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WOTC Tax Credits

WOTC

The Power of the Work Opportunity Tax Credit Program

The Work Opportunity Tax Credit (WOTC) is a valuable federal tax credit program that incentivizes employers to hire individuals from specific target groups who face barriers to employment. By participating in the program, employers can not only make a positive impact on their communities but also benefit from significant tax savings.

WOTC

Target Groups

The WOTC program targets various groups, including veterans, individuals with disabilities, ex-felons, Temporary Assistance for Needy Families (TANF) recipients, Supplemental Nutrition Assistance Program (SNAP) recipients, and more. Each target group has its own eligibility criteria and corresponding tax credit tier amounts.

Exploring Benefits

Veterans who have been unemployed for at least four weeks can qualify for a tax credit of $2,400, while disabled veterans can yield a maximum credit of $9,600. TANF and SNAP recipients, as well as designated community residents, may be eligible for a tax credit of $2,400. Other target groups, such as vocational rehabilitation referrals, ex-felons, Supplemental Security Income (SSI) recipients, and long-term unemployment recipients, also have their respective tier amounts.

Claiming the WOTC

To claim the WOTC tax credit, employers must obtain certification from the appropriate state workforce agency or participating agency before filing their federal income tax return. It’s crucial to stay updated on the latest guidelines and regulations associated with the program, as eligibility criteria and requirements may change over time. Employers should consult the official resources provided by the U.S. Department of Labor and the Internal Revenue Service (IRS) to ensure compliance and maximize their tax savings.

Promoting Diversity and Inclusivity

Participating in the WOTC program not only offers financial benefits but also allows employers to contribute to the economic empowerment of individuals facing employment barriers. By hiring from these target groups, businesses can make a positive social impact while simultaneously reducing their tax liability.

Maximizing Benefits

The Work Opportunity Tax Credit (WOTC) program provides a win-win situation for employers and individuals facing employment challenges. By taking advantage of this program, employers can access valuable tax credits while promoting diversity and inclusivity in their workforce. Stay informed about the latest guidelines and requirements to make the most of this beneficial program and contribute to a more inclusive society.Give us a call at (563) 583-2115 to get started today, or schedule an appointment with one of our advisors.

Non-Profit Organizations

Tax Credit Guide for Non-Profit Organizations

Non-Profit Organizations

Managing finances can be challenging for non-profit organizations. Fortunately, tax credits are available that can help non-profits save money and reinvest it in their mission.In this article, we will explore some of the federal and state tax credits that non-profits can take advantage of, as well as other tax credits and exemptions that can benefit them.

Federal Tax Credits

New Markets Tax Credit:

This credit allows non-profits to claim 39% of their total investment over a seven-year period if they invest in low-income communities. By utilizing this credit, non-profits can support economic development in disadvantaged areas.

Federal Tax Credits for NP

Work Opportunity Tax Credit:

Non-profits that hire individuals from targeted groups, such as veterans or individuals receiving government assistance, can claim a percentage of the first-year wages of these employees. This credit encourages non-profits to provide employment opportunities to those who face barriers to finding work.

Empowerment Zone Tax Incentive:

Non-profits operating in designated empowerment zones can claim 20% of the first $15,000 in wages paid to employees residing in these zones. This credit aims to stimulate economic growth and job creation in economically distressed areas.

Research and Development Tax Credit:

Non-profits engaged in research and development activities can claim a percentage of the expenses related to these activities. This credit encourages innovation and technological advancement within the non-profit sector.

State Tax Credits

State Historic Tax Credits:

Non-profits involved in preservation and restoration activities on historic properties can usually claim a percentage of the related expenses. This credit promotes the preservation of cultural heritage and historic landmarks.

Charitable Tax Credit

State Job Creation Tax Credits:

Non-profits that create new jobs within their state can claim a percentage of the total wages paid to these employees. This credit incentivizes non-profits to contribute to local job growth and economic development.

State Renewable Energy Tax Credits:

Non-profits investing in renewable energy projects can usually claim a percentage of their total investment. This credit encourages the adoption of clean and sustainable energy sources.

State Sales Tax Exemptions:

Depending on the state, non-profit organizations may be eligible for exemptions from state sales taxes on certain purchases, such as goods used for charitable purposes.

