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WOTC Tax Credits

Why You Need a Professional to Help You Claim Tax Credits

The U.S. Treasury recently issued a report that said that millions of dollars of tax credits have been issued to people who had no right to claim them. The report found that about 7 percent of the taxpayers claiming the Alternative Motor Vehicle Tax Credit, were not filing a claim for qualified electric vehicles.

We wrote a post in June about the Alternative Motor Vehicle Tax Credit and talked about what vehicles do and do not qualify for the credit. You can find it here.

The end result was the IRS discovered it was out about $74 million in unpaid taxes and that didn’t sit well with the agency.

Mistakes happen and if you’re filing your taxes yourself or claiming tax credits yourself, you may end up claiming something that you don’t qualify for. It happens. But what happens after that?

What Happens If You Claim a Tax Credit Incorrectly?

The IRS doesn’t like letting money go. The minute it discovers that you’ve claimed something that you do not qualify for, it’s going to contact you.

The IRS website has an article on how it will contact you and how you can keep yourself protected from potential scams, but here are the basics:

  • The agency will never reach out via email, social media or text message;
  • If you get a phone call, do not give out information over the phone and call the agent back through the IRS’s 800-number;
  • If an agent visits you in person ask for two forms of identification before you discuss your taxes.

Will I Owe Money?

If the IRS determines that you’ve claimed a tax credit incorrectly you will owe money. If you paid $1,000 in taxes in 2016 and the IRS discovers that you did not qualify for a $300 tax credit that you claimed, then you would owe a $300 tax credit to the IRS, plus any fees.

Will I Pay a Penalty for Claiming a Tax Credit Incorrectly?

The IRS can be an unforgiving entity so yes there will likely be a penalty attached to the request for payment of taxes owed. The amount of the penalty will depend on three variables, how long it’s been since the tax return was originally filed, how much money is owed to the IRS, and what kind of mistake you made in the initial tax return.

If you would like to see how the IRS calculates its fees, there’s an article here.

What if I File an Amended Tax Return First?

Even if you take the initiative and file an amended tax return, the IRS is still going to want its money and it will likely still charge you the penalty. Filing an amended tax return is appreciated, but serves no financial benefit except possibly preventing further fees down the road.

What Can I Do to Protect Myself?

The best thing you can do to protect yourself is to hire a professional. You want a CPA doing your taxes and you want a tax credit specialist to make sure you’re filing the right forms, crossing all your T’s and dotting all your I’s with the IRS.

If you’d like to know the specific difference between a CPA and a tax credit specialist, read this previous blog post.

Disclaimer: As with all the posts on this blog, this is just a general outline of what can happen and is certainly not specific to your case. If you have any tax questions, you should always consult your accountant or CPA. Tax Credit Group is also here to help.

What to Do if Immigration and Customs Enforcement (ICE) Comes to Your Business

With the current political climate, many small business owners are concerned that Immigration and Customs Enforcement (ICE) will pay a visit to their business. Despite their best efforts, small business owners can’t always know what goes on behind the scenes with every employee. Plus, these are co-workers and in many cases friends.

Why Would ICE Come to My Business?

According to the National Immigration Law Center, ICE will come to your place of business for a few reasons.

I-9 Audit

ICE officers may come to your workplace to confirm the identity and authorization to work in the U.S. for all your employees. When you hire employees, you need to make sure each of them fills out an I-9 form. Those forms should be onsite just in case ICE officers ask to see them.

To Speak to a Specific Employee(s)

ICE officers may also ask to speak to a specific employee. In this instance, you need to make sure that you’re not breaking the law. Do not hide employees or help them leave the premises.

What Should I Do if ICE Comes to My Business?

The American Immigration Lawyers Association has a complete pamphlet explaining what to do if ICE comes to your business, but there are some key points to highlight.

