• April 30, 2021

WOTC By The Numbers

Here’s a brief look at the WOTC certifications to date for 2020.

• Over 1.6 million certifications were issued for 2020.
• 1.1 million certifications were issued for SNAP recipients. This accounts for just over 68% of all certified groups.
• The smallest target groups were the summer youth recipients, which none were certified and the disabled veterans with less than 1% certified.
• Texas led all states with over 135,000, followed by California, Ohio, Illinois, Florida, Pennsylvania and New York.
• The States with the fewest included Maine, Alaska, New Hampshire, Puerto Rico, Virgin Islands.

• April 30, 2021
• No Comments
• WOTC Tax Credits

• August 2, 2020

Earn Credit for Hiring Unemployment Recipient

There’s no doubt that COVID has dealt the nation’s economy a tough blow. Case in point are the sheer number of jobless claims made nationwide since the pandemic began. Just five months ago, unemployment sat around three to four percent.  According to the U.S. Bureau of Labor Statistics, in June, states’ unemployment numbers averaged more than nine percent.

If your business is hiring right now, you may very likely be hiring someone who received unemployment insurance this year. Therefore, you may qualify for the Work Opportunity Tax Credit (WOTC).

Individuals who have been unemployed at least 6 months may qualify your company for the WOTC federal tax credit. You could save as much as $2,400 for each approved new hire and in some cases, as high as $5600 for veterans who have been unemployed.

Eligibility is based on a few factors. New hire applications must be submitted within 28 days of their hire date. Additionally, applicants must work at least 120 hours throughout the twelve months following their hire date.

To learn more, feel free to reach out to us or visit us online at www.taxcreditgroup.com.

• August 2, 2020
• No Comments
• WOTC Tax Credits

• May 14, 2020

False Claims Act – How it Could Affect Your PPP Claim

When the CARES Act was announced, it ignited a glimmer of hope within the small business community. Many companies were either closed or saw their revenue drop drastically as a result of the novel coronavirus.

But hope quickly disappeared as major corporations found a way to access the money that was meant for America’s small businesses. The money within the Paycheck Protection Program (PPP) quickly disappeared. Just days after the program was put into action, it ran out of money.

The federal government replenished the funds when it realized large corporations like Shake Shack ($10 million) and Ruth’s Chris ($20 million) were receiving funds while small mom and pop shops missed out. Both Shake Shack and Ruth’s Chris have since said they will not accept the money, however, the move brought attention to a large loophole in the PPP legislation. The ability of large corporations to access PPP funds.

The False Claims Act

And that leads us to the False Claims Act.

The False Claims Act, according to Cornell Law School, is “Federal statute setting criminal and civil penalties for falsely billing the government, over-representing the amount of a delivered product, or under-stating an obligation to the government. The False Claims Act may be enforced either by the Justice Department or by private individuals…”

It’s a law, that if used, would allow the federal government to pursue criminal and civil penalties against any company that misuses the PPP.

Should a Small Business Owner Be Worried?

This week, headlines like “For PPP recipients: You may be the subject to whistleblower lawsuits under false claims law” showed up in publications like the Witchita Business Journal.

The article is at least in part “clickbait” since it’s designed to get you to pay for a subscription so you can read the article. However, the crux of the argument is founded in truth.

US Secretary of the Treasury Steven Mnuchin has made multiple comments about the loans issued through the PPP and has promised that people taking advantage of the PPP will face “severe consequences”. He’s also promised that loans of $2 million or more will be audited before the government decides if it will forgive the loan amount. Mnuchin has also tossed around the words “criminal liability”.

Of course, you should be worried if you knowingly and deliberately defrauded the federal government. However, most small business owners are probably too small in the eyes of the government to warrant prosecution.

The comments from Mnuchin and the False Claims Law itself were designed for large corporations and businesses taking advantage of the federal government. Odds are, the government will not be pursuing you if you managed to secure a $10,000 PPP loan.

What if I’m Still Worried?

If you’re still worried and you want to find out more, the IRS and Small Business Administration (SBA) are trying to keep you informed. The Treasury Department has issued an entire document of FAQs to address concerns of borrowers. You can read it here.

