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Employee tax credits and new categories in the stimulus plan

Employee tax credits and new categories in the stimulus plan



How businesses can flourish using employee tax credits available under the new Economic Stimulus Plan

How businesses can flourish using employee tax credits available under the new Economic Stimulus Plan



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    Employee tax credits and new categories in the stimulus plan Employee tax credits and new categories in the stimulus plan Presentation Transcript

    • Employer Incentives Work Opportunity Tax Credits
    • About The Company Ken Brice, President, CFO Resources, Inc. and ETaxCredits.com • A student of corporate finance, Ken dedicated many years to educating himself in the finer points of financial resourcing and developing cash flow for business owners • He established CFO resources in 1992 and began running it full time in 1994 Dedicated the company to help others succeed and improve their profitability and cash flow. Added a tax credit service to the company portfolio in 1996 Currently, 260+ clients are taking advantage of this program
    • Brief History of Tax Credits Established by the Small Business Job Protection Act of 1996 (P.L. 104-188). The Taxpayer Relief Act of 1997 reauthorized the Work Opportunity Tax Credit (WOTC) and established a new Welfare-to-Work Tax Credit for hiring long-term welfare recipients, In May, 2008 President Bush reauthorized the programs through August 31, 2011 In President Obama’s economic plan for the current administration, the roles of tax credits are being expanded
    • A Snapshot of the Program • This program is a way of rewarding employers who hire individuals that the government sees as needing special aid in finding employment • It costs the government ~$25k a year to supply someone public assistance; the government offers businesses an incentive when you find their skills set and your needs match and you offer employment • In order to qualify someone, an employer needs to file for certification with the appropriate state agency; most state certifying agencies are understaffed and need extra time and attention to process certifications
    • A Snapshot of the Program • State agencies need regular and consistent follow up to ensure payment is made in a timely manner • Most employers do not have access to the information needed to maximize the program nor do they need to support the infrastructure required to process all applications. • 90% of the applications that an employer receives are denied or invalid • The remaining 10% can be worth thousands of dollars each
    • Expanded Veterans Group • Previously, only veterans in a household that had received public assistance would qualify • Currently, due to changes brought about by the Obama administration and the President’s Stimulus plan, ALL unemployed veterans returning from active duty in 2008-2010 will qualify • Hiring qualified and trained returning troops becomes in everyone best interest
    • New “Disconnected Youth” Group • An unheralded benefit for employers, the youth job market and job seekers • The federal government is further expanding the base of new hire employees that will make companies eligible for employee tax credits • Prospective employees between the ages of 16 and 25 who have not worked or attended school in 6 months qualify for a tax credit
    • Other available employee tax credits Work Opportunity Tax Credits; federally funded, state administered For Long Term Welfare Recipients (over 18 months) 40% of the first $10,000 in earnings for year 1 50% of the first $10,000 in earnings for year 2 for a total of $9,000 Qualified Employee must work a minimum of 120 hours For all but Long Term Welfare Recipients 40% of first year’s wages, up to a cap of $2,400- over 400 hours 25% of first year’s wages, up to a cap of $1,500 - under 400 hours but over 120 hours. Qualified employee must work a minimum of 120 hours
    • Empowerment Zones/Enterprise or Renewal Communities Depending on where you’re business is located, your company may be eligible for an Empowerment Zone credit, Enterprise Zone credit or Renewal Community credit. EZs, ECs, and RCs are areas of a city that has been designated by the federal government as distressed areas and are typically the more challenged areas of a city. Nationally there are:  65 Urban Enterprise Communities  6 Urban Empowerment Zones  30 Rural Enterprise Communities  3 Rural empowerment zones  DC Enterprise Zone
    • Targeted Employees If you hire from “Targeted” groups, the federal government will pay you for hiring them in the form of federal income tax credits. Target groups consist of: • People on food stamps • People on state disability programs • People on Welfare (TANF) • Veterans who come from • People who are on families on public assistance Supplemental Security Income • Young people who live in (SSI) empowerment zones • Ex-felons • Long Term Welfare Recipients • Katrina Victims Tax Credits are used by companies to reduce their federal and state income tax liability, you may be hiring these people and don’t even know it! Don’t worry – “we do all the work, you get all the credits”
    • Empowerment Zones/Enterprise or Renewal Communities A tax credits earning potential per qualified “Zone/Enterprise or Rural Community” employee is up to $3,000 per year for EZs and ECs and $1,500 per year for RCs This credit is calculated at 20% of the first $15,000 in earnings for a maximum tax credit of $3,000 for EZs and ECs and 10% of the first $15,000 in earnings for RCs. You can claim retroactively on existing staff
    • What’s in it for You! On Average, 10% of your new hires will be eligible for an tax credit of $1,500 Take the number of people you expect to hire and multiply first by 10% and then by $1,500 If you would like to reduce your taxes by that amount each year, you need this program
    • Our Company’s Services: • File for certification (employee qualification) in all states where you have payroll – you’re only billed when certifications are received and you’ve earned credits from the respective states • Follow up with respective government agencies to assure certifications are submitted and approved • Maintain an accurate data base of qualified individuals and for what program • Calculate the credits using our proprietary software
    • Our Company’s Services: • Send you quarterly reports indicating the number of certifications we’ve received and the number who were not certified and why • At the end of the fiscal year, we’ll send you the appropriate tax forms to file with your taxes (and take the deduction) along with copies of all certification for your records. • Leveraged CFO experience to create a methodology for accurately capturing income credits • There are no up front fees – we only bill when we receive certifications and are successful. If you don’t get paid, we don’t get paid. Calculated and billed quarterly. No fee unless the employee is certified!
    • Presented for CFO Resources, Inc. and ETaxCredits.com Jed Levinson; LinkedIn Consultant 521 Executive Dr Princeton, NJ 08540 • jlevinson@cforesources.com http://www.linkedin.com/in/jedlevinson CFO Blog