(888)236-7339

Tax Credits Blog

Employer Retention Credit in Combination with WOTC

Trying to understand the connection between the Employer Retention Credit (where an employer would get 50% of the first $10,000 they pay someone to keep them on payroll), the Work Opportunity Tax Credit (up to 40% of the person’s first year wages, depending on the category), and the Payroll Protection Program which provides small business loans to employers to keep their employees on the payroll can be a daunting task. Good news though, we have the best minds on it and have found that WOTC and ERC can work together, provided you don’t use the same earnings.
 
Example: John started 2/1/20 and has qualified for WOTC as a food stamp recipient. The company is entitled to a credit of up to 40% of John’s first year wages to a maximum of $2,400 in credits. The company has also kept John employed through this pandemic and would like to claim the payroll tax credit for ERC on John as well. The company would claim WOTC on earnings up to when they start claiming ERC and then start claiming WOTC again on earnings after the ERC period ends. The company then can continue claiming WOTC until John maxes out either the dollar amount or time period of his certification. Should John max out the time period of his certification or is terminated during the ERC period, WOTC ends there as well.
 
As for the Payroll Protection Program, you cannot claim ERC if you take out a Payroll Protection Program loan, and vice-versa. But the Payroll Protection Program has no effect on WOTC. You can continue using WOTC as you always have.
 
It is important to keep employee earnings separate for these credits so that there is no ‘double dipping.’ As an EmployerIncentives.com client, our monthly worksheets will be revised so we can track your WOTC separately from ERC so there is no confusion.
 
Please call us at 888-236-7339 ext. 703 or 704 if you have any questions.
 
Stay safe.

IRS Employee Retention Credit available for many businesses financially impacted by COVID-19

WASHINGTON — The Treasury Department and the Internal Revenue Service today launched the Employee Retention Credit, designed to encourage businesses to keep employees on their payroll. The refundable tax credit is 50% of up to $10,000 in wages paid by an eligible employer whose business has been financially impacted by COVID-19.

 

The credit is available to all employers regardless of size, including tax-exempt organizations. There are only two exceptions: State and local governments and their instrumentalities and small businesses who take small business loans.

Qualifying employers must fall into one of two categories:

  1. The employer’s business is fully or partially suspended by government order due to COVID-19 during the calendar quarter.
  2. The employer’s gross receipts are below 50% of the comparable quarter in 2019. Once the employer’s gross receipts go above 80% of a comparable quarter in 2019, they no longer qualify after the end of that quarter.

Contact 888-236-7339 x 703 for more information on how to claim this tax credit, or email This email address is being protected from spambots. You need JavaScript enabled to view it..

Coronavirus Tax Savings Free Webinar

Ken Brice here. As someone who’s been involved with companies to help reduce their income taxes 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 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 has recently been updated to include the COVID-19 virus disaster.

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 have scheduled a webinar on the subject on Tuesday, April 7, 2020 at 11:00 Eastern. To register for the webinar, click here. I've been in the business of helping companies reduce their income taxes for over 20 years and saved them over $24,000,000 in taxes so far. I would be happy to answer your questions.

 Looking forward to virtually meeting you,

Ken Brice, President

EmployerIncentives.com

This email address is being protected from spambots. You need JavaScript enabled to view it.

Coronavirus Leads to New Tax Saving Measures on the Horizon

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 This email address is being protected from spambots. You need JavaScript enabled to view it. and I’ll send you an invitation once we lock in dates and times (probably be two sessions).

WOTC Outlook for 2020

There appear to be a number of challenges ahead of getting WOTC permanently added to the tax code.  The below is from Paul Suplizio, President of the WOTC Coalition.

 

January 28, 2020

 

Renewing WOTC will be hyper-challenging this election year, not only because we’ll be lobbying candidates face-to-face at every opportunity (congresspersons and senators are more accessible during an election campaign), but also because we’ll have to confront the issue of the Federal government’s running trillion dollar annual deficits now.

 

The deficit will be the major factor in every bill that costs money, which means encountering more arguments to retrench, and more questions about the $19 billion ten-year cost of WOTC.

 

The candidate that holds the power to wreck our plans is the nation’s deficit-cutter-in-chief, President Trump, and more specifically the president’s men on the hill, Treasury Secretary Steven Mnuchin and White House Legislative Director Eric Ueland.  The more tight-fisted they are, the tougher our job.

 

In a few days, the President will issue his budget for FY 2021.  It’ll be a balanced budget based on around 3 percent economic growth, continued improvement in the workforce participation rate, and deep funding cuts for civilian agencies and social programs—a similar package as earlier years.

 

The President will also propose a trillion dollar infrastructure program and a tax cut for the middle class, with costs covered in part by revenue attributable to the tax cut, plus private sector participation in infrastructure development.

 

Hardly any tax extenders have been included in a Trump budget—not funding them is the same as calling for their cancellation.  Certain conservative organizations—Heritage Foundation, AEI, Committee for a Responsible Federal Budget, the Koch organization, and others—are supporting this policy.  We’re always alert to counter their statements.

 

The fact that the President’s budget will be dead-on-arrival on Capitol Hill doesn’t help us because, when House and Senate negotiate on any bill, the White House is a party to the talks since the President has the veto—Secretary Mnuchin or Mr. Ueland show up on the Hill with facts and figures crunched by OMB to make their case.

 

A month ago, we prevailed over Mnuchin/Ueland through good work mobilizing bi-partisan support in both houses, especially in the tax-writing committees.  But the White House has staying power, and with trillion dollar deficits we’ll have to keep our support in Congress from eroding.

 

Our goals remain the same—make WOTC permanent or enact a six-year extension, with specific improvements.  We’ll pick up where we left the talks last year, urging Ways and Means Chairman Neal and Finance Committee Chairman Grassley to agree on a tax measure making some extenders permanent, while compromising on Democrats’ repeated demands for expansion of the Earned Income Tax Credit and Child Tax Credit.

 

The White House and both Parties in Congress have placed high priority on an infrastructure bill this year.  The bill will may include revenue provisions as well as appropriations, so it could be a vehicle for passing WOTC and other tax extenders.  The Ways and Means Committee will hold a hearing, “Paving the Way for Funding and Financing Infrastructure Investments,” at 10:00 AM January 29th to lay the foundation for a larger measure to be developed with the Transportation and Infrastructure Committee.

 

Should the infrastructure bill falter and no stand-alone tax bill emerge, we’ll work to pass a long-term extenders bill on one of the FY 2021 appropriations measures due by September 30th.  September 30 may stretch to December 20th if the Appropriations Committees fall behind writing their bills, as in past years.  But if the Senate can finalize impeachment this week, appropriators will have a huge head start because, due to partisan differences, a joint (House and Senate) congressional budget is impracticable, thus each house will write its own budget.  Budget committees can start now because the top-line spending ceilings for FY 2021 have already been agreed—they were specified in law last summer.

 

By launching our campaign when the impeachment distraction ends, we may be looking at the prospect of permanent WOTC, Empowerment Zones, and Indian Employment Credit, or a long-term extension of these, as early as September 30 if the tax committees cooperate and the White House doesn’t threaten a veto.

 

A final note: over the break we’ve been examining several BLS metrics and studies indicating that the bottom half of the workforce isn’t faring well.  We’ll be able to give you more ammunition to show that WOTC boosts employment of lower-skilled workers, curbs growing homelessness, and stimulates economic development of poverty areas.  This is important because you may encounter the view of some people that because of a low unemployment rate WOTC isn’t needed.

 

Questions or comments are always welcome, by return e-mail or 703-587-4566.

 

PAUL E SUPLIZIO

President, WOTC Coalition