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Available Tax Credits
The Protect Americans from Tax Hikes (PATH), also known as The Path Act of 2015, provides an extension of the WOTC program through December 31, 2019.
Work Opportunity Tax Credit (WOTC) – Up to $9,600 per employee
The Work Opportunity Tax Credit (WOTC) is a federal tax credit that rewards employers for hiring new employees from various target groups. The tax credit varies according to group the new-hire is in, with maximum amounts of up to $9,600 per qualified employee.
- Long-term Unemployment Recipient
- An individual with Conditional Certification
- A member of a family that is a Qualified Food Stamp Recipient
- A member of a family that is a Qualified Aid to Families with Dependent Children (AFDC) Recipient
- An individual referred through Vocational Rehabilitation
- Qualified Veterans (including short-term and long-term unemployed veterans)
- Veterans receiving Food Stamps
- Disabled Veterans (as well as unemployed disabled veterans)
- Qualified Ex-Felons, pardoned, paroled or work release individuals
- Vocational Rehabilitation Referrals
- Qualified Supplemental Security Income (SSI) Recipients
- Designated Community Residents of a Rural Renewal County or Empowerment Zone
- Long Term Family Assistance Recipient (TANF)
- Short Term TANF
- Qualified Summer Youths
Employers must screen for these qualified employees at the point of hire. Failure to have a proper implementation method and compliance assurance will drastically affect the amount of tax credits that will be available to your company. We ensure that an efficient solution will be provided without burdening your existing human resources staff. As part of BowmanBack Tax Credit Services, we will screen your applicants, process the certification paperwork, calculate the federal credits and then produce tax forms and reports for your company.
The Empowerment Zone Tax Credit program was created to give distressed local communities real opportunities for growth and revitalization. Empowerment Zones were selected based on poverty levels, unemployment rate, crime rate and the number of low income households. The communities must have applied to become an Empowerment Zone in order to receive this designation. This program does include look-backs.
The Empowerment Zone Tax Credit applies to both urban empowerment zones and rural empowerment zones. The credit was equal to 20% of the first $15,000 in qualified employee wages if the employee lived and worked in the zone. To be qualified, the employee must have lived and worked in the zone and have been employed for at least 90 days.
An Enterprise Zone is a geographic area designated by state and local agencies that has experienced a weakening in overall economic stability. Enterprise Zones may demonstrate higher poverty rates, unemployment rates or lower per capita incomes that surround municipalities. For that reason, the governing authorities introduce tax benefits to businesses who are either currently in the area or interested in locating there. Enterprise Zone benefits may vary from state to state in the assistance they offer. Programs are tailored to benefit the individual state economies, so oversight of the program is most often at the state level.
Examples of Enterprise Zone incentives include:
- Job Tax Credits
- Sales Tax Deferrals
- State Withholding Tax Benefits
- Sales Tax Refunds on Business Equipment and Materials
- Property Tax Credits
- Sales Tax Exemptions
- Utility Tax Abatements and Exemptions
- Community Contribution Credits
- There may be more than one Enterprise Zone located in one state
- Enterprise Zone program, with over 42 zones throughout the state
Business owners in the Food and Beverage industry with employees that claim tips may qualify for the FICA Tip Tax Credit. There are two requirements for this tax credit:
You have/had employees that received tips from customers for providing, delivering, or serving food and/or beverages for consumption and you paid or incurred employer Social Security or Medicare taxes on those tips This credit will only apply to wages earned over the minimum wage amount.
The vast majority of states provide tax credits for the creation of new jobs, spurring expansion of existing businesses and creation or relocation of new businesses. Requirements vary by state and may exclude certain industries.
Certain investment activities are eligible for special tax credits under State and Federal tax code. There are a range of activities that are usually referred to as “qualified investments.” Most refer to activities surrounding the rehabilitation of certain normal and historic buildings, activities that invest in the development or implementation of cleaner and more efficient methods of developing and utilizing fuels or energy or activities surrounding the redevelopment of areas that have a great need for revitalization. Other credits include an “investment” as a required component of another credit, such as a State Job Tax Credit. This situation could require an employer not only to hire new workers, but also make a minimum investment in property or equipment.
IRS regulations finalized in 2003 make it significantly easier for more companies to qualify for the Research & Development Tax Credit. Record keeping requirements have been liberalized. The discovery test relating to new information has been significantly eased. Process improvements are now included as a qualified activity.
Criteria for Research & Development Tax Credits:
- Fights to survive international and domestic competition.
- Invests time, money or resources to advance or improve their products or processes.
- Manufactures products.
- Maintains a staff of technical personnel such as engineers, designers, labs, chemists.
- Invests in continuous improvement projects.
- Implements cost reduction initiatives.
- Attempts to use new materials.
- Adds new equipment.
- Develops prototypes, jigs, fixtures and molds.
- Automates or streamlines internal processes.
- Develops new technologies.
- Performs testing functions.
- Develops, implements or upgrades systems or software.
- Develops proprietary software applications for resale.
- Obtains patents.
- Spends money on outside consultants to do any of these things.
Every state offers some form of tax incentive to encourage certain business activity such as investing in specific areas or hiring from targeted groups. Identifying the incentives available to a company in a particular jurisdiction and determining the eligibility of those incentives can be a difficult, confusing and labor intensive task. We can identify opportunities available to all of your company’s locations and work with your staff to implement programs to retrieve these incentives.
- Enterprise Zone Credits
- WOTC Piggy-Back Credits
- State Job Creation and Hiring Credits
- Manufacturing Credits
- R&D Credits
- Strategic consulting, including research and planning related to the tax credit maximization of expansion projects and new initiatives
- Other Business Credits