For a limited time, employers have a “second chance” to receive Work Opportunity Tax Credits (WOTC)
Due to the Coronavirus pandemic, there are new tax credits available to some employers. Both the Families First Coronavirus Response Act (FFCRA), signed March 18, 2020, and the Coronavirus Aid, Relief, and Economic Security Act (CARES), enacted March 27, 2020, can provide payroll-related credit to help some business. Employee Retention Tax Credit(ERTC) portion of the CARES Act in addition to your PPP loan. We will now be able to calculate a refundable payroll credit for eligible wages paid during COVID for any wages paid with non-PPP money. This means a maximum credit of $5,000 per employee in 2020 and $14,000 per employee in 2021, for a potential maximum credit of $19,000 per employee.
FMS can assist you with these tax credits, but you need to have the information below on hand:
- Did you fully close or suspend business operations due to a Covid-19 related order?
- Did you pay employees during the closure?
- Did you have gross receipts of 50% less than gross receipts in the same quarter of 2019?
- Did you receive a PPP (Payment Protection Plan) loan?
- Did you pay employees while they were off ill with Covid or caring for a family member with Covid?
- Did you pay employees while they were off caring for a child because there was no school or daycare due to Covid?
- Do you have fewer than 500 employees?
The IRS recently published IRS notices 2020-78, allowing employers to submit paperwork for 2019 and 2020 new hires that did not complete WOTC paperwork or had their paperwork submitted late. It is important to submit missing applicants as soon as possible before the upcoming deadline!
For employees hired in 2019 and 2020 that did not complete WOTC paperwork or had paperwork submitted late, there’s an opportunity.
Follow this procedure to secure missing applicants:
This look back is primarily looking for tax credits associated with special zones where the applicant lives. They will likely not know if they are in a zone, which is why anyone that has not completed the WOTC documents (Form 8850) should complete this form, and it should be sent to HR Screening right away. We will then process their forms looking for the credits associated with the zones. NOTE: The candidate/employee should complete the forms with information when you HIRED them, not today. Meaning, they should use their address and economic info from the time period in which they were hired).
- Existing FMS/HR Screening clients; You received an email on Mon, Dec. 28th from HR Screening Services with the subject: Special Tax Credit Update. Please refer to that email with a list of the employees that forms were submitted for during 2019-2020.
- New FMS/HR Screening WOTC clients can also take advantage of this; simply contact your FMS rep. There are a few options to collect the documents from employees – paper forms, online link, or using our HRIS.
IMPORTANT: The deadline to submit missed forms for 2019-2020 is January 25th, 2021.
We want to make sure that you don’t lose even one tax credit! And moving forward, clients will see an increase in credits in certain categories because of Covid-19. There has been an increase in SNAP recipients, Long term unemployed, etc. If you aren’t set up to take advantage of WOTC credits, now is the time!
Contact your FMS rep today!
East Coast Clients:
Tim Parks at Tim.Parks@fmssolutions.com or 443-892-0382
Southwest and Midwest Clients:
Stan McClintock at Stan.McClintock@fmssolutions.com or 402-315-7363
West Coast Clients:
Randy Klotz at Randy.Klotz@fmssolutions.com or 952-828-8960