Questions Can be Very Powerful
Here's a true story about a Fresno business owner making a routine
delivery. Recently, an owner of a local restaurant delivered lunch to
our office and commented on how busy we looked. At that time, our firm
was working on a tax credit deadline and so we asked the owner a simple
question: “Have you submitted all your work opportunity tax credits
(WOTC)?” To our surprise, the owner told us that they just came
from their accountant and this topic had not come up in the five years
they’d been a client. Saving on taxes sparked the business owner’s
interest. During a meeting with the owner the next day, we discussed the
WOTC Federal tax credit. Based on their previous hires, this routine
lunch delivery ultimately saved their business $25,000 in Federal taxes.
Don't miss out on your opportunity to benefit from these powerful tax
credits and incentives. Keep reading to find out more about how they may
be able to work for you.
On December 11, 2020, the Department of the Treasury and the Internal
Revenue Service (IRS) issued Notice 2020-78. This notice provided
transition relief to employers that otherwise would be required to
submit IRS Form 8850 to a State Workforce Agency no later than 28 days
after an individual begins working for the employer. As a result, under
this notice, employers that hired designated community resident(s) or
summer youth employee(s) between January 1, 2018, and December 31, 2020,
have until January 28, 2021, to submit a completed Form 8850 to a
Designated Local Agency (DLA) to request certification.
About the Work Opportunity Tax Credit (WOTC)
The WOTC is a Federal tax credit available to employers for hiring
individuals from certain targeted groups who have consistently faced
significant barriers to employment.
WOTC Federal tax credits can range between $1,200 and $9,600 (or
more under certain circumstances) per qualified employee and credit is
available to all companies regardless of their business location.
Extension
Specifically, Notice 2020-78 provides transition relief by
extending the 28-day deadline for employers to request certification
from a DLA that an individual hired on or after January 1, 2018, and
before January 1, 2021, and is a member of the designated community
resident targeted group or the qualified summer youth employee targeted
group.
Designated Community Resident (DCR)
A DCR is an individual who, on the date of hiring,
Is at least
18 years old and under 40, resides within one of the following:
• An Empowerment zone
• An Enterprise community
•
A Renewal community
AND continues to reside at the locations
after employment.
Summer Youth Employee
A “qualified summer youth employee” is one who:
Is at least 16
years old, but under 18 on the date of hire or on May 1, whichever is
later, AND Is only employed between May 1 and September 15 (was not
employed prior to May 1st) AND Resides in an Empowerment Zone (EZ),
enterprise community or renewal community.
Opportunity
The IRS has given employers a unique opportunity to retroactively
qualify employees that are a member of the designated community resident
targeted group or the qualified summer youth employee targeted group.
This opportunity ends on January 28, 2021! If your business has not
taken advantage of claiming tax credits in the past, use this lifeline
from the IRS to catch up and claim what your business is entitled to
under the law.
Need Help?
If you think your business can benefit or is interested in claiming the
WOTC Federal tax credit, BOOS & ASSOCIATES is here to help! For more
information, please email us at askboos@booscpa.com.
