Your Employees May Be Worth Thousands Of Dollars in Tax Credits

By Jeanne Huynh, Client Advocate

By Jeanne Huynh, Client Advocate
Southland Data Processing

Jeanne-Web
“All that girl Jeanne talks about is tax credits.” Well, yes, I do talk about tax credits all waking hours and the reason why is because time is of the essence and you, the employer, should not let easy tax credits slip through the cracks. Let me explain.

Work Opportunity Tax Credit (WOTC) is a federal government sponsored program designed to motivate eligible employers to hire individuals who fall within one or more target groups. Examples would be individuals who are unemployed veterans and those receiving government assistance such as TANF and SNAP. There are actually several target groups. You can find more information on the Department of Labor’s website: www.doleta.gov/business/incentives/opptax/eligible.cfm

The tax credits range in value from $2400 to $9,600 per qualified individual and goes against the employers’ federal tax liabilities dollar for dollar. Any excess in tax credits can be carried forward for up to the next twenty years.

Normally, there is an order and a timeline in which an employer can apply for the tax credit. The employer would have to screen the applicant for the tax credit by giving the applicant a survey BEFORE the applicant is offered employment. Once the applicant is officially employed, the employer has twenty-eight days to file IRS Form 8850 (Pre-Screening Notice and Certification Request for Work Opportunity Tax Credit). To receive the full value of the tax credit, the employee must work at least 180 hours.

Since its inception, the tax credit program has expired and has been reinstated numerous times. Recently the program was reinstated by Congress in December 2015 making the program effective from January 1, 2016 to December 31, 2019. That is wonderful news, but what is even greater news is that the program now has a “transitional relief” which means that employers may now retroactively screen employees hired from January 1, 2015 to May 31, 2016. The employer’s chance to retroactively screen new hires in 2015 and the first few months of 2016 will have a deadline of May 31, 2016. Keep in mind that you will still have the opportunity to screen applicants the traditional way through December 31, 2019. See Transitional Relief Notice: www.irs.gov/pub/irs-drop/n-16-22.pdf

Most businesses with an hourly workforce hire qualified candidates and are simply un¬aware of this valuable program. On average 20% to 30% of hourly employees qualify your company for tax credits. Large Fortune 500 companies such as Walmart, Target and Amazon have been taking advantage of this program for years.

For more information, please visit www.sdphire.com/what-are-they or call me. I have an easy way to look for the tax credits.

Jeanne Huynh, Client Advocate at Southland Data Processing, Inc.
(909) 453-5334 – Jeanne.Huynh@sdppayroll.com

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