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WOTC Tax Credits

How Spring Cleaning and Tax Deductions Go Hand In Hand

It’s springtime and for many people, that means spring cleaning. However, spring cleaning should not just be for your home, you should also think about extending it to your business. It’s tough to admit that the inventory that’s been gathering dust on your shelf is never going to sell, or the old business equipment that you upgraded last year really has no use anymore.

Saving it is taking up something even more valuable in your business, space. It’s time to be honest with yourself and admit, you’re never going to use it again, or in the case of old inventory, you won’t be able to sell it. But instead of trashing it, why not donate it and get a little bit of benefit after you say good-bye?

Tax Deductions for Property Donations

When it comes to the IRS, property isn’t just land, it’s items too. The IRS allows you to deduct what it calls the “Fair Market Value” (FMV) of property. FMV means what you could conceivably get for a piece of property if you sold it.

For example, you can’t donate a 1994 Ford pick-up truck in marginal condition and say it’s worth $10,000. You have to either provide proof that you made sufficient upgrades to the truck to make it worth $10,000 or prove that someone was willing to pay $10,000 to purchase the truck. It’s a lot of work and that’s a simple example.

To keep everyone from having to prove the FMV of the items they donate, the IRS gives you up to $500 in donations without requiring a form. Anything more than $500, you’ll need to fill out a Form 8283 and you’ll probably need to prove that your property is worth what you say it’s worth.

There are a lot of other factors that go into determining the FMV and some of them require appraisals before you donate. If you would like to see a more extensive write up on how to determine the FMV, the IRS has drafted this article.

Once you determine the FMV of your item, deducting it may have benefits to your company come tax time. It’s an easy way to make that unwanted property do some work for you.

What Else Can You Donate and Deduct?

Money – The value of this one is pretty easy to determine. It’s a dollar for dollar deduction, though there is a cap. That cap will depend on your company’s tax situation.

Time – The value of your time is not deductible. That means you can’t deduct $400 because you volunteered for four hours and you normally bill $100/hour. However, you can deduct “…certain expenses incurred and related to your volunteer work. For example, if you host a party or fundraiser for the organization, you can deduct the costs. Other deductibles include supplies (e.g. stationery), the costs of a uniform and telephone expenses.” (Per the Small Business Administration)

Ask the Pros

The IRS has a lot of forms and a lot of systems in place to make sure that if you’re taking a tax deduction because of a donation, you’re doing it the right way. Filling out a form is only one part of the process, you need to make sure you’re also providing the correct documentation for any deduction claims you’re making. Not only does this keep you within the boundaries of the law, but it also ensures that if you get audited you’re prepared with proper documentation.

As with any tax deduction, you should always, always talk to a tax professional before you make any moves. That person is going to know the ins and outs of the tax laws better than anyone, plus he or she will be up to date on any changes that may have happened recently.

We here at Tax Credit Group can help you through all of that. All you need to do is give us a call.

The Difference Between a Tax Credit and a Tax Write-Off / Deduction

For non-tax people, it can be easy to consider a tax credit and a tax write-off to be one and the same. After all, both of them offer benefits on your taxes, ideally in the form of you paying less. In other words, they’re both good.

But to a tax professional, they are actually different and one is better than the other, though both are ideal.

What is a Tax Credit?

To put it as simply as possible, tax credits “…reduce taxes directly and do not depend on tax rates.” (Tax Policy Center)

In other words, if you have a $500 tax credit, then that’s $500 off of your taxes, no matter what your tax rate is.

What is a Tax Write-Off/Deduction?

As for a tax write-off or deduction, “The value of all deductions, itemized or otherwise, depends on the taxpayer’s tax liability and marginal tax rate.” (Tax Policy Center)

What that means is that the deduction is going to vary by what tax bracket you fall into. For example, if you have a $10,000 deduction, your taxes will be reduced by $1,200 if you’re in a 12% tax bracket, but $3,200 if you’re in the 32% tax bracket.

What’s Better, a Tax Credit or a Tax Deduction?

