Did I Miss a Tax Credit?

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Now that “Tax-Time” is unofficially ended for most people many people should be taking time to ask, “Did I miss anything”.  For the tax professional, “Tax-Time” never ends.  It is an ongoing year of planning and review to make sure your clients are in the best position they can be from a tax standpoint.  With the passing of the tax overhaul, many professionals are finding this time is more important than the season itself.  Without good communication between you and your CPA many things that a business owner does not see as important can be tax windfalls.  Most people think to involve their CPA when making large decisions such as buying/selling a building, a new business venture, and such (and if you are not getting them involved on those issues you DEFINITELY SHOULD BE) but who is looking out for you on those day-to-day items under the tax code?  Some items tend to fall through the cracks when  multiple parties are involved.  One such thing is employer credits.  Is the payroll company you hired making sure you are getting everything you can?  Often times this a place where things get missed since the CPA expects the payroll provider to address these issues and the payroll provider doesn’t have adequate information.  One new item in the code and one older such item are the FMLA tax credit and the Work Opportunity Credit, respectively.

The FMLA Tax Credit as a part of the Tax Cut and Jobs Act (TCJA) was added to help provide employers with some tax relief for providing benefits to those employees who need to take time off form family related medical issues.  This credit can allow employers a tax credit if they have employees on leave up to 12 weeks per year and provide them with benefits of at least 50% of their normal pay.  However, for employers with short-term type coverage for their employees, this can be a credit easily overlooked.  Amounts paid by those types of policies often qualify as wages under this section and would count toward the credit!  This credit is currently only available for 2018 and 2019 tax years.

The Work Opportunity Credit (WOTC) has been around since 1996 with many modifications and extensions and can often provide some great tax benefits.  The WOTC is a credit for employers who hire employees from some targeted groups such as Veterans, those receiving State assistance, Ex-Felons, Long-Term Unemployed, Empowerment Zone Resident, and a few other categories.  Although this credit requires a bit more work than the FMLA credit, it can be a bigger savings.  These credits can range anywhere from $2,400 per employee to $9,600!  The credit requires IRS and Department of Labor forms to be completed  and submitted to the STATE workforce agency for certification.  The credit is based on number of hours worked with limitations.  The thing not to be overlooked is that the credit can be applied to INCOME taxes or PAYROLL taxes!  This means tax-exempt employers can reap the benefits as well.  Wisconsin businesses have saved annually approximately $55M using this credit, but that is a far cry from states like California who have in one year alone saved $659M or even our close neighbors Illinois saving $244M!

So now what if I missed taking advantage of these things?  Both the FMLA Credit and the WOTC can still be taken on an amended return.  So get in touch with your CPA as soon as possible.

Keeping ongoing and open communication with your CPA is one of the keys to making sure you are taking advantage of all the tax savings available.  Making sure your company has a tax team they keep involved throughout the year is vital.  Let  RPB become a part of your team so we can help you take full advantage of the tax laws.

Brad Voght is the tax partner at Reilly, Penner & Benton, LLP, a public accounting firm and trusted adviser specializing in business and personal tax matters as well as in not-for-profit work, school organizations as well as government and municipal agency work. The firm also provides ERISA audit services to publicly held entities throughout the country. A PCAOB registered firm, Reilly, Penner & Benton CPAs also known as RPB CPAs, has served closely held businesses and has provided tax preparation and advice, financial statement audits, reviews and compilations, employee benefit plan audits, bookkeeping services, business valuations, fraud prevention and consulting services since 1907.
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