The federal government and a number of states allow businesses to claim tax credits for hiring members of targeted groups and for conducting business in specifically designated areas. There are a few hiring and zone-based tax credits that can be particularly valuable to a wide range of businesses.
The WOTC—a federal credit distributed at the state level—is designed to encourage businesses to hire individuals receiving government assistance to enable them to become more self-sufficient. Depending on which target group the individual belongs to, the maximum credit per new hire can range from $2,400 to $9,600. Target groups include:
The value of the credit is determined by the target group the employee qualifies under, the number of hours worked, and the wages earned in the period of employment. It must be applied for within 28 days of a new hire’s start date.
Many states offer their own WOTC-equivalent opportunities. The amount of credit and the type of tax they offset varies by state. For example:
Alaska offers an income tax credit of up to $3,000 for the first taxable year for employing new, full-time, qualified veterans.
Illinois offers an income tax credit of up to $1,500 for each qualified felon who was convicted in Illinois, sentenced to a period of incarceration, and hired within three years of being released.
New York offers a franchise tax credit of up to $2,100 for the first taxable year for employing new full- or part-time qualified, disabled employees.
Washington offers a credit of up to $1,500 against business and occupation tax or public utility tax for employing new, full-time, qualified veterans who work at least two consecutive calendar quarters. The credit applies to new hires on or after October 1, 2016.
Other states offer similar hiring credit opportunities that may require more specific qualifications. We can assess your company's qualifications and navigate the process of claiming these and other credits.
Both the WOTC and the empowerment zone tax credit offer valuable opportunities to boost your business's cash flow. Leveraging these credits used to be a time-consuming process that posed an administrative burden for many companies. Not anymore.
MaxCredits, an industry-leading Web-based tool from Moss Adams, vastly simplifies and streamlines the process. With MaxCredits, new hires enter relevant personal information via a secure Web site and answer a short set of questions to determine whether they qualify your business for federal or certain state wage-based income tax credits or incentives.
Businesses qualifying for tax credits use the IRS-approved DocuSign® Digital Transaction Management platform to electronically apply for relevant credits—removing paper from the process to drive enhanced security and increase compliance. Employers also save additional time and money by screening for other federal and certain state credits simultaneously. A process that used to take up to three weeks can now be accomplished in one day.
Contact us to learn more about MaxCredits and discover how it can benefit your business.
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