According to Investopedia, “Tax credits are more favorable than tax deductions or exemptions because tax credits reduce tax liability dollar for dollar. While a deduction or exemption still reduces the final tax liability, they only do so within an individual’s marginal tax rate.”

The other benefit comes if you have enough tax credits that your net liability drops below zero. “Some credits…are refundable, which means that you still receive the full amount of the credit even if the credit exceeds your entire tax bill.” (Turbo Tax)

When it comes to deductions, there are some deductions that can be rolled over to the next year, but deductions are often capped, which means it is difficult to drop your net liability below zero with deductions alone.

As a Business Owner, Why Do I Care?

Tax credits and tax deductions are independent of each other, which means that you are perfectly within your rights to take both on your taxes. It’s important that you remember to look into and take advantage of both as you do your taxes so that the system works for you instead of against you.

As always, the tax advice we provide in these blog posts is generic in an effort to apply to the most people possible. To get an idea about how your specific company can benefit, you should seek out the advice of a tax professional.

We here at The Tax Credit Group understand the ins and outs of the tax laws and how to make them best work to your advantage. Feel free to contact us at any time for a consultation.

Public Aid Recipients

The Work Opportunity Tax Credit (WOTC) is awarded to employers for hiring from ten target groups. Some of the most commonly certified (WOTC) groups are recipients of federal public aid, such as food stamps, family assistance (TANF) or social security. Chances are you’ve hired someone in this category without ever knowing it.

Over 19 million households received SNAP (food stamps) nationwide in 2018, USDA reports say. More than a million families qualified for family assistance funding, according to the Department of Health and Human Services.

When you hire from these segments, you could earn up to $2400 per eligible new hire. New hires must work at least 120 hours in their first year of employment.   Qualifications include the following:

SNAP (food stamps) Beneficiaries

  • At least 18 years AND
  • Member of family that received SNAP within six months before hire OR for three to five of the previous six months

SSI Recipients

  • Received SSI benefits within 60 days of date of hire

Long Term Family Assistance (TANF) Recipients

  • Received assistance under a IV-A program for at least 18 consecutive months before hire date, OR
  • Received assistance for 18 months after 8/5/1997 and it’s been under 2 years since the end of the earliest of the 18-month period, OR
  • No longer eligible for aid due to Federal or State laws limiting maximum time that payments are allowed and it’s been under two years since cessation

Tax Relief for Hurricane Michael & Florence

Do you operate in an area affected by last year’s hurricanes? Do you hire persons in impacted areas? If so, your business may have extra time to submit Work Opportunity Tax Credit (WOTC) applications.

Under typical circumstances, WOTC program participants have 28 days from new hires’ start dates to apply for the Work Opportunity Tax Credit.  For those most impacted by Hurricanes Michael and Florence, the Federal Disaster Relief extends the deadline. Now through February 27, 2019, extension guidelines allow eligible businesses to submit new hires made between September 10, 2018 and January 31, 2019.

Qualified businesses must either operate in a disaster zone or hire persons from corresponding areas.  The temporary extension applies to the following areas:

Hurricane Michael:

Alabama counties: Geneva, Henry, Houston, and Mobile.

Florida counties: Bay, Calhoun, Franklin, Gadsden, Gulf, Hamilton, Holmes, Jackson, Jefferson, Leon, Liberty, Madison, Okaloosa, Suwannee, Taylor, Wakulla, Walton, and Washington.

Georgia counties: Appling, Atkinson, Bacon, Baker, Ben Hill, Berrien, Bleckley, Brooks, Bulloch, Burke, Calhoun, Candler, Chattahoochee, Clay, Coffee, Colquitt, Cook, Crawford, Crisp, Decatur, Dodge, Dooly, Dougherty, Early, Echols, Emanuel, Evans, Glascock, Grady, Hancock, Houston, Irwin, Jeff Davis, Jefferson, Jenkins, Johnson, Jones, Laurens, Lee, Macon, Marion, Miller, Mitchell, Montgomery, Peach, Pulaski, Putnam, Quitman, Randolph, Schley, Screven, Seminole, Stewart, Sumter, Tattnall, Telfair, Terrell, Thomas, Tift, Toombs, Treutlen, Turner, Twiggs, Washington, Webster, Wheeler, Wilcox, Wilkinson, and Worth.

