Acuity Blog

Work Opportunity Tax Credit Provides Help to Employers

In today’s tough job market and economy, the Work Opportunity Tax Credit (WOTC) may help employers. Many business owners are hiring and should be aware that the WOTC is available to employers that hire workers from targeted groups who face significant barriers to employment. The credit is worth as much as $2,400 for each eligible employee ($4,800, $5,600 and $9,600 for certain veterans and $9,000 for “long-term family assistance recipients”). It’s generally limited to eligible employees who begin work for the employer before January 1, 2026.

The IRS recently issued some updated information on the pre-screening and certification processes. To satisfy a requirement to pre-screen a job applicant, a pre-screening notice must be completed by the job applicant and the employer on or before the day a job offer is made. This is done by filing Form 8850, Pre-Screening Notice and Certification Request for the Work Opportunity Credit.

Which New Hires Qualify?

An employer is eligible for the credit only for qualified wages paid to members of a targeted group. These groups are:

1. Qualified members of families receiving assistance under the Temporary Assistance for Needy Families (TANF) program,
2. Qualified veterans,
3. Qualified ex-felons,
4. Designated community residents,
5. Vocational rehabilitation referrals,
6. Qualified summer youth employees,
7. Qualified members of families in the Supplemental Nutritional Assistance Program (SNAP),
8. Qualified Supplemental Security Income recipients,
9. Long-term family assistance recipients, and
10. Long-term unemployed individuals.

Other Rules and Requirements

There are a number of requirements to qualify for the credit. For example, there’s a minimum requirement that each employee must have completed at least 120 hours of service for the employer. Also, the credit isn’t available for certain employees who are related to or who previously worked for the employer.

There are different rules and credit amounts for certain employees. The maximum credit available for the first-year wages is $2,400 for each employee, $4,000 for long-term family assistance recipients, and $4,800, $5,600 or $9,600 for certain veterans. Additionally, for long-term family assistance recipients, there’s a 50% credit for up to $10,000 of second-year wages, resulting in a total maximum credit of $9,000 over two years.

For summer youth employees, the wages must be paid for services performed during any 90-day period between May 1 and September 15. The maximum WOTC credit available for summer youth employees is $1,200 per employee.

A Beneficial Credit

In some cases, employers may elect not to claim the WOTC. And in limited circumstances, the rules may prohibit the credit or require an allocation of it. However, for most employers hiring from targeted groups, the credit can be beneficial. Contact us with questions or for more information about your situation.
© 2022


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2022 Q4 Tax Calendar: Key Deadlines for Businesses and Other Employers

Here are some of the key tax-related deadlines affecting businesses and other employers during the fourth quarter of 2022. Keep in mind that this list isn’t all-inclusive, so there may be additional deadlines that apply to you. Contact us to ensure you’re meeting all applicable deadlines and to learn more about the filing requirements.

Note: Certain tax-filing and tax-payment deadlines may be postponed for taxpayers who reside in or have businesses in federally declared disaster areas.

Monday, October 3

The last day you can initially set up a SIMPLE IRA plan, provided you (or any predecessor employer) didn’t previously maintain a SIMPLE IRA plan. If you’re a new employer that comes into existence after October 1 of the year, you can establish a SIMPLE IRA plan as soon as administratively feasible after your business comes into existence.

Monday, October 17

• If a calendar-year C corporation that filed an automatic six-month extension:
o File a 2021 income tax return (Form 1120) and pay any tax, interest and penalties due.
o Make contributions for 2021 to certain employer-sponsored retirement plans.

Monday, October 31

• Report income tax withholding and FICA taxes for third quarter 2022 (Form 941) and pay any tax due. (See exception below under “November 10.”)

Thursday, November 10

• Report income tax withholding and FICA taxes for third quarter 2022 (Form 941), if you deposited on time (and in full) all of the associated taxes due.

Thursday, December 15

• If a calendar-year C corporation, pay the fourth installment of 2022 estimated income taxes.

Contact us if you’d like more information about the filing requirements and to ensure you’re meeting all applicable deadlines.
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Hey, Watch the Language! (In Your Employee Handbook)

Every company needs an employee handbook to ensure that everyone understands the policies, procedures and rules of the organization.

An Employee’s Genetic Information Is a Protected Class

The Genetics Information Nondiscrimination Act of 2008 (GINA) protects employees from discrimination based on their genetic information. GINA also prohibits health insurance carriers and group health plans from using genetic information to deny coverage.

