Hiring Tax Credits

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Hiring Tax Credits

  1. 1. Employer Incentives Tax Credits November 5, 2009
  2. 2. Introduction <ul><li>CFO Resources, Inc. and ETaxCredits.com </li></ul><ul><ul><li>Ken Brice, President and Founder, spent many years in corporate finance learning how to make money for the owners of businesses. </li></ul></ul><ul><ul><li>Decided to leave corporate world in 1994. </li></ul></ul><ul><ul><li>Started business to help companies improve profitability and cash flow. </li></ul></ul><ul><ul><li>Added these tax credits services to portfolio of services in 1996. </li></ul></ul><ul><ul><li>Almost 300 clients already taking advantage of this service! </li></ul></ul>
  3. 3. Why We are Talking Today <ul><li>Federal program in place since 1996 that enables companies </li></ul><ul><li>to reduce federal income tax liability . </li></ul><ul><li>Obama Stimulus Package has expanded this program making it viable for all for-profit employers. </li></ul><ul><li>95% of employers are not aware of this program. </li></ul><ul><li>Once aware, most employers still don’t participate due to complexity of effective participation. </li></ul><ul><li>We’re here to make it effective for you! </li></ul>
  4. 4. Brief History of WOTC Tax Credits <ul><li>Established by the Small Business Job Protection Act of 1996, (P.L. 104-188). </li></ul><ul><li>The Taxpayer Relief Act of 1997: </li></ul><ul><li> - reauthorized the Work Opportunity Tax Credit (WOTC). </li></ul><ul><li> - established a new Welfare-to-Work Tax Credit for hiring long-term welfare recipients. </li></ul><ul><li>In 2008, President Bush reauthorized the programs through August 31, 2011. </li></ul><ul><li>In President Obama’s economic plan for the current administration, the tax credit programs are now expanded. </li></ul>
  5. 5. How it Works <ul><li>If you hire employees from “Targeted” groups, the federal government will pay you for hiring them in the form of federal income tax credits. </li></ul><ul><li>Tax Credits are used by companies to reduce their federal income tax liability </li></ul><ul><li>The good news is you’re probably hiring people from these Targeted Groups and don’t even know it! </li></ul>
  6. 6. Targeted Employees <ul><li>Original “Targeted” groups consist of: </li></ul><ul><ul><li>People on food stamps - 300,000 people going on food stamps every month. </li></ul></ul><ul><ul><li>People on Welfare (TANF) (over 3 million new applications for welfare in February, 2009, and growing!) </li></ul></ul><ul><ul><li>People on Supplemental Security Income (SSI) </li></ul></ul><ul><ul><li>People who are ex-felons </li></ul></ul><ul><ul><li>People on state disability programs </li></ul></ul><ul><ul><li>Veterans who come from families on public assistance </li></ul></ul><ul><ul><li>Young people who live in empowerment zones </li></ul></ul><ul><ul><li>Long Term Welfare Recipients </li></ul></ul>
  7. 7. Targeted Employees <ul><li>Obama Administration has expanded the base of new hire employees that will make companies eligible for tax credit: </li></ul><ul><ul><li>Expanded the Veterans Group </li></ul></ul><ul><ul><li>Added a Disconnected Youth Group </li></ul></ul>
  8. 8. Veterans Expanded Group <ul><li>Previously, only veterans in a household that had received public assistance would qualify. </li></ul><ul><li>Now, ALL unemployed veterans returning from active duty through 2008-2010, and who have been on unemployment assistance for 4 weeks, qualify. </li></ul>
  9. 9. Disconnected Youth New Group <ul><li>Any person between the ages of 16 and 25 who has not been employed or attended school on a permanent basis for 6 months prior to hire. Certain restrictions apply if the person has a HS diploma/GED or Trade School Certification </li></ul><ul><li>. </li></ul>
  10. 10. A Snapshot of the Program <ul><li>It costs the government around $25k to keep an individual on public assistance programs. </li></ul><ul><li>The Tax Credit program rewards employers, in the form of tax credits, who hire individuals so they can come off of public assistance. </li></ul><ul><li>To qualify for the tax credit: </li></ul><ul><ul><li>New hire must complete a form on or before the first day worked. </li></ul></ul><ul><ul><li>The employer files the form, in specified timeframes, with the appropriate state agency for certification on each new hire. </li></ul></ul>
  11. 11. Snapshot, con’t. <ul><li>State agencies are charged with administering this federal program. </li></ul><ul><li>Agency determines validity of each tax credit application for each new hire form submitted by the employer. </li></ul><ul><li>Many agencies are understaffed and continual follow-up is required to obtain certification. </li></ul><ul><li>90% of the applications reviewed by employers are invalid or would be denied if submitted for certification </li></ul>