Hurricane Florence:

North Carolina counties:  Allegany, Alamance, Anson, Ashe, Beaufort, Bertie, Bladen, Brunswick, Cabarrus, Carteret, Chatham, Columbus, Craven, Cumberland, Dare, Davidson, Duplin, Durham, Granville, Greene, Guilford, Harnett, Hoke, Hyde, Johnston, Jones, Lee, Lenoir, Madison, McDowell, Montgomery, Moore, New Hanover, Onslow, Orange, Pamlico, Pender, Person, Pitt, Polk, Randolph, Richmond, Robeson, Rowan, Sampson, Scotland, Stanly, Tyrrell, Union, Wayne, Wilson, and Yancey.

South Carolina counties: Berkeley, Calhoun, Charleston, Chesterfield, Clarendon, Colleton, Darlington, Dillon, Dorchester, Florence, Georgetown, Horry, Jasper, Lancaster, Marion, Marlboro, Orangeburg, Sumter, and Williamsburg Counties.

Virginia counties: Botetourt, Charles City, Chesterfield, Craig, Floyd, Franklin, Grayson, Halifax, Henry, Isle of Wight, King and Queen, King William, Lancaster, Lunenburg, Mathews, Mecklenburg, Nelson, Northumberland, Nottoway, Patrick, Pittsylvania, Pulaski, Russell and Roanoke Counties and the Independent Cities of Bristol, Danville, Franklin, Hampton, Martinsville, Newport News, Richmond, and Williamsburg.

WOTC is a federal tax credit awarded to businesses who hire from populations that have historically faced barriers to employment.  Companies can earn as much as $2,400 in tax credit for each eligible new hire.

For more information, contact us at 563-583-2115 or try our savings calculator to see how much tax credit you can earn.

WOTC Target Groups

Recently we’ve heard from a quite a few people that said they don’t participate in the Work Opportunity Tax Credit Program (WOTC) because they “don’t hire people that would qualify.”  More often than not, after a brief discussion, we were able to discover that they did hire qualified employees.  We’re not sure where the misunderstandings are coming from, but we thought this to be great time to revisit the list of WOTC target groups so more companies can be better informed when exploring the program.

There are 9 Target Groups of employees that U.S. employers can hire to earn WOTC tax credits. Below we’ve provided a brief overview of each target group without going into all specifics.

1.) Military Veterans
Military veterans must meet one of two criteria in order to qualify for any credits. They must have served at least six months of active duty or been discharged from active duty because of an service-related injury. Secondly, active duty lasting three months or longer must be completed at least sixty days before they’re hired.

2.) Long Term Unemployed
Employees that have been unemployed for a combined 6 months of the previous 12 months prior to their hire date.

3.) SNAP (Food Stamps) Recipients
Eligible SNAP applicants are identified as those who are between 18 and 39 and live in a household that is receiving food stamp aid.

4.) TANF Recipients (Temporary Assistance for Needy Families)
Hired employees meet the criteria if they have been on TANF benefits for at least 18 months consecutively or cumulatively prior to their hire date.

5.)  SSI
New hires who received Social Security Income as part of Title XVI define this target group.

6.) Vocational rehabilitation referrals
Individuals qualify if they have physical or mental disabilities and complete a certified vocational rehabilitation program.

7.) Empowerment Zones
Candidates under 40 meet this criteria as long as they reside in federally- designated Rural Renewal or Empowerment Communities.

8.) Summer Youth
16-17 year-old new hires, residing in Empowerment Zones are categorized through the summer youth target group.  New hires must take place from  mid-May through September

9.) Ex-felons
WOTC-qualified ex-felons include those with release dates within 12 months of their hire date.