Tax Credits for Non-Profit Fundraising

Charitable Gaming Tax Credits:

Some states provide tax credits for non-profit organizations that conduct charitable gaming activities, such as raffles or bingo.

Film Production Tax Credits:

In certain states, non-profit organizations involved in film production or hosting film festivals may be eligible for tax credits.

Tax Credit Group Can Help

Tax credits can be an effective way for non-profit organizations to save money and reinvest it in their mission. Non-profits should explore all available tax credits to maximize their savings and allocate more resources towards their mission. Please note that tax laws and credits can vary by jurisdiction, so it’s important for non-profit organizations to consult with tax professionals such as Tax Credit Group or legal advisors to determine their eligibility and specific requirements for these credits.

How to Effectively Claim the Work Opportunity Tax Credit

The Work Opportunity Tax Credit (WOTC) is a valuable incentive program to potentially reduce your tax liability while making a positive impact in your community. As a small business owner, you have the opportunity to uncover the immense benefits and potential that tax credits can have on your business. In this article, we’ll break down the basics of the WOTC and explain how it can benefit both your business and the individuals you employ.

Determine Employee Eligibility

The first step in claiming the WOTC is to determine whether an employee falls into one of the targeted groups specified by the IRS. These groups include qualified IV-A recipients, qualified veterans, qualified ex-felons, designated community residents, vocational rehabilitation referrals, summer youth employees, SNAP recipients, Supplemental Security Income recipients, long-term family assistance recipients, and qualified long-term unemployment recipients.

Apply for Certification

To certify that an employee qualifies for the WOTC, you need to submit these forms to the state workforce agency (SWA) in your state within 28 calendar days from the employee’s start date.

  1. Have the job applicant complete Form 8850 before or on the day of making a job offer.
  2. Complete the remaining sections of Form 8850 at the time of the job offer.
  3. Fill out the conditional certification Form 9061 (or request Form 9062 if the applicant already has it).
  4. Check to see if any additional forms are required for the applicant’s specific targeted group.
  5. The SWA will provide you with a letter confirming the employee’s eligibility or denial.

Tax Credit Calculation

Once an employee is certified as eligible for the WOTC, you need to determine the qualified wages that can be considered for the tax credit. Qualified wages are the wages on which you paid Federal Unemployment Tax Act (FUTA) tax during the employee’s first year of work. However, wages paid while receiving payment from a federal on-the-job training program or reduced by Social Security Act payments should be excluded.

Additionally, you need to identify the maximum allowable wages for each employee category, which depend on the target group. These limits can be found in the IRS instructions for Form 5884.

Claim the Work Opportunity Tax Credit

  1. Use Form 5884 (or Form 5884-C for tax-exempt organizations that hired qualified veterans) to calculate the allowable credit based on the qualified wages determined in your tax credit calculation.
  2. Enter the maximum allowable wage on Form 5884, Line 1A (for employees working between 120 and 400 hours) or Line 2 (for employees working more than 400 hours).
  3. Transfer the calculated credit to Form 3800, General Business Credit , which will be filed with your business tax returns.
  4. Keep a record of the certification and all supporting documentation for future reference and potential audits.

Successfully claiming the Work Opportunity Tax Credit can result in significant tax savings for your business while fostering employment opportunities for individuals from targeted groups. By following the steps outlined in this guide, you can navigate the process with confidence and maximize the benefits of the WOTC program.

Let Us Help

At Tax Credit Group, we specialize in helping businesses identify and claim various tax credits and incentives. Reach out to our team of experts to streamline the WOTC process and ensure you receive the maximum benefit from this valuable tax credit.

The Benefits of Work Opportunity Tax Credits

As a business owner, it’s important to be aware of all the tax incentives that are available to you. One such incentive is the Work Opportunity Tax Credit (WOTC), a federal tax credit for employers that hire individuals from specific groups that have historically faced barriers to employment.

Eligible Employee Groups

Eligible employee groups for WOTC include veterans, individuals receiving public assistance, ex-felons, and several other groups. Hiring from these groups not only promotes diversity and inclusion in the workplace, but it also allows businesses to take advantage of the WOTC tax credit.