  12. 12. Why We are Talking Today <ul><li>Is it worth it? </li></ul><ul><li>YES! Now more than ever! </li></ul><ul><li>Previously, an average of 1 in 10 new hires would qualify the employer for a tax credit. </li></ul><ul><li>In today’s economy, and with recent expansion of tax credit program, now estimated that: 2 in 10 new hires may qualify for tax credit and, the average credit is going up too! </li></ul>
  13. 13. How much credit are we talking about?
  14. 14. Work Opportunity Tax Credits <ul><li>Federally funded, state administered </li></ul><ul><li>Tax Credit for Long Term Welfare Recipients (over 18 months) </li></ul><ul><ul><li>40% of first $10,000 in earnings for year 1. </li></ul></ul><ul><ul><li>50% of first $10,000 in earnings for year 2, for a total of $9,000. </li></ul></ul><ul><ul><li>Qualified Employee must work a minimum of 120 hours. </li></ul></ul><ul><li>Tax Credit for all but Long Term Welfare Recipients </li></ul><ul><ul><li>40% of first year’s wages, up to a cap of $2,400 - over 400 hours. </li></ul></ul><ul><ul><li>25% of first year’s wages, up to a cap of $1,500 - under 400 hours but over 120 hours. </li></ul></ul><ul><ul><li>Qualified Employee must work a minimum of 120 hours. </li></ul></ul>
  15. 15. <ul><li>Depending on location, your company may be eligible for an Empowerment Zone credit, Enterprise Community credit, or Renewal Community credit. </li></ul><ul><li>EZs, ECs, and RCs are areas of a city designated by the federal government as distressed areas. </li></ul><ul><li>Nationally there are: </li></ul><ul><ul><li>65 Urban Enterprise Communities </li></ul></ul><ul><ul><li>6 Urban Empowerment Zones </li></ul></ul><ul><ul><li>30 Rural Enterprise Communities </li></ul></ul><ul><ul><li>3 Rural Empowerment Zones </li></ul></ul><ul><ul><li>DC Enterprise Zone </li></ul></ul>Empowerment Zones, Enterprise/Renewal Communities
  16. 16. <ul><li>Tax credits earning potential per qualified “Zone/Enterprise or Rural Community” employee: </li></ul><ul><li> - up to $3,000 per year for EZs and ECs. </li></ul><ul><li> - up to $1,500 per year for RCs. </li></ul><ul><li>This credit is calculated at 20% of the first $15,000 in earnings for a maximum tax credit of: </li></ul><ul><li> - $3,000 for EZs and ECs. </li></ul><ul><li> - 10% of the first $15,000 in earnings for RCs. </li></ul><ul><li>Claim retroactively on existing staff! </li></ul>Empowerment Zones, Enterprise/Renewal Communities
  17. 17. Where’s the Beef? <ul><li>On average, 10%-20% of your new hires will be eligible for an average tax credit of between $1,500 and $2,000 . </li></ul><ul><li>To be conservative, simply take the number of people you expect to hire and multiply first by 10% and then by $1,500. </li></ul><ul><li>If you don’t know the number of people you’re going to hire and, if your turnover is: </li></ul><ul><ul><li>20% - multiply the number of current employees by $30.00 </li></ul></ul><ul><ul><li>25% - multiply the number of current employees by $37.50 </li></ul></ul><ul><ul><li>30% - multiply the number of current employees by $45.00 </li></ul></ul><ul><ul><li>35% - multiply the number of current employees by $52.50 </li></ul></ul><ul><ul><li>(quick ballpark numbers) </li></ul></ul><ul><li>If you would like to reduce your taxes by that amount each year or more, you need to start this program today! REALLY! </li></ul>
  18. 18. <ul><li>Our Company’s Services: </li></ul><ul><li>Screen all employee forms against proprietary and other databases to ensure applying for all possible credit. Follow up directly with employee if more information is required. </li></ul><ul><li>File for certifications (employee qualifications) in all applicable states. </li></ul><ul><li>Follow up with respective government agencies to assure certifications are submitted and approved. Maintain relationships with agency staff. </li></ul><ul><li>Maintain an accurate data base of qualified individuals and for what program. </li></ul><ul><li>Calculate the credits using our proprietary software. </li></ul><ul><li>Send you quarterly reports indicating the number of certifications we’ve received and the number who were not certified and why. </li></ul><ul><li>At the end of the fiscal year, we send you the appropriate annual tax forms to file with your taxes (and take the deduction) along with copies of all certifications for your records. </li></ul><ul><li>Leverage CFO experience to create a methodology for accurately capturing income credits. </li></ul><ul><li>There are no up front fees – we bill quarterly only when we receive certifications and are successful. If you don’t get paid, we don’t get paid. </li></ul><ul><li>No fee unless employee is certified! </li></ul><ul><li>Guaranteed satisfaction – cancel anytime – no contracts to sign! </li></ul><ul><li>Whether you outsource it or try to do it yourself, just do it. </li></ul>CFO Resources, Inc.
  19. 19. Don’t let this continue to happen to you! Get your share of some stimulus money today!
  20. 20. CFO Resources, Inc. The Tax Credits Company 521 Executive Dr Princeton, NJ 08540 Ken Brice, President 888-236-7339, extension 703 [email_address] Call now to get started – your next new hire may be the one who qualifies!

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