Don’t Be Afraid to Ask for Help

We here at the Tax Credit Group have spent hours upon hours looking at, analyzing, and evaluating the CARES Act as well as all the legislation and updates that have come from the IRS, the SBA, and other government agencies. We are keeping up with the headlines and the rules and regulations behind those headlines.

If you’re a small business owner and you find yourself in doubt, please don’t hesitate to reach out to us here and ask a few questions. We would be happy to answer them or at least research until we have an answer. There’s a lot of material out there right now and a lot of changes and we want to make sure our clients, our friends, and our family stay informed.

• May 14, 2020
• No Comments
• WOTC Tax Credits

• May 5, 2020

Why It is Better to Hire a Tax Credit Specialist than Do It Yourself

When we talk to potential clients, sometimes they ask us why a tax credit specialist is something they need. It is a great question. After all, they are usually already paying for a CPA and this is just an added financial expense. What we tell them is that a tax credit specialist is something completely different.

How is a tax credit specialist different from a CPA?

We did a whole post about the difference between a tax credit specialist and a CPA and you can read it here. The short answer is that while a CPA has a broad understanding of the tax code and knows more than enough to file your taxes with the IRS, a tax credit specialist has a very specialized understanding of the tax code.

Tax credit specialists are focused on the sections of the tax code that deal with tax credits and they understand them word for word.

Why haven’t I heard of a tax credit specialist until now?

Odds are if you are reading this article, someone mentioned that you might benefit from a tax credit specialist and you Googled it to find out more.

The truth is that not every business qualifies for tax credits, but many businesses do and do not even realize it.

Does your business employ veterans, ex-felons, or persons with disabilities? Does your business conduct research? Does your business offer a health plan or retirement plan to your employees? These are all business expenses that can qualify for tax credits, but many businesses do not know that the credits are available. Usually, it requires a tax credit specialist to fill them in on what they are missing.

What is the benefit of hiring a tax credit specialist?

Most CPA’s will be able to tell you about small savings within your taxes. However, the tax code is immense. We’re talking thousands of pages, though exactly how many thousands is up for debate. No matter the answer, it is too much for any individual to know everything about. That is why there are specialists.

Specialists are people who focus on specific parts of the tax code and become experts in those specific parts. We just happen to be specialists in the tax credits part of the tax code. That means we know the ways you can and cannot save money through the use of tax credits. Through the years, we have figured out some tricks of the trade to make sure businesses are maximizing the benefits of those tax credits.

Our goal, first and foremost, is to discover as many ways as possible for you to earn credits that will directly offset the amount you owe on your taxes.

Why can’t I figure out the tax credits myself?

Figuring out which tax credits your business qualifies for and applying for them is certainly something you can do yourself. However, be warned that there are a lot of hoops the IRS wants a company to jump through to get a tax credit.

There are forms to be filled out, information to be gathered, and separate deadlines to meet. For something like the Electric Vehicle Tax Credit, the requirements to qualify are constantly changing and you have to be updated on those changes.

In other words, there is a lot of research and a lot of time that goes into applying for tax credits and there’s always the possibility that after all of that, the IRS will reject your claim. We have seen seasoned tax professionals struggle with learning about all the tax credits available and how to apply for those credits.

What if my company already operates at a loss?

Even if your company is losing money this year, it is still important to take tax credits if possible. There are a couple of reasons for this.

First, some tax credits are what is called refundable. That means if you have a credit and you owe zero dollars in taxes, the money left over will be refunded to you.

Second, some tax credits can be carried over from one year to the next. That means that even if you are operating at a loss this year, the tax credit could be used to offset any taxes your business owes next year.

If you still are not sure if you need a tax credit specialist, contact us here at Tax Credit Group. We will take a look at your situation and tell you if there is or is not savings that you can benefit from.

• May 5, 2020
• No Comments
• WOTC Tax Credits

• April 26, 2020

Tax Deadline Extension FAQ’s

As I am sure you know by now, the 2019 tax deadline has been extended to July 15, 2020. We here at Tax Credit Group get a lot of questions about what that means for our clients and their taxes. So now seems like a great time to pull some of those answers together and put them in the same place.