  • The minute ICE officers walk in the door, your receptionist or you should inform the agents that you will be calling your lawyer. Then call your lawyer.
  • Ask for a warrant. ICE officers should provide you with a warrant and that warrant should be signed by a court representative. If they do not, then it is not an authorized search. Read the warrant and ask for a copy of it. If you object, state your objection but do not get into an argument over it or try to prevent ICE officers from conducting their search.
  • Write down the name of the ICE officers involved, and the U.S. attorney assigned to the case.
  • You and your managers should not speak to ICE officers without first consulting with your attorney.
  • Inform your employees that they can choose to speak to the officers or choose not to. It’s up to them.
  • If ICE officers walk through your business, have an employee respectfully follow them. Your employee is legally allowed to photograph or record the search.
  • If anything is taken from your business, ask for an itemized list of what was taken.
  • If an employee is detained, contact his or her family and pay any wages to date.

ICE officers are allowed to search public areas of your business but are not allowed to search non-public ones unless those areas are specified in the search warrant.

What Should My Employees do if ICE Comes to My Business?

If your employees are asked to stay until ICE is done searching, then they also have rights.

  • Your employees are allowed to ask for an attorney if they’re being questioned. They also have the right to remain silent, though you cannot tell them to stay silent.
  • Employees do not have to disclose their immigration status, country of nationality or citizenship.

How to Prepare for a Visit from ICE Ahead of Time

Regardless of how you feel about the issue, it’s important that you know your rights and prepare your employees for the possibility of a visit by ICE officers. You should have a written response planned ahead of time that includes details about calling your lawyer.

You should also talk to your employees ahead of time about what they are and are not legally allowed to do.

The information provided in this article is a starting point but should not be considered legal advice. You must have an attorney in mind just in case an incident occurs. If you need more information about what to do during a visit from ICE officers, visit the National Immigration Law Center or the American Immigration Lawyers Association.

Celebrating National Disability Awareness Month

October is National Disability Awareness Month and it offers the perfect excuse to once again highlight the Work Opportunity Tax Credit (WOTC). For many businesses, the WOTC is the easiest tax credit for them to achieve.

Basically, the federal government is offering you an incentive for hiring from specific groups like veterans, persons with disabilities or people coming off long-term unemployment. In other words, you’re being rewarded for hiring a qualified employee. It seems like a no brainer.

If you’re one of the companies that’s already in on the WOTC, great! But there’s always more that you can do.

Create an Employee Resource Group

The federal government suggests that National Disability Employment Awareness Month is the perfect time to launch an Employee Resource Group, sometimes called an Employee Network or Affinity Group. The group is designed to help people with similar backgrounds or interests connect and receive support.

Home Depot does a great job of this. The company has a number of Employee Resource Groups including one for Asians called Pan Asian Waves and one for veterans called Military Appreciation Group.

Keep Your Employees Informed

To emphasize your commitment to disability inclusion, you should regularly reinforce that commitment through monthly meetings or training sessions with your employees. The Job Accommodation Network (JAN) has a whole list of disability etiquette materials so you can approach each individual with the proper sensitivity.

You can also create a bulletin board or put up posters in your break area or another common area where employees will see and read them. Change the items frequently so that employees are constantly learning. There are some great posters at What Can You Do? Campaign.

Train Your Managers

You also want to take special care to train your supervisors about their role in creating an inclusive workplace culture. Make sure your supervisors understand the process for providing reasonable accommodations for employees who may need it.

The Department of Labor suggests training modules at JAN.org. You can also use the Department of Labor’s Building an Inclusive Workforce guide.

Take Part in Disability Mentoring Day

According to the Department of Labor, “Disability Mentoring Day promotes career development for youth with disabilities through hands-on programs, job shadowing and ongoing mentoring.”

Disability Mentoring Day is the third Wednesday of October, so it is on October 16, 2019.

The American Association of People with Disabilities (AAPD) has a number of resources you can use to take part in Disability Mentoring Day.

Translating Military Experience to the Civilian Job Market

When you leave the military, it’s sometimes difficult to figure out how the experiences that you had during your service relate to the civilian job market. It’s tough to explain to someone that retiring as a Master Sergeant in the Army you have proved that you had the work ethic, the ability to lead, and the intelligence to manage a large group of enlisted men and women.

