April of 2016 may be a great time for many small business owners. Previous laws allowing write-offs and credits have been extended, while a few new credits have been signed into law. The PATH Act and the Omnibus Spending Bill were both passed at the end of 2015, both of which could create serious tax savings. If you are hiring new employees or doing research to improve your business, this is the year to get some of the expense offset by the federal government.
Small Business Tax Benefits for Hiring
While the economy is said to be in full recovery mode, many small businesses are struggling to expand and to take on new staff. However, these new tax credits should make it easier. The Work Opportunity Tax Credit, or WOTC, offers tax credits of up to $9,600 per year per employee when you hire people who are classified as long term unemployed or otherwise struggling, including people who receive public assistance and veterans. If your business is in an area identified as struggling, the Federal Empowerment Zone Employment Credit will give you a tax credit of up to $3000 per new employee.
Newly Expanded Credits
There are also credits for people who hire active duty military members and Native Americans. The Employer Wage Credit for Employees Who Are Active Duty Members of the Uniformed Services does exactly as it implies, offering up to 20% of wages for people who employ servicemen. The Indian Employment Credit offers up to $20,000 reimbursement of wages and health care benefits for small business owners who employ members of Native American tribes or their spouses. Both of these credits have been broadened so many more businesses qualify, including those who employ more than fifty people.
Claiming these small business tax benefits can be complicated, so it is important to consult a qualified accountant when preparing returns. While the number of businesses allowed to claim these has been expanded, there are still criteria to be met. However, if you have been hiring in 2015, you likely will be saving on taxes in early 2016. The federal government is determined to encourage growth and willing to pay to keep the economic recovery in full swing.