Does that mean I cannot file my taxes before July 15, 2020?

Absolutely not. Just like all tax deadlines, the IRS will not penalize you for filing your taxes early. The extension means that the IRS is giving you until July 15, 2020, to file and pay your taxes without penalty.

What about my state taxes?

Most states have extended their tax deadlines to July 15, 2020, to match the federal deadline, however, a small handful of states have alternate deadlines. Here’s a list according to AICPA:

What if I am owed a refund?

If the federal government owes you money, then filing early is not a problem. The IRS will process your refund based upon when you file, not upon the July 15, 2020 deadline. Therefore, if you are owed money, it’s in your best interest to file early and get a refund now.

What about the deadline to contribute to my IRA?

According to the IRS, the deadline to contribute to your IRA retirement account was also extended with the tax filing deadline extension. That means you have until July 15, 2020, to make contributions to your IRA and have them count against your 2019 taxes.

What about the deadline to contribute to my Health Savings Account (HSA)?

The same goes for the HSA.

What about tax estimates for next year?

If you are one of those people that owe taxes every year and pay estimates to off-set what you owe, then you need to be aware of the new deadlines for 2020 tax estimates. According to the IRS, “…first quarter 2020 estimated income tax payments due April 15, 2020, and second quarter 2020 estimated income tax payments due June 15, 2020, have both been postponed to July 15, 2020.  Make a single payment in an amount sufficient to cover both your first and second quarter estimated tax payments on or before July 15, 2020.”

The tax deadline was extended to help alleviate some of the pressure taxpayers were feeling because of the novel coronavirus and the business shutdowns that followed. If you have other questions or concerns, you can find more answers to your questions on the IRS website. And if you still need help, you can always contact us here at Tax Credit Group.

• April 26, 2020
• No Comments
• WOTC Tax Credits

• April 26, 2020

Alternatives to Employee Layoffs

Businesses around the world are hurting right now and many business owners are struggling with the dilemma of whether to layoff employees now or try to ride things out with the hope that they’ll get better. It’s an unenviable decision. For most employers, these people are like a second family and it’s not easy to let go of them. Which is why you sometimes need to think outside the box to get things done.

None of the solutions below are ideal, but if you’re looking for an alternative to layoffs, one of them might be your best option.

Freeze hiring, raises, and bonuses

If you have not already, make sure that you halt all payroll increases. That means freezing all hiring and raises and cutting out bonuses. You’re trying to maintain or decrease the amount you spend each week on payroll, not increase it.

Cut part-time staff and contractors

One way to make cuts to payroll without losing core team members is to eliminate part-time staff and contractors. Cutting hours or letting go of either can help lower your payroll. Just remember that these staff members and contractors may not be available again if you want to hire them back in the future.

Create a virtual office

For some businesses, the physical location is closed, and employees are working from home. If this is your situation, consider whether it’s working and working well. Can your business successfully operate in the long-term with a virtual office and online meetings? If the answer is yes, then you might be able to cut rent out of your expenses and funnel that rent into other expenses like payroll.

Pay cuts

Pay cuts are a way to lower your payroll while still keeping part or all of your staff. However, pay cuts may foster dissatisfaction among your employees, especially if those cuts remain in place well after the business recovers.

Your ability to issue pay cuts to full-time employees will depend on the employment laws within your state as well as the contract you have in place with that employee. Be sure to contact your human resources specialist before you issue something like pay cuts across the board.

Furloughs

Similar to pay cuts, furloughs are also something you’ll need to contact your human resources specialist about before you institute them.

Furloughs are kind of like a temporary layoff. You’re giving an employee unpaid leave for an undetermined amount of time, but you’re planning on reinstating their pay when things get better. According to SHRM, the benefit of furloughs over layoffs is, “employers do not have to pay for recruiting, selecting, socializing and training new employees because the furloughed workers can pick up where they left off.”

What if I have to layoff employees?

