Work Related Tax Credits

Federal and State Tax Credits are government incentives for businesses to invest in their employees through locating, hiring, and training the employee. It is important to understand that credits are more valuable than deductions as Tax Credits reduce your tax liability dollar for dollar.

Many employers are eligible to receive the benefit of credits available from their state and federal governments. At the federal level an employer can receive the Work Opportunity Tax Credit (WOTC) which was created to incentivize businesses to hire unemployed or disabled veterans, food stamp or welfare recipients and ex-con felons. These credits can benefit the employer up to $9,600 per qualified new hire.

These credits require an application to be filed with the federal government within 28 days of the “new hire” start date.

Georgia State Tax Credits

State of Georgia employers have the opportunity to utilize a credit unlike any offered in other states. The Georgia Retraining Tax Credit (GRTC) was created in 1994 and is available to all Georgia employers. Georgia employers can receive up to $1,250 per existing employee per year for the training costs of each employee to be trained or retrained on upgraded or new software, equipment and technology, including accounting, billing, client and document management & payroll software; copiers, telephone systems and AV equipment, etc.

Many other items specific to your industry are also included.

This credit can be applied for retroactively for one year and carried forward up to ten years. Accordingly, if you act quickly you can claim the credit for tax years 2017 and 2018. These credits must be approved for by the State prior to deducting them on your tax return. Once approved you are assured of receiving the credit so there is no down side risk of these credits being disallowed later.

Potential Savings Example

A local Georgia Dentist office has ten employees and uses practice management software and digital equipment in their office. During the year, the dentist implements a new patient procedure and installs new equipment. All employees receive training on the new procedure, new equipment and are constantly keeping up with changes that occur in the practice management software as well as updates of other software utilized in the office.

The Dentist applies for the full credit of $1,250 per employee or a total of $12,500. After review, the State allows 90% or $1,125 per employee for a total allowed credit of $11,250. The Dentist prepares his tax return and has a Georgia state income tax liability of $18,000. Upon applying the approved credit his amount due to the state of Georgia is reduced to $6,750. He fully utilized the $11,250 credit.

How Do I Get Help With This Credit?

If you would like help with this or other tax saving ideas contact me at 678-999-3800 or Lee Pennington, CPA, CGMA, CTC