About Federal Incentives
There are many incentives that the U.S. Government provides to businesses that participate in capital investment, job creation, or hiring people with certain barriers to employment. Some of these programs include the Work Opportunity Tax Credit (WOTC), Federal Empowerment Zones (Fed EZ), Indian Employment Credit (IEC), and the Federal Insurance Contributions Act (FICA) Tip Credit.
These programs were established to incentivize businesses to hire people that experience significant employment barriers, create jobs in depressed areas, and create overall growth within business sectors. Knowing how to participate in the many incentive programs available can be confusing but also essential to your company’s growth and financial health.
Synergi Partners can help determine which incentive programs can be most lucrative to your business. This ensures that your company can receive maximum benefit from credits and you don’t waste time or money on credits that aren’t ultimately beneficial to you.
The Federal Government has designated certain economically depressed areas as tax advantage areas. If your business is located in one of these areas and you employ individuals living in the same area, you can earn credit against your federal tax liability.
Federal Empowerment Zones (Fed EZ)
Companies that operate in and employ individuals who reside in an Empowerment Zone may qualify for the Federal Empowerment Zone Credit. Empowerment Zones are federally designated urban and rural communities that have a high poverty and emigration levels. In order to stimulate activity in these areas, the government has authorized a tax credit for providing employment to qualified individuals.
- Up to $3,000 per qualified employee per year
- Credits renew every year
- Look back potential up to 3 years
Indian Employment Credit (IEC)
The Indian Employment Credit (IEC) is a Federal Income Tax incentive offered to employers who conduct business on tribal lands and employ registered Native Americans and spouses of registered Native Americans. Qualified employees must live on or near federally recognized tribal land. The program encourages employers to hire and retain individuals of Native American descent. The credit may be claimed for as long as the employee remains qualified. Up to $4,000 per qualified employee per year.
Federal Insurance Contributions Act (FICA) Tip Credit
An eligible employer may claim a credit against the business’s income taxes for FICA taxes paid on certain tip wages. The FICA tip credit depends on the employee’s non-tip wages. The credit is non-refundable and is subject to the carryback and carryforward provisions for general business tax credits.
Work Opportunity Tax Credit (WOTC)
The Work Opportunity Tax Credit Program rewards employers for hiring applicants who fall into various target groups. Depending on the qualifications of the individual, companies may be eligible to receive $1,200 to $9,600 per eligible employee per year upon hiring.
Ready for the good news? It’s likely that you’re already hiring individuals who meet the criteria for your business to earn these type of credits. On average, 1 in 5 new hires qualify your business for WOTC.
The tax credit may be worth up to $9,600 if your company is hiring from any one of the following groups:
- Qualified Veterans
- A member of a family that is a Qualified Food Stamp Recipient
- A member of a family that is a Qualified Supplemental Nutrition Assistance Program (SNAP) Benefits Recipient
- Qualified Ex-Felons, Pardoned, Paroled or Work Release Individuals
- Vocational Rehabilitation Referrals
- Qualified Summer Youths
- Qualified Supplemental Security Income (SSI) Recipients
- Qualified Individuals living within an Empowerment Zone, Enterprise Community, Renewal Community, or Rural Renewal County
- A member of a family that is a Qualified Temporary Assistance for Needy Families (TANF) recipient
- A member of a family that is a Qualified Long Term Temporary Assistance for Needy Families (TANF) recipient
- Qualified Long-Term Unemployment Recipients
Time to Act is Now
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