Tax Credit Amounts

The tax credit amounts available vary based on the length of time the employee works for the company and the employee’s wages. According to the official IRS website for the WOTC program, businesses can claim up to $9,600 per eligible employee, depending on the employee’s specific target group and the number of hours worked. This can add up to significant savings for businesses, especially those in industries with high turnover or recruitment costs.

Applying for WOTC

One of the benefits of the WOTC program is that it is not limited to certain industries or regions. As stated by the Department of Labor, any for-profit business, tax-exempt organization, or government entity that employs individuals in the United States may be eligible to claim the credit. This means that businesses of all sizes and in all industries can take advantage of the program.

State Specific Credits

In addition to the federal WOTC, many states also offer their own WOTC program, which can provide additional tax savings for businesses.

Tax Credit Group

The Work Opportunity Tax Credit is a valuable incentive for businesses that hire individuals from specific groups that have historically faced barriers to employment. By taking advantage of this tax credit, businesses can not only promote diversity and inclusion in the workplace, but also reduce their tax bill and generate a return on investment. If you want to take advantage of this opportunity and other credits your business may qualify for, don’t hesitate. Contact Tax Credit Group so we can help you navigate the process and maximize your savings.

Lucrative Tax Incentives for Employers

As a tax credit consultant, it is our job to help businesses navigate the complex world of tax incentives and deductions. We specialize in helping employers take advantage of the many lucrative tax incentives available to them. In this article, we will be sharing some of the key incentives that employers should be aware of and how they can take advantage of them.

Supporting the Community

First, let us talk about supporting the community. Many states offer tax incentives for businesses that make charitable donations or sponsor community events. For example, some states offer credit for businesses that sponsor local little league teams or make donations to food banks. By giving back to the community, businesses can feel good about doing their part but also benefit from a reduced tax bill.

Hiring

Another way for employers to take advantage of tax incentives is by hiring from specific groups. The Work Opportunity Tax Credit (WOTC) program is a great example of a valuable tax incentive for employers. This program provides tax credits to employers who hire individuals from certain targeted groups who have consistently faced significant barriers to employment. By hiring from these groups, employers can reduce their tax bill while also helping to promote diversity and inclusion in the workplace.

Development Opportunities

Offering training and skill development is also a terrific way for employers to take advantage of tax incentives. Many states offer tax credits for businesses that invest in employee training and development programs. By providing opportunities for employees to improve their skills, employers can also improve the productivity and performance of their workforce.

New Jobs

Finally, bringing new jobs to the community is another way for employers to take advantage of tax incentives. Many states offer tax credits for businesses that create new jobs or expand their workforce. By investing in new hiring, businesses can also grow their operations..

Tax Credit Group

There are many lucrative tax incentives available to employers that can help them save money while also supporting the community, promoting diversity, and investing in employee training and development. If you are an employer and want to take advantage of these incentives, it is important to consult with a tax credit consultant. Call us today at (563)583-2115 to ensure that you are maximizing your savings.

WOTC By The Numbers

Here’s a brief look at the WOTC certifications to date for 2020.

  • Over 1.6 million certifications were issued for 2020.
  • 1.1 million certifications were issued for SNAP recipients. This accounts for just over 68% of all certified groups.
  • The smallest target groups were the summer youth recipients, which none were certified and the disabled veterans with less than 1% certified.
  • Texas led all states with over 135,000, followed by California, Ohio, Illinois, Florida, Pennsylvania and New York.
  • The States with the fewest included Maine, Alaska, New Hampshire, Puerto Rico, Virgin Islands.

Earn Credit for Hiring Unemployment Recipient

There’s no doubt that COVID has dealt the nation’s economy a tough blow. Case in point are the sheer number of jobless claims made nationwide since the pandemic began. Just five months ago, unemployment sat around three to four percent.  According to the U.S. Bureau of Labor Statistics, in June, states’ unemployment numbers averaged more than nine percent.

If your business is hiring right now, you may very likely be hiring someone who received unemployment insurance this year. Therefore, you may qualify for the Work Opportunity Tax Credit (WOTC).

Individuals who have been unemployed at least 6 months may qualify your company for the WOTC federal tax credit. You could save as much as $2,400 for each approved new hire and in some cases, as high as $5600 for veterans who have been unemployed.