Many companies have dismissed participating in the WOTC program because the believed that no one they hired would qualify.  Sadly this has been a costly mistake for a lot of companies.  With the maximum credit per employee being $2,500, $4,500, or $9,600 you can see it doesn’t take that many qualifying employees to add up to significant tax savings.  We typically see that 20-25% of new hires qualify for the program.

If you’d like to explore the WOTC program further and what your potential tax savings could be, click here to contact us, or here to use our free estimating calculator.

Don’t Miss This Last Chance to Earn 2015 Tax Credits

Image by Matt Wade

The Federal Government recently announced their renewal of the Work Opportunity Tax Credit Program. (WOTC) for 2015 through 2019 and that is really great news!

The WOTC program experienced some challenges in 2015 stemming from the late December renewal.  Although the renewal was retroactive, it created a hardship for employers seeking to take advantage of these lucrative tax credits.

Due to the challenges last year, many people chose not to participate and apply for 2015 tax credits.

The most exciting news is that the IRS recently issued notice 2016-40. This notice makes 2 very important allowances you need to know about.

  1. You now have an opportunity to go back and get your Work Opportunity Tax Credits (WOTC) by submitting ALL employees you hired between January 1, 2015 and May 31, 2016!
  2. A new target segment has been added to the types of employees you can submit for tax credit. The new group is Long Term Unemployed and is available to all employees hired anytime in 2016.


With this provision ANY employer can currently submit all of their 2015 new hires for credit qualification!

This is a nearly unprecedented move by the IRS.  Since the inception of WOTC in 1996, this is only the second time such an extension has been made available by the IRS.

RIGHT NOW is the absolute perfect time to get started and receive retroactive credits for all 2015 and 2016 new hires!  This is the ideal scenario for all of you that were heavily considering WOTC last year but held off because of the pending renewal.

There’s only one catch! We Must get all of your 2015 new hires submitted ASAP! 
We don’t want you to miss any available Work Opportunity Tax Credits (WOTC) or have them delayed.

The official deadline to submit last year’s employees under this transitional relief provision is June 29, 2016, but we want to get your employees submitted ASAP before all the other companies in your state submit theirs. Procrastinating will increase the risk of missing credits or having your credits delayed by several months because other companies submitted before you. We will handle all the leg work for you, but we need to get started sooner rather than later.

To get an estimate of just how much your 2015 WOTC tax credits are worth, use our calculator HERE or contact us HERE and we’ll help you get started.

Don’t miss this opportunity and over-pay your 2015 taxes!

Are Today’s Youth HR’s Best Kept Secret?


Progressive companies seem to have cracked the code of hiring teenage help and leveraging those employees as strategic assets. More specifically 16-17 year olds for seasonal help.

It’s true that there is a certain unflattering stigma associated with teenage employees, but it doesn’t mean that you should overlook this segment of the workforce.  In fact, with an intentional plan you can sift through this unique talent pool and hire the best and take advantage of the benefits they can offer your company.

There are more than a few examples of teenagers behaving badly in their workplace scattered across the internet casting a shadow upon both their employer and fellow teen worker.  This shouldn’t be a deterrent but rather an incentive to perfect your hiring process.

So why should you consider hiring more teens?

  • For starters, they have lower wage requirements than longer tenured employees resulting in lower overall payroll. Not to mention they seldom work enough hours to earn OT and often don’t receive the benefits of full time workers.
  • They can help expand your clientele to a segment of the population you may not have previously reached. Teenagers have dozens of retail options to visit after school, but they gravitate to those where their friends work.
  • You can begin relationships with quality individuals that become lifetime employees.  The landslide majority of Chick-fil-A operators started working for the company during summers in high school.
  • The energy they have is both inspiring and infectious. Teenagers can often be labeled as lazy, but more often than not, it’s just boredom.  Given a task and empowered to achieve it, you’ll be surprised at how creative and efficient they can be at problem solving.
  • As a final bonus, the Federal Government offers you a WOTC tax credit for each 16-17 year old hired during the summer.  This could reduce your tax liability by up to $2,400 per teen hired.