How to Explain Your Military Experience on Resumes

When you’re creating your resume, it’s tempting to write down that you spent three years as an XO in the military personnel office, or that you were an Operations NCO with seven subordinates, but not many civilians know what that translates into.

Your resume is your first impression. You need to make sure that it conveys a message that the person reading will understand or you’ll never get called in for an interview.

Job Roles to Translate

One of the toughest things to correlate into civilian life is what role is equivalent to the experience that you received in the military. Military.com has a really good comparison list here, but we’ll list it below too.

Commander = Director or Senior Manager
Executive Officer = Deputy Director
Field Grade Officer = Executive or Manager
Company Grade Officer = Operations Manager or Section Manager
Warrant Officer = Technical Specialist or Department Manager
Senior NCOs = First-Line Supervisor
Infantry = Security Force
First Sergeant = Personnel Manager
Squad Leader = Team Leader or Team Chief
Supply Sergeant = Supply Manager or Logistics Manager
Operations NCO = Operations Supervisor

By changing the terms, you’re letting hiring managers know the civilian skills that you acquired during your time in the military.

Other Resume Tips

When it comes to listing your skills and attributes, make sure that you stay away from abbreviations. What’s common speak in the military isn’t so obvious to civilians and so saying that you were on a TAD/TDY doesn’t make sense to a civilian. In fact, saying Temporary Additional Duty probably doesn’t make sense either so call it a business trip.

If you managed a group of soldiers, make sure you quantify that group. Say that you managed a team of five or oversaw a battalion of 250 soldiers. Numbers let people know what kind of groups you led throughout your career. They also help people better understand your overall ability to lead.

How to Explain Your Military Experience in Interviews

If you get the call to come in for an interview, it’s okay to prepare with stories from your time in the military. After all, that’s when you acquired all those great skills that are going to help the company you’re interviewing with. What you want to change is the way you talk about those experiences.

The site Real Warriors has some great tips.

When it comes to talking about your technical skills, talk about the IT equipment that you used if you’re interviewing for an IT job, or talk about the communications gear you used. If you worked in an office setting, talk about the computer programs that you used or your daily duties.

When it comes to working as a team, few people understand that better than military veterans. Be sure to have a few examples of how your group faced a challenge and how you worked to unite the group to accomplish a task. This is your chance to shine.

Looking for Work Based on the Skills You Acquired in the Military

The site Military.com has a great tool for veterans looking to enter the civilian workforce. The Military Skills Translator will look at the branch of the military you were in, your job title and then search for jobs that will best suit the skills that you acquired during your military service. The Skills Translator is designed to translate your military expertise with the current job market.

Lockheed Martin also has a military skills translator for jobs at Lockheed Martin.

Top Employers of Military Veterans

According to the site Military.com, the top employers of veterans include:

  1. Booz Allen Hamilton
  2. Science Applications International Corporation (SAIC)
  3. Northrop Grumman
  4. L-3 Communications
  5. Lockheed Martin
  6. S. Department of Defense
  7. BAE Systems
  8. DXC Technology
  9. CACI International
  10. The Boeing Company

Other companies known for hiring veterans include Home Depot, Walgreens, U.S. Department of Veterans Affairs, and Southwest Airlines.

Be sure to check the U.S. Department of Veterans Affairs website for more help in joining the civilian workforce. Among other things, that’s what the VA is there for.

What You Need to Know About the Work Opportunity Tax Credit (WOTC)

Here at the Tax Credit Group, we spend a lot of time talking about the Work Opportunity Tax Credit, also known as the WOTC, and what it does. We talk about it so much that it often gets ingrained in our speech and we sometimes forget that other people don’t know what it is or what it means.

What is the Work Opportunity Tax Credit (WOTC)?

The WOTC is a tax credit that’s given to employers for hiring employees from specific groups such as veterans, ex-felons, people on food stamps, and the long-term unemployed.

The IRS has a whole list of people who qualify for the WOTC and if you want to take a look just click here.

