Employer’s (including tax exempt entities) that experience employee turnover or are expanding their workforce should continue to screen their new hires for federal tax credits. Tax credits are a dollar for dollar reduction of the amount of tax that is owed. If the tax credits exceed the tax liability, the excess can be carried back to the preceding tax year or forward for up to 20 years. The result is a decrease in the employer’s cost of doing business.
The American Taxpayer Relief Act of 2012 extended the date by which employers can obtain a federal tax credit for hiring targeted individuals. The tax credit, which is normally $2,400 per certified individual calculated based on eligible first year wages, can be as much as $9,600 for U.S. veterans. The Tax Act extended the deadline for hiring targeted indivduals to December 31, 2013. The extended deadline applies to all catergories of targeted individuals including the groups that expired on December 31, 2011.
In addition, certain tax exempt employers can continue to claim a federal income tax credit of up to $6,240 per targeted veteran. Since tax exempt entities are exempt from federal income tax, the tax credit is applied against tax-exempt entities share of social security tax.
In order to claim these federal income tax credits, the targeted individual must be certified by the State Workforce Agency within 28 days of hire. Freed Maxick CPAs, P.C. provides the training necessary to obtain the targeted certification as well as the preparation of the annual tax credit form necessary to claim the tax credits.
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