These are just a few reasons to include teenagers in your candidate pool; especially for retail, seasonal help.

Progressive companies, like yours, have realized solid return on investment by carefully hiring teenagers. Teens help businesses diversify their workforce, attract young customers and increase your profitability. That means more bottom line, thanks to reduced payroll costs, sales potential and tax incentives.

If you’d like to learn more about how we can help your business improve your hiring and take advantage of the Work Opportunity Tax Credit (WOTC) program click here and we’ll be in touch shortly.

5-year WOTC Extension Announced

Image by Matt Wade

It’s official! The Work Opportunity Tax Credit (WOTC) program has been renewed for five years (2015 – 2019).  Last week, Congress voted to extend the WOTC program as part of the Tax Extenders legislation, and received the President’s official signature of approval on December 19th.

This renewal is especially exciting as it is the first time in it’s history WOTC has received a 5-year renewal which is a testament to it’s success. Secondly, Congress has added a new target segment for Long Term Unemployed Recipients, which can qualify more of your employees and increasing your potential tax credits.
Here is the actual wording from the bill:

The term ‘qualified long-term unemployment recipient’ means any individual who is certified by the designated local agency as being in a period of unemployment which is not less than 27 consecutive weeks, and includes a period in which the individual was receiving unemployment compensation under State or Federal law.

This is precisely what employers have been waiting on all year.  In a nutshell, the program provides participants tax credits up to $2400-9600 for each qualified, new hire brought on board. This renewal is a solid investment in the American dream and provides work opportunities for millions while providing businesses the capital to expand their businesses that will create even more jobs.

It doesn’t take long to figure out that this program can be a great way for companies to invest in their growth by significantly reducing their tax liability. To learn how much your potential tax savings might be, try our tax savings calculator here.

WOTC Renewal Update


The Work Opportunity Tax Credit (WOTC) program scored a big victory this week. On 7/21/15, the Senate Finance Committee voted 23-3 to pass a two-year extension of this important program. This means that the bill is now ready for a full Senate vote. Although this is only the first step,  the near-unanimous support for WOTC legislation marks a huge step forward in a program which has awaited renewal since December 2014.

WOTC is an employment incentive to reward businesses who hire from several target groups that historically have faced barriers to employment. The tax credit awards businesses up to $2400-9600 for each eligible new hire. Applications must be received within 28 days to state workforce agencies.

We strongly advocate for this program as it has served American companies well. WOTC has helped businesses save thousands annually in tax liability. Moreover, it expands opportunities for job candidates most in need.

The program has passed one gateway and is en route for a Senate vote. We will keep you posted as new developments take place.

SNAP: A Huge Part of WOTC Tax Credits


The WOTC program includes many target groups. Among these are SNAP (Supplemental Nutrition Assistance Program) recipients, or persons receiving food stamps. It’s highly likely that you may have hired a SNAP recipient or member of a qualified household. According to USDA statistics, in fiscal year 2014, SNAP recipients represented over $10 billion in available tax credits.

With the volume of SNAP recipients in this country, you’ve probably hired untold numbers which met WOTC qualifications. Did you know that roughly one in seven Americans receives this aid? Since the recession, food stamp recipients grew to over 23 million households. The number of children benefiting from the program has nearly doubled to over 15 million since the 2007 recession. All across the country, rural and urban citizens receive food stamps temporarily and long-term.

Hiring a SNAP beneficiary could earn you up to $2400 in tax credit for each new candidate. Qualified candidates must be between 16-39 years old and not have worked for your company before. State workforce departments must receive requests within 28 days of new hires’ start dates.

The great news is these people are easier to identify than you thought possible. By taking advantage of these, and making minor tweaks in your hiring process, you could save thousands in tax dollars. Give us a call at 563-583-2115 to learn how to get started or you can find out how much you have been missing in tax savings by using our free calculator HERE.

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