WOTC Form 8850

To claim someone as a WOTC, you first have to have that person screened by the IRS. That’s why you’ll hear the term Form 8850 a lot. It’s the form you must fill out and file with the IRS so that the agency can approve or deny your plans to claim an employee as a tax credit.

You must get this done quickly. The IRS has a time clock on this kind of paperwork. You have 28 days from the employee’s first day of work to file the Form 8850 with the employee’s “state workforce agency”.

Is the WOTC tax credit refundable?

In a previous post, we talked about the difference between a tax credit and a tax deduction. When it comes to a tax credit, if you have enough of them, they can drop the amount of money that you owe to the IRS below zero. This means the IRS could owe you a refund.

The Congressional Research Service lays out all the details, but the bottom line is that the WOTC is non-refundable except in certain, very specific circumstances. Non-refundable means that once you hit zero with your tax bill, that’s it for the year.

WOTC Form 5884-C

Now the one exception is that certain tax-exempt employers can receive a refundable WOTC. If you do, then you’ll need Form 5884-C.

If you think you’re in that situation, you should contact your CPA for clarification or us here at the Tax Credit Group.

Carrying forward the WOTC

While you cannot go below zero, you can carry the WOTC back one year on your taxes or forward up to 20 years according to the Tax Foundation. That means if you drop your taxes owed down to zero in one year and use the rest of the credit for the next year’s taxes. That can continue until you use all the tax credits or hit the 20-year mark.

Does WOTC benefit the employer?

The financial benefit of the WOTC varies depending on the employee and how many hours the employee works in his or her first year of employment.

According to the Tax Foundation, “The size of the tax credit is 25 percent of the qualified employee’s first year wages if the employee works between 120 and 400 hours of that year. This grows to 40 percent of the employee’s first year wages if the employee works more than 400 hours of that year.”

This is per employee, so if you employ multiple people that qualify for the WOTC, you stand to see a substantial credit.

The IRS caps the amount of WOTC a company can claim, and it varies depending many different factors. Be sure to check with your CPA or reach out to us if you’re not sure.

Piggy-back WOTCs

The other benefit that a company can receive from the WOTC is the piggy-back credit. We talk about WOTC piggy-back credits in a previous blog post, but the basic idea is that states also offer WOTCs for state taxes. Sometimes all it takes is applying to the federal program to qualify for the state benefits as well.

Does WOTC benefit the employee?

When it comes to taxes, the WOTC doesn’t benefit the employee, just the employer. The employer is the only one that gets to claim the tax credit.

However, the WOTC still benefits employees. An employer looking to use the WOTC they start actively seeks out employees who fall into one of the categories designated by the IRS. That’s the whole point of the WOTC, to get some of the underemployed workforces such as veterans and ex-felons, employed.

What the WOTC does is offer more and more diverse employment opportunities to key groups.

Top 5 Job Categories for Veterans

Once their years of service are over, many veterans are still young enough to enter the workforce, and start a second career. But figuring out what that second career is can be tough.

Here are five jobs categories that have plenty of opportunities for veterans

Operations Manager

According to the site GI Jobs, Military Friendly Employers are looking for managers all over the country. Job titles that fall into this category include Business Manager, Facilities Manager, General Manager, Plant Superintendent, Production Manager, and Store Manager.

Operations Managers tend to coordinate between departments to make sure production goes smoothly.

Average Pay, Industry Growth & Education Requirements for an Operations Manager

GI Jobs says the median annual salary for an Operations Manager is $100,410.

The Bureau of Labor Statistics projects job growth of 5 to 9 percent through 2026.

You’ll likely need a college degree for this job, but you may also qualify if you have equivalent operational and leadership experience in the military.

Customer Service Representative

GI Jobs ranks Customer Service Representative as the second hottest job for veterans.

Customer Service Representatives answer phones, reply to calls and emails or respond to customers online.

Common customer service job titles include Sales Facilitator, Account Representative, Member Services Representative, and Customer Care Representative.

