Many employers are unaware of the possible tax breaks for hiring workers from certain targeted groups. A portion of the wages can be used to claim a tax credit; the amount of the credit varies with the group to which a new employee belongs. In effect, claiming the credit decreases your out-of-pocket expenses for these workers. Some of these groups include:
Long term unemployed (27 weeks or more)
Food stamp recipients
Summer youth employees
To claim the credit, you must submit IRS Form 8850 to your state workforce agency within 28 days of the first day of the new worker’s employment. The agency will certify whether the worker is a member of a targeted group.
Some other little known employee tax breaks:
Empowerment zone credit. If you do business within a designated distressed economic area, you can claim a tax credit of 20 percent of the wages paid to new employees up to $15,000.
Payroll tax reduction for R&D expenses. Start-ups and young businesses engaged in research activities may have little or no revenue and can’t benefit from the usual research credit. They can apply the credit against the employer’s Social Security taxes.
State income tax credits. Don’t overlook tax breaks available on the state level. Florida has many programs and incentives to attract, retain, and grow business and create jobs in the state.
There are many more ways your business can save valuable tax dollars. For more information on this topic or any other potential tax savings, feel free to give us a call at BluePoint Financial.
BluePoint Financial, LLC
151 Regions Way, Suite 6B
Destin, FL 32541