Are you taking advantage of federal and state tax credits to benefit your staffing firm? If not, you are missing out on opportunities to increase your firm’s tax savings and bottom line.
Most staffing firm leaders do not take advantage of tax credits for these reasons:
- Believing the staffing firm does not qualify
- Not knowing whether new hires meet eligibility requirements
- The extensive onboarding process prevents new hires from filling out eligibility surveys
- Lengthy time commitment
- Detailed paperwork and recordkeeping
A lack of expertise or tracking does not mean your staffing firm needs to miss out on tax credits. Partnering with an expert-led service provider is the easiest way to capture this lost revenue without increasing employee workloads.
Ensure your staffing firm is not missing out on the following tax credits.
Work Opportunity Tax Credit
The Work Opportunity Tax Credit (WOTC) is a federal tax incentive available to companies that hire individuals in 10 targeted groups facing barriers to employment. Businesses can earn $2,400 to $9,600 for each qualified new hire, depending on the employee’s wages and the company’s tax liability.
The WOTC program includes the following historically marginalized groups:
- Qualified individuals from families receiving certain federal assistance
- Qualified veterans
- Qualified ex-felons
- Designated community residents economically struggling
- Vocational rehabilitation referrals
- Qualified summer youth employees
- Qualified Supplemental Nutrition Assistance Program (SNAP) benefit recipients
- Qualified supplemental security income (SSI) recipients
- Long-term family assistance recipients
- Qualified long-term unemployment recipients
Empowerment Zone Employment Credit
The Empowerment Zone Employment Credit (EZ) is a federal tax incentive created to encourage companies to operate in and hire residents of economically distressed areas:
- Businesses can receive a wage credit of up to $3,000 annually for each qualified zone employee.
- The EZ credit is 20% of the first $15,000 in wages paid to each eligible employee annually.
- Employees who work at least 90 days during the year for which the credit is claimed qualify.
Businesses must meet these requirements to qualify for the EZ credit:
- Location: The company must be located within a designated Empowerment Zone.
- Employee residence: Employees for whom the EZ credit is claimed must reside within the Empowerment Zone.
- Employment duration: Employees must work at least 90 days during the year in which the credit is claimed.
The EZ credit provides these company benefits:
- Financial incentives: Significant savings on federal taxes to reduce hiring and retention costs.
- Other tax incentive eligibility: Businesses in Empowerment Zones might be eligible for low-cost loans through EZ facility bonds, increased Section 179 deductions for specific types of property used in an Empowerment Zone, and partial exclusion of capital gains from the sale of certain assets held for over 5 years.
- Community impact: Economic development and job creation in distressed areas support community revitalization, investment, and growth.
Maximize Your Staffing Firm’s Tax Savings
Work with MJA & Associates to optimize your staffing firm’s federal and state tax credits for a stronger bottom line.
