3 Tax Incentives Staffing Agencies Need to Consider

Apr 11, 2023

Tax season is upon us, and there are some valuable tax credits and incentives available to businesses that can help reduce your tax liability.

Staffing agencies should take a moment to look at these programs to make sure they are not overlooking any tax credits that you may be eligible for. These valuable tax incentives can save your company a substantial amount of money.

If you are already participating in these programs, it’s still a good idea to review your current programs to make sure you are maximizing your tax credits.

Here are three tax incentives that businesses should consider:
Work Opportunity Tax Credit (WOTC) – this tax incentive was created to help individuals from certain target groups gain employment and become self-sufficient. The tax credits range from $2,400 to $9,600 for each qualified employee. Employers can earn tax credits for hiring military veterans, food stamp recipients, long-term unemployed, ex-felons, and individuals from certain Target Groups. Employers can earn 40% of qualified gross wages if the qualified employees work over 400 hours. This program was designed to create new jobs.

Employee Retention Credit (ERC) – this tax credit was created in response to the COVID-19 pandemic. The ERC is designed to help businesses that were impacted by COVID-19 and to encourage businesses to keep employees on their payroll. Businesses can earn up to $26,000 per employee through the ERC. Businesses may qualify for the ERC if they experienced a significant reduction in gross receipts or if the business had to fully or partially suspend operations due to orders from an appropriate governmental authority limiting commerce, travel, or group meetings due to COVID-19.

Empowerment Zone Employment Credit – this tax incentive offers a tax credit up to $3,000 for each qualified employee. This tax credit is available to businesses in the Empowerment Zones that also hire employees that live in the Empowerment Zones. The Empowerment Zones are distressed urban and rural communities where qualifying businesses are eligible for billions of dollars in tax incentives.

MJA & Associates specialize in government tax incentives. We have over 20 years of experience with tax credit processing. To learn more about these tax credits and incentives or for a free evaluation of your current program, please contact Marcel Abandonato at [email protected] or 951.272.8294.

COATS Staffing Software partners and integrates with MJA & Associates and has worked hand-in-hand with Marcel for years. Because of the considerable tax savings obtained for our sister staffing agency throughout the years, COATS experienced significant savings and integrated with MJA so that our clients could benefit as well.

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