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How to Improve Your Bottom Line and Cash Flow – Tax Credits

Posted on: September 10th, 2014

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Ask MassPay about tax credits your business may have earned

Businesses may not be aware that there is free money out there in the form of Federal, State and Local income tax credits.

Your business may be eligible for these tax credits depending on where your business is located, where your employees live, how many people you hire in a year and who you hire.

Finding and applying for these credits can be very labor intensive. MassPay assists companies in applying for these credits. There’s little effort on your part, no upfront costs or contract and you’re charged a sharing fee only when you’ve earned bookable tax credits.

It almost sounds too good to be true, but Federal, State and Local agencies want to invest in their communities and in high potential industries, so your business should not go unrewarded if you meet the requirements.

Here are some Tax Credits that you may be missing:

  • Empowerment Zone Tax Credits

These credits are designed to foster growth and reward businesses within certain designated geographic areas, called empowerment zones.

Employees need to both live and work within the same zone, but these credits can add up significantly. Although these credits expired on 12/31/13, employers can still go back up to three years, and can claim 20% of the eligible employee’s first $15,000 in earnings.

In Massachusetts, some of the empowerment zones include areas within Boston, Lawrence and Lowell. In the Northeast, Maine and Vermont also offer credits for certain zones.  Zone locator

These credits are expected to be reauthorized by Congress and continue, at a minimum, through 12/31/15.

  • Work Opportunity Tax Credits (WOTC)

Although this tax credit expired at the end of 2013, everyone expects this program to be re-authorized. A good indicator is that Agencies are still accepting applications in anticipation of this extension.

This tax credit relates specifically to hiring employees from targeted groups such as people on food stamps, welfare, supplemental security income, and other groups including unemployed veterans, ex-felons, folks on state disability and others.

Typically 10-15% of the employees a company will hire will be eligible and the average credits is approximately $1,500.00 There is a minimum work requirement – 120 hours or more must be worked, and there is a cap at $2,400.

  • VOW to HIRE HEROES tax credit

Also under WOTC, credits are available to employers who hire unemployed veterans and individuals from other eligible target groups with significant barriers to employment.

A veteran who has a service-connected disability, is unemployed, or is receiving SNAP (food stamp) benefits may be eligible.

WOTC can reduce an employer’s federal income tax liability by as much as $9,600 per veteran hired, depending on length of unemployment prior to hire, time from discharge, etc.

There is no limit on the number of veterans an employer can hire to qualify to claim the tax credit.

  • State & Local Programs

Many states have announced tax credits as an incentive to hiring.

In Massachusetts, specific industries like biotech, medical devices and marine services, which create 10 or more jobs per year, may be eligible for additional tax credits. Most other states have also announced similar programs, all geared to improving employment in their state.

What type of companies are likely to get tax credits?

All for-profit businesses are eligible. There is no special application or approval process required. Even if you only hire a handful of people per year, there’s a 10-15% chance that one of them will qualify for one of the programs outlined above.

Non-profits can also earn FICA tax credits by hiring unemployed veterans.

Many of MassPay’s clients, small to medium businesses in Hospitality, Restaurants, Hotels, Manufacturing, Retail, Grocery, Staffing, Home Health Care and other industries are excellent candidates to earn these tax credits. The question becomes, why not?  There is really no good business reason to not collect this free money from Uncle Sam.

If you are interested in learning more, Contact us today to request your free analysis and estimate of your available tax credits.

Boost your bottom line with the help of MassPay!


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