If there’s no way around it and you have to layoff your employees, then there are ways to make it easier on the employee.

• Be polite and empathetic. Make sure you state upfront that this has to do with the health of the business and that the employee did nothing wrong. Offer to be a reference for the employee during his or her future job search.
• Have a list of resources available for them including where to apply for unemployment and other services.

These are difficult times and if you have a good relationship with your employees, they will understand that you’re trying to do your best by them.

Note: The above are options that you should explore, but please remember that they are general insights and not advice for your specific company. If you’re looking for advice that would directly relate to your business, please feel free to contact us here at Tax Credit Group or contact your financial adviser.

• April 26, 2020
• No Comments
• WOTC Tax Credits

• April 15, 2020

The Employee Retention Credit in the CARES Act

With shutdowns across the country, America has entered unchartered waters, and everyone is trying to figure out what it means for them. Lawmakers are doing what they can to help, but what ends up coming out of Washington, DC are massive pieces of legislation that cover millions of people but are difficult to understand.

The latest legislation, the Coronavirus Aid, Relief and Economic Security Act (CARES Act), is huge. 335 pages to be exact. It’s aimed at helping almost every American that’s suffering because of the COVID-19 outbreak and that means there’s a lot to dig in to. For a small business, it’s tough to know what’s for you and what’s not.

What should small business owners look at in the CARES Act?

If you’re a small business owner that’s struggling to do right by your employees whether the doors remain open or not, then the Employee Retention Credit within the CARES Act is what you want to be focusing on first.

As the IRS website states, the credit “…is designed to encourage Eligible Employers to keep employees on their payroll, despite experiencing economic hardship related to COVID-19…” In other words, don’t fire them, the IRS will try to help you keep them.

What do I need to know about the Employee Retention Credit?

There are three keys to the Employee Retention Credit:

• The credit is 50 percent of the qualified wages and that includes qualified health plan expenses.
• It applies to qualified wages paid after March 12, 2020, and before January 1, 2021.
• The maximum amount you can claim for each employee is $10,000 which means $5,000 in credit.

How do you know if your business is eligible for the Employee Retention Credit?

To be an eligible employer, you need to conduct business in 2020 and face one of two hardships.

One, you’re forced to fully or partially suspend your business operations because a government authority told you to. That means the mayor of your city or your state’s governor issued a stay at home order that affected your business.

Or two, you see a significant decline in gross receipts during a calendar quarter. The decline must be 50% or greater to be considered significant. So, if the gross receipts from Q1, Q2, and Q3 of 2019 significantly better than those in Q1, Q2, and Q3 of 2020 then you would be considered an eligible business.

The self-employed are not eligible for this credit.

What else should I know about the Employee Retention Credit?

The cool thing about the Employee Retention Credit is that it’s a tax credit, which means it’s fully refundable. A fully refundable credit is awesome because it means if your credit exceeds the amount that you owe in taxes, then you get that money back.

The credit is applied to the employer owed portion of social security taxes, in other words, the social security taxes that are paid by the employer on behalf of the employees.

The federal government has worked out a system of allowing employers to divert funds currently owed to the federal government in taxes to employee wages. But doing that is a lot more complex than it sounds. If you need to use taxes you currently owe to pay your employees, I suggest that you talk to your tax adviser or contact us here at Tax Credit Group before you start. There may be some ins and outs of the system that you may not understand, and it would be good to talk them through with someone who does understand.

Tax Credit Group has tried to follow all of the things happening on Capitol Hill during this crisis and we’ve tried to share with you as much as we can. If you’re looking for details on the other small business help that’s coming out of Congress, then take a look at the blog post we did on the Families First Coronavirus Act in March.

We also gathered together some of the key federal sites to look at for COVID-19 updates as they come out of Congress. You can find that here.

And if you’re one of the lucky businesses that are growing during this time and looking to hire new employees, I strongly urge you to consider hiring people that qualify for the Work Opportunity Tax Credit. It’s a credit that a lot of employers are missing out on because they simply don’t know about it.

• April 15, 2020
• No Comments
• WOTC Tax Credits