Eligibility is based on a few factors. New hire applications must be submitted within 28 days of their hire date. Additionally, applicants must work at least 120 hours throughout the twelve months following their hire date.

To learn more, feel free to reach out to us or visit us online at www.taxcreditgroup.com.

False Claims Act – How it Could Affect Your PPP Claim

When the CARES Act was announced, it ignited a glimmer of hope within the small business community. Many companies were either closed or saw their revenue drop drastically as a result of the novel coronavirus.

But hope quickly disappeared as major corporations found a way to access the money that was meant for America’s small businesses. The money within the Paycheck Protection Program (PPP) quickly disappeared. Just days after the program was put into action, it ran out of money.

The federal government replenished the funds when it realized large corporations like Shake Shack ($10 million) and Ruth’s Chris ($20 million) were receiving funds while small mom and pop shops missed out. Both Shake Shack and Ruth’s Chris have since said they will not accept the money, however, the move brought attention to a large loophole in the PPP legislation. The ability of large corporations to access PPP funds.

The False Claims Act

And that leads us to the False Claims Act.

The False Claims Act, according to Cornell Law School, is “Federal statute setting criminal and civil penalties for falsely billing the government, over-representing the amount of a delivered product, or under-stating an obligation to the government. The False Claims Act may be enforced either by the Justice Department or by private individuals…”

It’s a law, that if used, would allow the federal government to pursue criminal and civil penalties against any company that misuses the PPP.

Should a Small Business Owner Be Worried?

This week, headlines like “For PPP recipients: You may be the subject to whistleblower lawsuits under false claims law” showed up in publications like the Witchita Business Journal.

The article is at least in part “clickbait” since it’s designed to get you to pay for a subscription so you can read the article. However, the crux of the argument is founded in truth.

US Secretary of the Treasury Steven Mnuchin has made multiple comments about the loans issued through the PPP and has promised that people taking advantage of the PPP will face “severe consequences”. He’s also promised that loans of $2 million or more will be audited before the government decides if it will forgive the loan amount. Mnuchin has also tossed around the words “criminal liability”.

Of course, you should be worried if you knowingly and deliberately defrauded the federal government. However, most small business owners are probably too small in the eyes of the government to warrant prosecution.

The comments from Mnuchin and the False Claims Law itself were designed for large corporations and businesses taking advantage of the federal government. Odds are, the government will not be pursuing you if you managed to secure a $10,000 PPP loan.

What if I’m Still Worried?

If you’re still worried and you want to find out more, the IRS and Small Business Administration (SBA) are trying to keep you informed. The Treasury Department has issued an entire document of FAQs to address concerns of borrowers. You can read it here.

Don’t Be Afraid to Ask for Help

We here at the Tax Credit Group have spent hours upon hours looking at, analyzing, and evaluating the CARES Act as well as all the legislation and updates that have come from the IRS, the SBA, and other government agencies. We are keeping up with the headlines and the rules and regulations behind those headlines.

If you’re a small business owner and you find yourself in doubt, please don’t hesitate to reach out to us here and ask a few questions. We would be happy to answer them or at least research until we have an answer. There’s a lot of material out there right now and a lot of changes and we want to make sure our clients, our friends, and our family stay informed.

Why It is Better to Hire a Tax Credit Specialist than Do It Yourself

When we talk to potential clients, sometimes they ask us why a tax credit specialist is something they need. It is a great question. After all, they are usually already paying for a CPA and this is just an added financial expense. What we tell them is that a tax credit specialist is something completely different.

How is a tax credit specialist different from a CPA?

We did a whole post about the difference between a tax credit specialist and a CPA and you can read it here. The short answer is that while a CPA has a broad understanding of the tax code and knows more than enough to file your taxes with the IRS, a tax credit specialist has a very specialized understanding of the tax code.

Tax credit specialists are focused on the sections of the tax code that deal with tax credits and they understand them word for word.

Why haven’t I heard of a tax credit specialist until now?

Odds are if you are reading this article, someone mentioned that you might benefit from a tax credit specialist and you Googled it to find out more.

The truth is that not every business qualifies for tax credits, but many businesses do and do not even realize it.

