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Over 8500 Tax Incentive Zones Throughout The U.S. Allow Employers To Claim Percentage Of Credits For Wages

Blake Christian - Tax Credits And Incentives
Hiring Tax Credits

An abundance of Federal and California hiring tax credits can offset your tax liability on a dollar-for-dollar basis.

Is your business potentially missing out on significant tax refunds which can offer you enhanced cash flow and a competitive advantage? Numerous federal and state tax hiring tax credits and incentives can offset your tax liability on a dollar-for-dollar basis. Any missed credits for past years can be secured via amended returns for at least the past three years, and to the extent the credits cannot be used in the prior or current year, liberal carryover rules generally apply. Federal and California hiring tax credits are abundant and should never be overlooked by those who have the potential to take advantage of them.

The significance of hiring tax credits is especially true for businesses when hiring employees. There are over 8,500 tax incentive zones throughout the country which generally allow employers to claim credits for a percentage of wages paid to employees meeting certain criteria at the time of hire. Which hiring tax credit and other incentive programs you qualify for.

Hiring Tax Credits Available to You

Federal Hire Act

The Federal HIRE Act is an additional hiring tax credit designed to encourage businesses to increase their levels of employment, reduce the national unemployment rate and help stabilize their budgets. The recent law provides immediate economic benefit and gives business an added lucrative tax-saving opportunity opportunity to qualify for hiring tax credits. Businesses have only until the end of the year to take advantage of this tax saving opportunity.

The HIRE act is an employer hiring credit of up to $1,000 which is also available in 2011 for non-family employees hired after Feb. 3, 2010 and retained for at least 12 months. The employee must either be: 1) hired for a newly created position, OR a replacement of an employee who quit or was let go “for cause”. For the full information on this newly created hiring tax credit, see the detailed overview of the HIRE Act.

California Enterprise Zone Tax Credit Program

There are millions of dollars of annual credits available under each of these state and federal programs, yet 90% of businesses claim no credits, or when they do – they grossly understate them. One example of a powerfully beneficial tax incentive program is the California Enterprise Zone Tax Credit Program (EZ) . The California EZ hiring tax credit focuses on 42 economically challenged communities within the state of California. This hiring tax credit is an incentive of up to $13,000 per employee annually to encourage business investment while stimulating new job creation and retention in these areas, in hopes of reviving the local economy and keeping workers off unemployment and/or welfare rolls.

WOTC Program

Another opportunity to qualify for a federal tax credit is through the Federal Work Opportunity Tax Credit (WOTC) program. Similar, to the California EZ program, the California WOTC program rewards business owners who hire from certain demographic groups – mainly those receiving public assistance, as well as veterans. The Veterans hiring tax credits program and other opportunities from the WOTC can generate credits up $2,400 to $8,400 per employee and are available to businesses operating in any state and almost any industry (gaming and massage parlors are specifically excluded).

Groups which will generate California EZ credits for their employers include:

  • Recently laid off (or threatened with lay-off)
  • Native Americans and Pacific Islanders
  • Qualified disabled veterans. Unemployed veterans must have been discharged from the armed services in the past 5 years and been on active duty for at least 180 days, discharged or released due to service related disability. This also includes veterans who have recently qualified for food stamps.
  • Summer youth hires in designated communities.
  • 18-40 year old residents of designated communities.
  • Qualifying ex-felons, provided they meet preset conditions.
  • Persons who’ve recently been eligible or received various benefits. This includes SSI, food stamps or Temporary Assistance for Needy Families benefits.
  • Qualifying disconnected youth between 16 and 25 years old on the hire date. The youth would not have a high school diploma or GED or received one more than 6 month before hire.

The amount of state and federal hiring tax credits your business qualifies for depends on factors such as wages paid and the group under which the employee qualifies. For unemployed veterans and disconnected youth, for example, federal hiring credits per employee max out at $4,800 and $2,400, respectively, but state credits can rise to $13,000, limited to 50% of the employee’s wages during their first 12-months.

For more information, see the detailed overview of WOTC California.

Want expert advice? Contact Blake Christianson



Blake is a nationally recognized expert and frequent author and speaker on State and Federal Location-based Incentive Credits (LBIC’s), including State Enterprise Zone Credits, Federal Empowerment, Renewal Community, Indian Tribal Lands and Gulf Opportunity Zone Credits. He has also assisted in the development of specialized software, which is used by over 200 tax departments throughout the U.S. to identify LBIC’s. Blake’s clients include multi-national, publicly traded corporations, as well as closely held owner-managed businesses. His industry concentration includes manufacturing and distribution, service companies, restaurant, shipping and transportation, energy and healthcare. In addition to corporate, partnership and individual tax compliance and planning, Blake is experienced in the design and implementation of executive compensation plans.

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