Protecting Americans from Tax Hikes (PATH) Act of 2015
In mid-December, President Obama signed the Protecting Americans from Tax Hikes (PATH) Act of 2015. This bill was designed to help grow our economy and help American taxpayers keep more of their hard earned dollars.
Included in the bill was a 5 year extension of the Work Opportunity Tax Credit (WOTC). This will extend the WOTC through the end of 2019. A new category was also added to the WOTC, which includes the long term unemployed. Tax credits may be earned for hiring individuals that were unemployed for a period of 27 weeks or longer.
The 5 year extension will help employers to plan ahead, hire new workers, and grow their businesses.
The Work Opportunity Tax Credit (WOTC) allows businesses to earn up to $9,600 in tax credits for each qualified employee. There is no limit to the amount of tax credits that a company can earn. The program is designed to help create new jobs, so businesses are rewarded with these tax incentives for hiring new employees.
A qualified employee must work a minimum of 120 hours and belong to one of the nine designated target groups. Some of the target groups include: Veterans, long term unemployed, and food stamp recipients.
Businesses can significantly increase their profits by reducing their tax liability. These valuable tax credits can reduce their Federal tax liability, which ultimately increases profits. The tax credits earned can be carried back one year and/or carried forward for up to 20 years. This means, businesses have up to 20 years to utilize these tax credits.
Companies really find out how beneficial these tax credits are once it’s time to file their annual tax returns. Businesses will see the financial impact when they see increased profits by paying less in taxes. At the same time, companies are stimulating the economy by helping to create new jobs.
The WOTC was made retro-active to January 1, 2015. Companies that did not submit the applications in 2015 will have a “relief period” to submit WOTC applications before they file their 2015 tax returns. This will be a very brief period, so companies need to act quickly to earn tax credits for any 2015 hires.
Businesses should seek a tax consultant that specializes in government tax incentives. Many accountants and CPAs don’t focus in this area, so thousands of dollars in tax credits can go unclaimed every year.
For more information about the Work Opportunity Tax Credit (WOTC) please contact Marcel Abandonato at 951-272-8294 or email@example.com.