires careful attention to detail. This form is essential for claiming various tax credits, and accuracy is paramount to ensure compliance with state tax regulations. Below are the steps to complete the form effectively.
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