Tax Credit Opportunities Still Open for Employers

Changing legislation can bring tax credit and incentive opportunities. From new relief programs and tax credits for employers to incentives for renewable energy investments, explore emerging possibilities and understand how they can impact other areas of your organization.

Legislation impacts tax strategy throughout the years

The Consolidated Appropriations Act, 2021 was signed into law just as most employers were preparing to ring in the new year. With it came a myriad of legislative opportunities that continued to be enhanced and modified by the American Rescue Plan Act of 2021 and the Infrastructure Investment and Jobs Act.

In addition, the Inflation Reduction Act of 2022 is a game changer for investing in clean energy, offering new tax incentives and financing opportunities.

Even with all these changes, employers still have access to certain relief programs and tax credits, and future legislative changes may bring new opportunities. Work with your financial advisors and keep informed about the latest news and legislative updates to explore any emerging possibilities.

Explore potential tax credits and incentives

Work Opportunity Tax Credit (WOTC)

Although this credit is not new to many employers, the credit broadened to include the newly extended authorized federal empowerment zones.

What does this mean for employers? If any of their employees are between the ages of 18 and 40 and reside in a federal empowerment zone at the date of hire, their wages could generate a federal income tax credit of up to $2,400.

Other eligibility categories became increasingly relevant as a result of the pandemic, including the long-term unemployment category. To be eligible, new employees must be in a period of unemployment that has lasted at least 27 weeks and at some point received either federal or state benefits. Categories also include food stamp recipients, temporary assistance for needy family recipients, certain veterans, and ex-felons.

In many cases, employers are finding that 25% of their incoming workforce qualify for and could generate significant tax credits to offset federal income tax liability. But you must follow the appropriate protocols to capture various opportunities.

Let CLA simplify your WOTC process with a WOTC Welcome Kit. Our team will assist you in navigating the complex eligibility, certification, and claiming of this important tax credit.

Employee Retention Credit (ERC)

Eligible employers who either experienced a significant decline in gross receipts or were fully or partially suspended by a government order were often eligible for the ERC. However, the IRS uncovered many improper claims.

Under current legislation, the deadline for filing 2021 ERC claims is April 15, 2025. Additionally, the IRS has again opened a voluntary disclosure program as a way for employers to repay ERC funds that were improperly claimed.

Employers who already filed proper claims but have not received funds also have an opportunity to file a protective claim for income tax refunds for any tax paid on the credit .

Green energy tax credit

The green energy tax credit, also known as the renewable energy tax credit, is a financial incentive for individuals and businesses who invest in renewable energy sources.

This credit is designed to encourage the use of clean and sustainable energy, including:

• Solar
• Wind
• Geothermal
• Biomass

By installing qualifying renewable energy systems or making energy-efficient improvements to their properties, taxpayers can claim a tax credit on their federal income tax return and help offset green energy investment costs. Learn how one organization even found tax benefits in existing activities and processes.

Seeking clean energy funding and tax credits? Connect with CLA to navigate the IRA and capture available benefits.

Disabled access credits and deductions

Small businesses may claim a one-time federal credit for hiring certain individuals with different abilities. Additionally, businesses that remove barriers to access may claim a deduction for up to $15,000 for qualifying expenses that would otherwise be capitalized.

Many states also offer credits for hiring employees who meet certain criteria. These credits can be as much as $20,000 per qualifying employee.

Tax opportunities can mean compliance reporting

If you or your organization received money from federal or state sources, you may be burdened with specific regulatory compliance reporting. For some, the funding may even require your organization to have a financial statement audit.

Effective compliance reporting relies on having an in-depth understanding of the requirements and the resources to meet them. Talk with your tax advisor to make a plan that meets your specific needs.

Consider benefits when reviewing your tax strategy

Considerations related to your retirement plan include:

• Understanding current legislation and accounting and auditing changes
• Identifying leading practices for plan administration
• Understanding cybersecurity risks and how to keep your assets safer
• Understanding fiduciary requirements

How CLA can help with tax credits and incentives

At CLA, we consider your particular circumstances to help guide you through decisions and devise a tax plan that aligns with your objectives and available opportunities. We continuously monitor tax legislation and administrative guidance to help you understand significant developments and how they could affect you, whether it’s general grant compliance or exploring tax credits and incentives.

Contact us

Are you taking advantage of available tax opportunities? Complete the form below to connect with CLA.