Average Pay, Industry Growth & Education Requirements for a Customer Service Representative

Truthfully, the pay for a Customer Service Representative isn’t great. The median pay is $32,890 annually.

But the industry is hot. The Bureau of Labor Statistics believes there will be a 5 percent job growth through 2026. And skilled Customer Service Representatives tend to move up the ladder quickly.

Plus, the average education requirement for a Customer Service Representative is a high school diploma, something you already had when you enlisted in the military.

Computer Information Systems Manager

GI Jobs says Computer Information Systems Managers help manage a company’s computer systems. When you’re looking for a job in this field, look for job titles like Information Technology (IT) Manager, Technical Services Manager, Information Systems Director, IT Director, and Chief Technology Officer.

Average Pay, Industry Growth & Education Requirements for a Computer Information Systems Manager

According to the job search engine Monster, the average IT Program Manager earns $96,300 annually.

The industry is growing. The Bureau of Labor Statistics thinks the IT field will grow by 10 to 14 percent through 2026, that’s more than most fields.

Most IT managers will need a bachelor’s degree in computer or information science and experience.

However, there are ways to get your degree online before you even leave the military. Clearance Jobs has a list of great colleges that offer online degrees in the STEM (Science, Technology, Engineering, and Math) fields including San Francisco State University, University of New Haven, and Florida International University.

Accountant/Auditor

This one falls into the finance field, so you’ll want to be strong in math or at least love it. Accountants and auditors track the money and analyze the financial records of organizations.

Job titles include Accountant, Auditor, Business Analyst, Certified Public Accountant (CPA), Financial Analyst, and Budget Analyst.

Average Pay, Industry Growth & Education Requirements for an Accountant/Auditor

GI Jobs says the median annual salary of an Accountant/Auditor is $69,350 and it’s a growing industry. The Bureau of Labor Statistics predicts a 10 percent job growth in the industry through 2026.

You do need a four-year college degree to take on a job like this. If you’re looking to become a CPA, there’s more work required because there are certification requirements that vary from state to state.

The good news is, once you get your degree many accounting firms will allow you to work full-time while you work toward your CPA and help train you along the way.

Computer Systems Analyst

This one is similar to the Computer Information Systems Manager in that it works with a company’s IT systems. A Computer Information Systems Manager is constantly looking for ways to improve the computer systems within an organization and make things run more efficiently.

Job titles in this field include Computer Analyst, Business Systems Analyst, Applications Analyst, Systems Engineer, Information Systems Analyst, and Computer Systems Consultant.

Average Pay, Industry Growth & Education Requirements for a Computer Systems Analyst

GI Jobs claims the median annual salary for a Computer Systems Analyst is $88,270.

The Bureau of Labor Statistics believes the industry will grow by 9 percent through 2026.

To get a job as a Computer Systems Analyst you’ll need a four-year degree in computer or information science. Some skills that you acquired while in the military may translate over to a job in this field and may count in place of some of the prerequisites in college so be sure to ask.

Companies Hiring Veterans

Several companies make it a point to hire veterans.

According to Glassdoor, Walgreens, Booz Allen Hamilton, Power Home Remodeling, The Home Depot, and the U.S. Department of Veterans Affairs are all known for hiring veterans.

The site Military Benefits says American Corporate Partners teams up with major corporations to hire veterans. Among its affiliates, Pepsi, Coca-Cola, Lockheed Martin, Johnson & Johnson, and UPS.

Why 2019 is the Year to Harness the Sun

There are plenty of tax credits out there for businesses, but if there’s one that you want to take advantage of in 2019, it’s the Solar Investment Tax Credit (ITC). That’s because the credit is at its peak this year and in 2020 it’s going to drop.

What is the Solar Investment Tax Credit?

In 2006, the federal government enacted the tax credit to help businesses and residents switch to solar power.

It allows for a 30 percent tax credit for the installation of solar in a residence or business. The rule is that you must “commence construction” before December 31, 2019, to be eligible for the full 30 percent tax credit.

