Pardon Me, Is This Your Two Grand?
If you're not filing employee tax credits, it could be.
Do you know there is "free" money out there for your business, and that it is easier than ever to claim it? Last year alone, TaxBreak, a tax credit recovery and processing firm, discovered more than $200 million in available tax credits for clients. Many businesses don't take advantage of the tax credit opportunities available to them, for several different reasons.
Tax credits are designed to encourage businesses to provide job opportunities to groups such as veterans, those in a specified demographic, or those in a specific geographic area. To qualify, your business must have recently paid federal taxes and be for-profit. Businesses with hourly workers and high turnover tend to see the highest qualification rates.
Thousands of tax credit opportunities are available through federal and state programs. The most common is the Work Opportunity Tax Credit (WOTC), which provides incentives for hiring individuals in designated groups, such as veterans. Others include Empowerment Zone Employment Credits, which are designed to help stimulate the economy in high-poverty regions and are worth up to $3,000 per year for each qualifying employee; and the FICA Tip Credit, which varies depending on wages, tips, and state tax credits.
Twenty percent of hourly wage earners qualify their employers for a tax credit up to $9,600 per new hire, with an average tax credit of $1,200. If you have 100 employees, for example, 20 individuals will qualify for an average $1,200 each--earning you $24,000 in available tax credits. Imagine what you can do with an additional $24,000 annually.
Can you afford to leave this money on the table? A tax credit, unlike a deduction, actually reduces the amount of taxes you owe each year and adds money directly to your bottom line--money that you can put back into your business to help it grow.
Doing it right
Applying for, processing or collecting tax credits can be time-consuming. It takes a lot of effort, deadline tracking, and organization to ensure that you provide all of the required information properly for each credit. In the past, the additional paperwork burden HR teams had to manage when dealing with tax credits was such a huge issue that many companies simply chose not to participate. With the approval of the federal E-Sign Act by the federal government and various partnerships with HR technology companies, the process is now simple and virtually paper-free.
To be successful with a tax credit program, you must make sure to review every person who applies and comes to work for your company--something that can only be done effectively and accurately by using technology. Prescreening questions can be easily integrated into the online job application process. The results are typically accessible during the applicant tracking and onboarding process.
Don't walk away from your organization's share of the millions of dollars in tax credits that are available to you each year. These credits are designed to help your business grow and to help stimulate the economy. So embrace the tools of today to help you track your tax credits... because this two grand I just found might be yours!
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