Tax Intelligence: Federal Credit Extensions
The Tax Increase Prevention Act of 2014 was officially signed by President Obama on December 19, 2014, extending the Work Opportunity Tax Credit (WOTC) through December 31, 2014. In this same legislation, two other lucrative federal tax credit programs also received the one-year extension. The Federal Empowerment Zone Employment Credit and the Indian Employment Credit offer qualifying businesses tremendous benefit, and should not be overlooked.
The Federal Empowerment Zone Employment Credit and the Indian Employment Credit programs both started in 1993 as a way to increase employment in impoverished areas and Indian tribal lands. New and existing employees can generate valuable tax credits for the employer. These two credits have been extended several times since their inception, providing businesses with substantial tax savings.
Federal Empowerment Zones are currently designated in 23 states. The Empowerment Zone Employment Credit allows a credit to businesses of 20% of up to $15,000 in wages paid to an employee both living and working in an Empowerment Zone. Unused credit can be carried forward up to 20 years, and may also be carried back to the prior year.
The Indian Employment Credit allows a credit of 20% of up to $20,000 in wages paid to a qualified employee. A qualified employee is an enrolled member of an Indian tribe, or the spouse of an enrolled member. Additionally, the employee must perform substantially all work within a reservation, including former Indian reservations in Oklahoma, and must also have their primary residence on or near the reservation. Wages considered for the credit can also include amounts paid by the business for health insurance coverage of the employee. However, employees with wages of $45,000 or more are not eligible for the credit. Similar to the Empowerment Zone Employment Credit, it has a 20-year carry forward and a 1-year carry back.
Equifax Workforce Solutions monitors all Empowerment Zones and qualifying Indian reservations, and can verify your locations and calculate credit for any qualifying employees, with little or no burden to your business. If your company is interested in receiving more information on these credits or any other credits, please contact your Account Manager (AM) or Pete Krieshok of Equifax Workforce Solutions at 314-214-7325 or by email at email@example.com.