The Solar Investment Tax Credit is Phasing Out

After this year, the tax credit will slowly phase out.

It will step down to 26 percent in 2020 for both commercial and residential.

In 2021, it will step down to 22 percent for both commercial and residential.

In 2022, the residential credit completely disappears and the commercial credit drops down to 10 percent permanently.

All of this bars an act of Congress, but at this time it looks like this is how things are going to go.

How Do I Qualify for the Solar Investment Tax Credit?

To claim the Solar ITC, you must install the photovoltaic (PV) solar panels. The U.S. Office of Energy Efficiency & Renewable Energy says, “When the sun shines onto a solar [PV] panel, photons from the sunlight are absorbed by the cells in the panel, which creates an electric field across the layers and causes electricity to flow.”

What Qualifies for the Solar Investment Tax Credit?

The Solar ITC doesn’t just cover 30 percent of the cost of the solar panels but also covers 30 percent of the work needed to get the panels installed and 30 percent of the installment of the energy storage systems that accompany the panels.

Most solar providers can give you details on what is and is not covered under the Solar ITC.

Do I Have to Use a Specific Contractor to Qualify for the Solar Investment Tax Credit?

No. Unlike some programs, the federal government does not have specific contractors that it requires you to use to qualify for the tax credit. It’s in your best interest to find a reputable contractor that will offer a competitive price, but that’s just good business practice, not something the federal government requires.

Will I Still Receive the Solar Investment Tax Credit if I Lease the Solar Panels?

No. The person who pays for the solar panels is the one that gets the credit. If you’re leasing from the solar company or even leasing to own, it’s the solar company that will receive the tax credit.

If you’re leasing to own, it may be in your best interest to shop around for a solar company that will work the tax credit into the cost of the installation so that the 30 percent credit goes toward paying off the cost of the installation.

State Solar Benefits

That 30 percent tax credit is just what the federal government offers, many states in the U.S. offer their own tax credits and incentives for businesses to add solar power.

The Dsire USA website has a list broken down by state here.

Is the Solar Investment Tax Credit Worth It?

Of course, there’s no reason to install solar panels if you don’t end up saving money in the end.

According to the site Energy Sage, there’s a large initial outlay of cash for solar installation but anywhere between 5 and 10 years after the investment, you should hit a breakeven point.

How much you pay out initially is dependent on how large of a building you’re putting solar panels on. While the breakeven point will depend on the roof size, amount of shade on that roof, and the initial outlay of cash.

To determine if the Solar ITC is worth it for your business, it’s important to take all factors into account. Think about how much money you’ll have to pay upfront and how long it will take to recoup that investment. You also want to look at how much you stand to save every year in electricity costs.

Increased Appraisal Value

You should also look at possible long term benefits. According to a study published in the Appraisal Institute’s Magazine, the addition of solar panels increased the value of homes across six states.

It stands to reason that solar panels could also increase the value of your commercial property.

As always, the advice in this post is a general overview and cannot be considered advice specifically for your business. It’s important that before you take any steps, you consult your accountant or contact us here at the Tax Credit Group. We’re always happy to answer any questions you may have.

If you’re looking for other ways to help the environment, be sure to check out our post Ways to Go Green and Save Your Business Money.

And if your company spends a lot of money every year on transportation, it might be a good idea to look at our post on Alternative Motor Vehicle Tax Credits.

The Indian Employment Tax Credit

Employers who hire Native American Indians are well advised to look into whether they qualify for the Indian Employment Tax Credit (IEC). As with other tax credits, qualified employers may receive a certain monetary incentive when they file their annual taxes.

What Exactly is the Indian Employment Credit?

The IEC is a monetary incentive provided in the form of a tax credit. It was first created and introduced in 1993. It is offered by the United States federal government to employers that hire employees who are registered Native Americans (referred to as “American Indians” or “Native American Indians” in IRS documentation). The credit provides a dollar-for-dollar reduction in the employer’s business taxable income.

