Maximize profitability with employment tax credits and unlock your company’s full potential. Implementing an employment tax credit program can significantly increase profitability by generating billions of dollars in tax savings and reducing your effective tax rate. Both federal and state governments offer tax credits for employers across the country. While large, publicly traded companies often have established programs, many businesses are unaware of these opportunities or lack the resources to implement them successfully.
Outsource Your Tax Credit Program to Experts
If you lack the resources to implement an employment tax credit program, consider outsourcing to Sikich. Our experts handle all federal and state tax credit participation responsibilities, leveraging decades of experience and relationships with local economic development representatives. We provide seamless solutions for screening employee eligibility and promptly filing applications with government agencies. All tax credit reports include instructions for claiming credits and full documentation for any potential audits.
The IRS offers two lucrative employment tax credits: the Federal Empowerment Zone (FEZ) and the Work Opportunity Tax Credit (WOTC). Both programs offset income tax liabilities but have different requirements for proper calculation and claims. These credits can be claimed alongside other discretionary credits, making it essential to seek guidance from seasoned professionals. We ensure accurate tracking and calculation of multiple credits to avoid erroneous claims.
Work Opportunity Tax Credit (WOTC)
The Work Opportunity Tax Credit (WOTC) is a federal income tax credit for employers who hire individuals from eligible target groups facing employment barriers. This credit can lower your effective tax rate and complement other workforce programs that promote workplace diversity and provide access to quality jobs.
Steps for Claiming WOTC:
- Employer screens prospective employees on or before date of hire.
- Submit application forms to the SWA within 28 calendar days of hiring eligible employees.
- Follow up with SWAs to check certification status (provide additional information, obtain WOTC certificate, or address application denials).
- SWAs process WOTC applications at their discretion, potentially causing delays in issuing certificates.
The foundation of a comprehensive tax credit program begins with federal employment tax credits. When you partner with Sikich, our process starts with a discovery meeting to understand your company’s current activities and future growth strategies. By understanding your company’s culture, we recommend the best way to implement a successful employment tax credit workflow. These programs require mutual engagement and regular payroll data to participate effectively. We monitor growth benchmarks and consistently communicate progress.
Federal Empowerment Zone Tax Credit
The IRS offers a 20% income tax credit on the first $15,000 in wages paid annually to employees in Federal Empowerment Zones, up to a maximum amount of $3,000 per eligible employee. To qualify, businesses must have locations within a designated Federal Empowerment Zone and hire employees residing within the same zone. Without the requirement for certification, this program provides significant tax savings while boosting profitability.
Our services encompass the following:
- Complimentary eligibility review (given a detailed location list)
- Credit calculation for annual income tax reduction
- Continuous legislative monitoring for potential federal program enhancements
Related Experts
Sabrina Champagne
Sabrina Champagne
