Use New Tax Credits to Increase Your Business Income
August 11th, 2010 | 
Author: The American Recovery and Reinvestment Act (ARRA) has made it particularly easy for small businesses to get some needed tax credits to fatten their wallets in 2010, even if they’re still having trouble getting business loans. To increase cash flow, a business must either increase income, decrease expenses, borrow, or seek out tax credits. Many businesses can benefit from tax credits that end up putting more money in their coffers at the end of the year, however, you have to know what is available and how to get them.
Work Opportunity Tax Credit (WOTC)
This tax credit was expanded in 2009 under ARRA to cover two new groups: Unemployed veterans and disconnected youth. Many of the targeted groups used to be in the Welfare-to-Work Tax Credit program (WtWTC) but these groups have also been lumped in with the WOTC. Now, the list of targeted groups include: long-term TANF recipients, veterans, 18-39 year old SNAP benefit recipients, 16-17 year old summer youth, some disabled people, and ex-felons. By hiring someone that fits within the target groups, your company can get tax credits for hiring from target groups that can amount to $1,200 to $9,000 depending on the hire and the targeted group to which they belong.
The Hiring Incentives to Restore Employment (HIRE) Act
The HIRE act provides businesses with tax incentives to hire the unemployed or part-time workers who worked less than 40 hours in the last 60 day period. By offering an incentive to hire from this group, the government hopes to reduce the unemployed and get America working again. In this case, the tax credit is equal to the 6.2% of social security tax that the employer contributes for the employee. If the person who is hired is retained at least 1 year and makes at least 80% in the second half of the year as they made in the first half, than the employer can also take another tax credit up to $1000 depending on the wages of the individual.
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