Like many other tax credits, it was designed to incentivize employers to hire certain workers. These workers traditionally face barriers to employment. Credits create a win-win situation for both employees and employers. Employers who may consider hiring certain groups they have not considered before.  For employees, who may have an easier time finding work.

How Much is the IEC Worth?

The amount of the Indian employment credit is equal to 20% of the excess (if any) of:

  • The sum of qualified wages paid during the taxable year and the sum of qualified employee health insurance costs paid during the taxable year
  • The sum of qualified wages and qualified employee health insurance costs that were paid by the employer during the calendar year

It is important to note that for the purposes of this credit, qualified wages are all wages paid to a qualified employee, except for who also qualify for the Work Opportunity Tax Credit, which is reported using IRS Form 5884.

Who Qualifies for the IEC?

In order to qualify for this tax credit, the employee must:

  • Be either themselves a registered Native American or the spouse of a registered Native American (be an enrolled member of an Indian tribe). The term “Indian tribe” may include:
    • Any Indian tribe, band, nation, pueblo, or other organized community or group, including Alaska Native villages
  • Live on or near a Native American reservation while performing the services of their job
  • Complete all services for an employer within that reservation

Certain employees are not eligible. The term “qualified employee” does not include:

  • Individuals who receive wages in excess of $40,000
  • Those whose wages from the company do not meet certain thresholds that are specified by the IRS
  • Any employee who is a 5% owner of the company
  • Those whose work is related to certain gaming activities:
    • Services which involve the conduct of Class I, II, or III gaming as defined in section 4 of the Indian Gaming Regulatory Act
    • Services that are performed in a building that houses such gaming activity

How Do I File for This Tax Credit?

Although the IEC has the one name, it is reported differently, depending on the employer’s business structure:

  • S Corporations and Partnerships must use IRS form 8845
  • Employers that are trusts or estates report the credit on either form 8845 or form 3800, the General Business Credit, if the source credit comes from a beneficiary
  • Other types of businesses report using IRS form 3800

Anything Else I Need to Know?

It is important to understand that the Indian Employment Credit initially expired on December 31, 2007. However, it has been extended several times through acts of Congress. Currently, the IEC is indeed in effect as of 2018. If you are unsure whether the credit is expired, you can check on the IRS’s page for commonly used items which may be expired. This page is regularly updated, especially as the tax season approaches each year.

If you’re unsure whether you qualify for the Indian Employment Tax Credit, give the Tax Credit Group a call. We can help you determine your eligibility.

The New York Minimum Wage Tax Credit

New York offers millions of dollars’ worth of tax incentives every year for employers. If your business is in this state, the good news is you may qualify for more than one tax credit that may each add up to thousands. These credits not only aim to boost investment in New York businesses, they also help people who traditionally face employment barriers find work.

A large group of these people are young, low-income earners. The state of New York offers a Minimum Wage Reimbursement Credit that rewards employers who hire young students at minimum wage. Students may be disadvantaged and at-risk as they join the workforce. Sometimes, as they attempt to find employment, they become discouraged due to their lower skillset and inability to commit to full-time work year-round.

Who Qualifies for This Credit?

Employers are eligible to receive this credit if they employ students in New York State. These student workers must:

  • Have been employed beginning on/after January 1st, 2014 and before January 1, 2019
  • Be at least 16 but not yet 20 years of age
  • Be paid at the New York state’s minimum wage During the qualifying period of time, this minimum wage started at less than $9.70 and increased to $11.10 ($10.50 minimum to $13.50 minimum for New York City)
  • Be a student during their period of employment and be able to prove their student status

How Much is the Credit?

In order to calculate how much the credit will be worth for you, you’ll apply a certain tax credit multiplier to the total number of hours worked within the taxable year for which the student worker is paid New York’s minimum wage. The tax multipliers vary based on the year and are as follows:

  • $0.75 for each hour for tax years beginning on/after January 1st, 2014 and before January 1st, 2015
  • $1.31 for each hour for tax years beginning on/after January 1st, 2015, and before January 1st, 2016
  • $1.35 for each hour for tax years beginning on/after January 1st, 2016, and before January 1st, 2019

For example, if you hired a student employee who worked 20 hours a week for 20 weeks in 2019, they’ll have worked a total of 400 hours. This entitles you to a credit of $540.

