W2 Tax Credits

There are several tax credits that companies can take advantage of by hiring W2 employees, including:

1. Work Opportunity Tax Credit (WOTC): This credit is available to employers who hire individuals from certain targeted groups, such as veterans, ex-felons, individuals receiving government assistance, and individuals with disabilities. The credit amount varies based on the individual’s target group and other factors but can be up to $9,600 per employee.
2. Empowerment Zone Employment Credit (EZEC): This credit is available to employers who hire individuals who live and work in designated empowerment zones in economically distressed areas. The credit can be up to $3,000 per employee per year.
3. Indian Employment Credit (IEC): This credit is available to employers who hire Native American employees who live and work on or near an Indian reservation. The credit can be up to $4,000 per employee per year.
4. Credit for Small Employer Health Insurance Premiums: This credit is available to small employers who provide health insurance to their employees. To qualify, the employer must have fewer than 25 full-time equivalent employees, and the average annual wages of the employees must be less than $55,000. The credit can be up to 50% of the employer’s share of the health insurance premiums.
5. Disabled Access Credit: This credit is available to small businesses that make their facilities more accessible to individuals with disabilities. The credit can be up to $5,000 per year and can be used to cover expenses such as the cost of providing ramps, wider doorways, or other modifications to make the workplace more accessible.
6. Research and Development Tax Credit: This credit is available to companies that invest in research and development activities. The credit can be up to 20% of qualified research expenses and can be used to offset income tax liability.
7. Employer-provided childcare credit: This credit is available to employers who provide childcare services to their employees. It allows employers to claim a percentage of the expenses incurred for providing the service.
8. Credit for Small Employer Health Insurance Premiums: Small employers with fewer than 25 full-time equivalent employees who provide health insurance coverage to their employees may be eligible for this credit.
9. The Employee Retention Credit (ERC) is a tax credit that was introduced by the Coronavirus Aid, Relief, and Economic Security (CARES) Act in 2020 to help businesses retain employees during the COVID-19 pandemic. It allows businesses to claim up to $26,000 per W-2 employee. Your business may qualify for this credit. Visit our partner website to find out if your business qualifies here: https://bit.ly/3zb8VFO.

Overall, hiring W2 employees can provide companies with a variety of tax credits, including the Work Opportunity Tax Credit, Empowerment Zone Employment Credit, Indian Employment Credit, Credit for Small Employer Health Insurance Premiums, Disabled Access Credit, Research and Development Tax Credit, Employer-provided childcare credit, Credit for Small Employer Health Insurance Premiums and of course the Employee Retention Credit. It’s important to note that tax laws and regulations can be complex and subject to change, so employers should consult with a tax professional or refer to the latest IRS guidelines to determine their eligibility for tax credits.