Does your business employ veterans, ex-felons, or persons with disabilities? Does your business conduct research? Does your business offer a health plan or retirement plan to your employees? These are all business expenses that can qualify for tax credits, but many businesses do not know that the credits are available. Usually, it requires a tax credit specialist to fill them in on what they are missing.

What is the benefit of hiring a tax credit specialist?

Most CPA’s will be able to tell you about small savings within your taxes. However, the tax code is immense. We’re talking thousands of pages, though exactly how many thousands is up for debate. No matter the answer, it is too much for any individual to know everything about. That is why there are specialists.

Specialists are people who focus on specific parts of the tax code and become experts in those specific parts. We just happen to be specialists in the tax credits part of the tax code. That means we know the ways you can and cannot save money through the use of tax credits. Through the years, we have figured out some tricks of the trade to make sure businesses are maximizing the benefits of those tax credits.

Our goal, first and foremost, is to discover as many ways as possible for you to earn credits that will directly offset the amount you owe on your taxes.

Why can’t I figure out the tax credits myself?

Figuring out which tax credits your business qualifies for and applying for them is certainly something you can do yourself. However, be warned that there are a lot of hoops the IRS wants a company to jump through to get a tax credit.

There are forms to be filled out, information to be gathered, and separate deadlines to meet. For something like the Electric Vehicle Tax Credit, the requirements to qualify are constantly changing and you have to be updated on those changes.

In other words, there is a lot of research and a lot of time that goes into applying for tax credits and there’s always the possibility that after all of that, the IRS will reject your claim. We have seen seasoned tax professionals struggle with learning about all the tax credits available and how to apply for those credits.

What if my company already operates at a loss?

Even if your company is losing money this year, it is still important to take tax credits if possible. There are a couple of reasons for this.

First, some tax credits are what is called refundable. That means if you have a credit and you owe zero dollars in taxes, the money left over will be refunded to you.

Second, some tax credits can be carried over from one year to the next. That means that even if you are operating at a loss this year, the tax credit could be used to offset any taxes your business owes next year.

If you still are not sure if you need a tax credit specialist, contact us here at Tax Credit Group. We will take a look at your situation and tell you if there is or is not savings that you can benefit from.

Tax Deadline Extension FAQ’s

As I am sure you know by now, the 2019 tax deadline has been extended to July 15, 2020. We here at Tax Credit Group get a lot of questions about what that means for our clients and their taxes. So now seems like a great time to pull some of those answers together and put them in the same place.

Does that mean I cannot file my taxes before July 15, 2020?

Absolutely not. Just like all tax deadlines, the IRS will not penalize you for filing your taxes early. The extension means that the IRS is giving you until July 15, 2020, to file and pay your taxes without penalty.

What about my state taxes?

Most states have extended their tax deadlines to July 15, 2020, to match the federal deadline, however, a small handful of states have alternate deadlines. Here’s a list according to AICPA:

Hawaii July 20
Idaho June 15
Iowa July 31
Mississippi May 15
New Hampshire June 15
Virginia May 1 to file, June 1 to pay

 

What if I am owed a refund?

If the federal government owes you money, then filing early is not a problem. The IRS will process your refund based upon when you file, not upon the July 15, 2020 deadline. Therefore, if you are owed money, it’s in your best interest to file early and get a refund now.

What about the deadline to contribute to my IRA?

According to the IRS, the deadline to contribute to your IRA retirement account was also extended with the tax filing deadline extension. That means you have until July 15, 2020, to make contributions to your IRA and have them count against your 2019 taxes.

What about the deadline to contribute to my Health Savings Account (HSA)?

The same goes for the HSA.

What about tax estimates for next year?

If you are one of those people that owe taxes every year and pay estimates to off-set what you owe, then you need to be aware of the new deadlines for 2020 tax estimates. According to the IRS, “…first quarter 2020 estimated income tax payments due April 15, 2020, and second quarter 2020 estimated income tax payments due June 15, 2020, have both been postponed to July 15, 2020.  Make a single payment in an amount sufficient to cover both your first and second quarter estimated tax payments on or before July 15, 2020.”

The tax deadline was extended to help alleviate some of the pressure taxpayers were feeling because of the novel coronavirus and the business shutdowns that followed. If you have other questions or concerns, you can find more answers to your questions on the IRS website. And if you still need help, you can always contact us here at Tax Credit Group.

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