Typical employee handbooks outline the nondiscrimination requirements of the Equal Employment Opportunity Commission to not base employment decisions on factors such as gender, age, pregnancy, race, color, religion, country of origin, citizenship, mental or physical disability, or military service or veteran status. Employers who haven’t already done so should add genetic information to this list.

In addition, ensure that you also list any factors required by state and local law, which might include political affiliation, sexual orientation, gender identity, familial status and marital status.

However, an improperly written handbook can inadvertently create a binding obligation that can be used against you.

What you don’t want is for the documents to be interpreted as an employment contract. Keep this in mind when crafting or revising your employee handbook, so you can lower the risk of legal claims by litigious employees. Here’s a list of dos and don’ts:

Don’t use phrases such as “permanent position” or “the company promises.” There should be no statements that you don’t intend, or may not be able, to honor.

Don’t leave explanations of the results and consequences of actions open to interpretation. Be clear, concise and comprehensive.

Do include a disclaimer that the handbook isn’t and shouldn’t be considered an employment contract.

Do reserve the right to use your discretion in individual cases involving policy statements or procedures.

Do reserve the right to make changes to the handbook at any time, without notice.

Do require employees to affirm in writing that they have read the handbook, including disclaimer provisions — and that they understand it’s a general presentation, not a contract.

Many states have held that employee handbooks can be enforceable contracts. Some courts have even found that handbooks create a presumption that the parties intended it to be a contract. This forces the employer to prove to a jury that a contract wasn’t intended.

However, there are instances where courts have found handbooks unenforceable as contracts for reasons such as:

    • The terms were so ambiguous that the parties couldn’t have intended to create a contract.

 

    • The handbooks were distributed to employees after they started working for the company.

 

  • An “at will” termination clause was included.

Although these exceptions exist in some states, don’t rely on them when drafting , revising and distributing handbook. It’s a good idea to get an attorney’s help when spelling out policies and procedures. By doing so, you’ll reduce the chance of a costly, time-consuming and disruptive legal battle.

 


©  2022


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College Nights are Back!

College nights are back! Look to see what schools we will be attending, come meet various team members to find out more about who we are, and the opportunities we have for you!


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Inflation Reduction Act Provisions of Interest to Small Businesses

The Inflation Reduction Act (IRA), signed into law by President Biden on August 16, contains many provisions related to climate, energy and taxes. There has been a lot of media coverage about the law’s impact on large corporations. For example, the IRA contains a new 15% alternative minimum tax on large, profitable corporations. And the law adds a 1% excise tax on stock buybacks of more than $1 million by publicly traded U.S. corporations.

But there are also provisions that provide tax relief for small businesses. Here are two:

A Payroll Tax Credit for Research

Under current law, qualified small businesses can elect to claim a portion of their research credit as a payroll tax credit against their employer Social Security tax liability, rather than against their income tax liability. This became effective for tax years that begin after December 31, 2015.

Qualified small businesses that elect to claim the research credit as a payroll tax credit do so on IRS Form 8974, “Qualified Small Business Payroll Tax Credit for Increasing Research Activities.” Currently, a qualified small business can claim up to $250,000 of its credit for increasing research activities as a payroll tax credit against the employer’s share of Social Security tax.

The IRA makes changes to the credit, beginning next year. It allows for qualified small businesses to apply an additional $250,000 in qualifying research expenses as a payroll tax credit against the employer share of Medicare. The credit can’t exceed the tax imposed for any calendar quarter, with unused amounts of the credit carried forward. This provision will take effect for tax years beginning after December 31, 2022.

A qualified small business must meet certain requirements, including having gross receipts under a certain amount.

Extension of the Limit on Excess Business Losses of Noncorporate Taxpayers

Another provision in the new law extends the limit on excess business losses for noncorporate taxpayers. Under prior law, there was a cap set on business loss deductions by noncorporate taxpayers. For 2018 through 2025, the Tax Cuts and Jobs Act limited deductions for net business losses from sole proprietorships, partnerships and S corporations to $250,000 ($500,000 for joint filers). Losses in excess of those amounts (which are adjusted annually for inflation) may be carried forward to future tax years under the net operating loss rules.

Although another law (the CARES Act) suspended the limit for the 2018, 2019 and 2020 tax years, it’s now back in force and has been extended through 2028 by the IRA. Businesses with significant losses should consult with us to discuss the impact of this change on their tax planning strategies.

We Can Help

These are only two of the many provisions in the IRA. There may be other tax benefits to your small business if you’re buying electric vehicles or green energy products. Contact us if you have questions about the new law and your situation.
© 2022


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