Dec 31

Employment Tax Credits Extended for Employers

The Tax Increase Prevention Act of 2014 (2014 Tax Prevention Act) provides a one-year extension of several taxpayer-friendly provisions applicable to employers. These credits and benefits are intended to encourage new hiring and to improve employment opportunities for broader classes of individuals, including veterans and working families.

The 2014 Tax Prevention Act extends the following employment-related credits and benefits through 2014:
Work Opportunity Tax Credit. Under the revived Work Opportunity Tax Credit (WOTC), employers hiring an individual within a targeted group (otherwise hard-to-employ workers) are eligible for a credit generally equal to 40 percent of the first-year wages up to $6,000. The WOTC for unemployed veterans, and unemployed veterans with service-connected disabilities, can be as high as $9,600.
Empowerment Zone Employment Credit. Empowerment zone employers are entitled to a credit against income tax for qualified wages paid to eligible employees in empowerment zones through the end of 2014. Generally, the 20-percent credit applies to the first $15,000 of qualified wages for a maximum credit of $3,000. Eligible employees must be full- or part-time employees who are residents of the empowerment zones and who performed substantially all of their employment services within the zone.
Differential Wage Credit for activated military reservists. When members of the National Guard or Reserves are called up to active military duty, their civilian jobs and salaries are placed on hiatus and they begin receiving military pay. If a member’s civilian salary was higher, the civilian employer might voluntarily provide military differential pay in an amount equal to the difference between the member’s civilian pay and military pay. An eligible small business employer can claim a tax credit for up to 20 percent of the military differential wage payments it makes through 2014.
Indian Employment Tax Credit. The Indian Employment Tax Credit is equal to 20 percent of the employer’s costs for a qualified employee’s wages and health insurance paid or incurred during the tax year that exceed the amount the employer paid or incurred for such costs during 1993. A qualified employee is an employee (or spouse) that is an enrolled member of an Indian tribe that performs substantially all of the services within the Indian reservation, and their principal place of abode while employed is on or near the reservation where they are working.
Parity for employer-provided mass transit and parking benefits. The temporary increase to the monthly exclusion amount for van pool benefits and transit passes provided by an employer to an employee, so that these two qualified transportation fringes match the monthly exclusion amount for qualified parking, is extended through 2014. As a result, the inflation-adjusted monthly exclusion amount for van pool benefits, transit passes and qualified parking is $250 for 2014.

You may be interested in providing some of these benefits to your employees and taking advantage of the tax savings. Please call our office to discuss the details for these fringe benefits and credits at 228-396-2996. We will be happy to assist you.