How Do I Verify My Employees’ Student Status?

In order to prove that you did indeed hire employees who may be eligible for the minimum wage reimbursement, you must verify that the individual was enrolled at an eligible educational institution. You need to retain documentation from the student and keep it in your records so it’s available upon request. Acceptable forms of documentation include:

  • A student ID
  • Current or future course schedules that are officially issued by the school (transcripts)
  • A letter from their school verifying their future or current enrollment
  • Working papers: New York State Department of Labor Student General Employment Certificate-AT-19

What is an Eligible Educational Institution?

These institutions are ones that maintain a consistent curriculum and faculty. They also contain a body of students that is regularly enrolled and in attendance at the location where educational activities are regularly conducted. Examples include:

  • Universities
  • Colleges
  • Secondary schools
  • Vocational, technical, and trade schools
  • Any institution that offers programs of training or education that are meant to prepare students for gainful employment

Institutions that are not eligible include:

  • On-the-job training courses
  • Schools whose courses are only available online
  • Correspondence schools

When able to verify that young employees are indeed students and they are paid the minimum wage, employers can be rewarded. On the other end, young students may find an easier path to employment if companies are incentivized to hire them.

If your business is in New York, exploring the minimum wage tax incentive can improve your company’s financial outlook. The Tax Credit Group can help you find the most current credits available in your state—and help you determine whether your employees qualify for this reimbursement.

What’s the Difference Between a Tax Credit Specialist and a Certified Public Accountant (CPA)?

We here at the Tax Credit Group are tax credit specialists, but we always get a lot of questions about personal and corporate taxes and accounting. It’s understandable. For many people, the words tax and accountants are synonymous and so it’s easy to think that we can specialize in taxes and CPAs specialize in tax credits. But that’s not the case.

What’s a Certified Public Accountant (CPA)?

According to Investopedia, the CPA designation is given to people who are certified by the American Institute of Certified Public Accountants (AICPA). They have met the education and experience requirements set forward by AICPA and have passed an exam.

A CPA has at least a bachelor’s degree, has completed 150 hours of education and has completed at least two years of public accounting experience. He or she has also passed a certification exam and must complete several continuing hours of education every year to maintain his or her certification.

But the key here is that’s what has to happen before a CPA even starts specializing in a field. Even among CPAs, there is a difference. Some of them specialize in audits, making sure a company’s books are in order and there’s no fraud. Some specialize in personal taxes, making sure that people submit the right paperwork to the IRS. Still, others specialize in non-profits, making sure that those non-profits meet the rigid requirements of the state and federal government.

How is a Tax Credit Specialist different?

A tax credit specialist does not have to be a CPA, but it can certainly help.

In most cases, a CPA will likely have a general understanding of the tax code, but he or she may not be specialized in the particular tax code you’re dealing with. And it’s not the fault of the CPA. The tax code is immense. So big in fact, that no one can quite figure out how many pages it is.

To give you an idea, there’s a book called Federal Income Tax: Code and Regulations–Selected Sections (2018-2019) on Amazon that totals 1,776 pages. Mind you, that’s just selected sections.

A tax credit specialist understands the ins and outs of very specific parts of the tax code. This person will understand the nuances of the tax code and know when to push the envelope and when to be cautious.

CPAs and Tax Credit Specialists are not interchangeable

A very lucky few will find a CPA that can specialize in the tax credits they are trying to apply for, but for a majority of people who are looking for business tax credits they will need both.

A CPA can apply tax credits to your taxes, however a tax credit specialist will be the one to find the tax credits, tell you how to fulfill the requirements necessary for you to qualify for those credits, and then make sure that you and your CPA have all the paperwork and forms necessary to apply those tax credits to your taxes.

Do not cut corners and pick one over the other. You could end up leaving money on the table.

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