Sometimes tax credits seem random. Sometimes tax credits seem like they’re always for the other
I want to give YOU a tax credit for giving other people a chance.
guy. But sometimes, there are tax credits for hiring people who need an extra boost or being particularly good to your employees. And those are important tax credits to know about.
Before I go on, let me emphasize the difference between a tax credit and a tax deduction. A tax deduction lowers your taxable income by a given amount, but it may not make that much difference depending on what your taxable income is and what your tax bracket is. So a $2,000 deduction may only wind up saving you a few hundred dollars. A tax credit is a dollar-for-dollar refund or deduction. That’s $2,000 back. Tax deduction good; tax credit, better!
For example, the Work Opportunity Tax Credit (WOTC) is a Federal tax credit for employers who hire people from certain target groups who have consistently faced significant barriers to employment, like disabled veterans, people who receive Temporary Assistance for Needy Families or Food Stamps, ex-felons, community residents or summer youth employees living in Empowerment Zones and vocational rehabilitation referred individuals.
In some of these cases, employers are taking an extra risk to hire some of these people. They might require more training or they might need more support to fit comfortably into the organizational culture. Often the risk is more perceived than real. In either case, the Federal government recognizes—particularly in this employment climate—employers that sometimes go the extra mile to hire people from these groups and wants to make that easier.
The government also wants to reward especially those small businesses that go out of their way to take care of the employees they do have. For example:
• Health Insurance: If you have fewer than 25 full-time equivalent employees who earn an average wage of less than $50,000 a year and you pay at least half their employee health insurance premiums, you get a tax credit!
• Accessibility Expenditures — If you earned $1 million or less in the past year or had 30 or fewer full-time employees, you might be able to take up to a $5,000 credit annually for providing accessibility for your employees!
• Architectural/Transportation Tax Deduction — Okay, this is a deduction but it lets businesses of all sizes take an annual deduction of up to $15,000 for creating accessible parking, installing ramps and curbcuts, adapting the business’s vehicles and making restrooms and water fountains accessible. Remember, deduction, good!
Of course, it’s the federal government, and it’s taxes. So you have to make sure you fit all the criteria and you fill out all the forms and keep all the receipts and cross your “t”s and dot your “i”s but it’s still getting a financial break for basically doing the right thing, anyway. So if you’re thinking about hiring, or considering whether your business or organization is accessible and part of solving the problem for people who really want—but have trouble getting—jobs, don’t forget to look into these cool federal benefits.
And if you want help figuring out how to become a more accessible company, we can help.
We work with companies on a project basis or on retainer, providing a custom level of HR help designed for your business, with offices in Austin, San Antonio, Dallas and Houston. Contact me at Caroline@valentinehr.com or call (512) 420-8267
