Ken Brice here. As someone who’s been involved with companies to help reduce their tax bite for over 20 years, I wanted to bring you up to speed on a couple of tax saving opportunities that are developing now and are important to companies in these tough times.
As all companies are dealing with this invisible enemy, I wanted to make sure that you know that there are more tools in your money toolbelt.
The first tool is one that we are hopeful will allow companies to recoup the cost of paying people who have been laid off due to this pandemic. The Employer Retention Tax Credit (“ERTC”) will provide up to $10,000 in reduced taxes per employee to the company to offset the cost of keeping your employees on payroll. It was a credit that was made available to employers who were affected by other disasters such as hurricanes and wildfires and we expect Congress to agree that what we’re going through is a disaster of national proportions.
If keeping your employees on payroll is not an option, you have a second tool in your financial toolbelt. As we get our arms around this virus and life starts to approach normal, companies who have laid off workers can take advantage of the Work Opportunity Tax Credit (“WOTC”) program. This program rewards companies for hiring from targeted groups, primarily people on public assistance such as Food Stamp recipients, unemployed veterans, long term unemployed, and 8 other categories. It is my belief that displaced individuals from this crisis will be added as another category to encourage employers to seek out these unemployed workers.
To recap, if you need to lay off people but want to keep paying them, you can receive up to $10,000 back as part of the Employer Retention tax credit (50% of the first $20,000 you pay someone). If you need to let your employees go but will start hiring again once this crisis ends, you can take advantage of the Work Opportunity Tax Credit program for new hires as long as they haven’t worked for you before.
I will be scheduling a webinar on the subject sometime over the next two weeks once we get final numbers on the ERTC. We’ve been in the business of helping companies reduce their income taxes for over 20 years and would be happy to answer your questions. Send me your email address at firstname.lastname@example.org and I’ll send you an invitation once we lock in dates and times (probably be two sessions).