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HR Party of One is brought to you by BerniePortal.

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Ahhhhh….

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Taxes.

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When Benjamin Franklin helped to author the Constitution, he said, “...but in this world,

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nothing can be said to be certain, except death and taxes… and employees asking HR

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when the next check deposits.”

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Or something like that.

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I may be fibbing just a little, but it remains true.

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Taxes are inevitable, and many people dread them.

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Being an employer is hard enough without the overhanging duty to give the IRS its due.

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However, HR professionals are best positioned to know what their organization does that

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translates to dollars saved.

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Let’s take a look at how Melanie, an HR pro at a small business, can leverage her

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knowledge to help her organization save money.

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Melanie is the HR Party of One at a company called Arms and Antiques, which employs 15

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specialists and is actively hiring five more.

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This company’s specialists identify and appraise historical items in high demand for

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private collectors or museums.

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Many of her consultants have niche expertise in weaponry from various eras or conflicts,

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hence the company’s name.

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Hiring such specialized consultants is incredibly challenging, but Melanie got creative.

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Her creativity found great talent and saved Arms and Antiques almost $12,000 via tax credits.

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But how?

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I’ll tell you about her creative strategy at the end of this episode.

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First, let’s cover: What Tax Credits Are, and

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The Top Tax Credits Businesses May Consider

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Then, I’ll reveal Melanie’s secret weapon.

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Let’s dive in!

What is a Tax Credit?

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What Is a Tax Credit?

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A tax credit is a way for the government to credit businesses that participate in certain

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endeavors that further the community, industry, workforce, and more.

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There are countless credits organizations can apply for, each with a specific form and

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qualifications.

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That’s why HR should defer the hefty task of filing for tax credits to their organization’s

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tax professional.

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While you can read about tax credits and their qualifications, the goal of an HR Party of

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One isn’t to fill and file any tax credit form that could potentially save a buck.

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That would be a waste of your time, as many tax credits have highly specific requirements

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to qualify that fall outside HR’s wheelhouse.

HR’s Responsibility

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Your responsibility is to know enough about tax credits to communicate effectively with

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your organization’s tax professional so they can determine which tax credits your

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org may use.

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You’re the one who knows all the information a tax accountant needs to claim tax credits.

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Think about it: if the tax pro asked your boss, “How many NCHEs do you have on your

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health insurance plan?” would your boss know the answer…?

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Realistically, does your boss know what an NCHE is?

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Maybe yes, but maybe no.

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However, you know an NCHE is a non-highly compensated individual, so that you can answer

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your tax pro’s question.

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Then, they can see if your org qualifies for certain tax credits requiring that information.

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So let’s cover some top tax credits and how your deep organizational knowledge is

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what your tax advisor needs to claim them.

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Top Tax Credits Employers Should Consider Using:

Top Tax Credits Employers Should Consider

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1.

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The General Business Tax Credit, is an umbrella for many other types of credits that a business

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may be qualified to use, which is why I want to cover it first.

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Beneath the General Business Credit, employers may be familiar with the Disabled Access Credit,

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Low Income Housing Credit, and well over 20 more types of credits.

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Some are highly specific, like the Mine Rescue Team Training Credit, whereas others may be

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much more general—like the ones I'll cover in this episode.

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2.

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The Work Opportunity Tax Credit, or WOTC, is a credit available to businesses that hire

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individuals who face barriers to employment.

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A barrier to employment is how the Department of Labor defines the factors that inhibit

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someone from getting hired or holding onto a job.

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For example, a student may apply for a summer job but is limited by how much time they can

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commit because they must return to school in the fall.

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Other individuals with barriers to employment are:

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Qualified IV-A Recipients Qualified Veterans

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Qualified Ex-Felons Designated Community Resident (DCR)

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Vocational Rehabilitation Referral Qualified Summer Youth Employee

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Qualified Supplemental Nutrition Assistance Program (SNAP) Benefits Recipient

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Qualified Supplemental Security Income (SSI) Recipient

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Long-Term Family Assistance Recipient , or Qualified Long-Term Unemployment Recipient

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Visit the IRS’s website for more details about each of the qualifications.

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Employers must verify that a new hire is a member of a specific group eligible for the

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WOTC tax credit before claiming it.

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So, speak to your tax professional about the best way to apply and receive a certification

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that verifies the targeted group.

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You will know the most about the composition of your workforce, but the tax advisor is

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who should direct things beyond that point and fill out Form 5884 to receive the tax

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credit for your org.

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3.

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The Retirement Plan Startup Costs Tax Credit, enables start-ups to offer retirement benefits.

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Getting a business off the ground is difficult—renting office space, securing equipment and technology,

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hiring costs, and more prohibit businesses from creating benefits packages.

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While it can be challenging for startups to invest money into a retirement plan for their

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employees, this tax credit may diminish some of the cost.

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To qualify for the Retirement Plan Startup Costs Tax Credit, you should first know if:

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100 or fewer employees received a minimum of $5,000 in annual wages in the year preceding

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the startup.

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At least one person on the retirement plan is a non-highly compensated employee (NHCE).

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Within the three years before the plan, most employees participating were not also receiving

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benefits from a different employer-sponsored plan.

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4.

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The Small Employer Health Insurance Premiums Tax Credit is specifically for small businesses

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to help offset the costs of healthcare premiums.

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To qualify, a business must have less than 25 employees and pay at least half of the

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employee’s premiums for single health insurance coverage.

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While you know how much your organization contributes to your employees’s healthcare,

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let your tax expert fill out Form 8941 to receive this tax credit.

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They will also know that a business can only claim this tax credit for two consecutive

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years.

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5.

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The Employer Credit for Paid Family and Medical Leave pertains to organizations that offer

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paid family and medical to those who would not be covered by FMLA, or the Family and

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Medical Leave Act.

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To qualify for this tax credit, HR must first check on an old favorite: clear, reasonable,

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written policy.

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Employees must be able to access this policy and must be notified of this policy’s existence,

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as well.

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HR pros can use the Compliance Feature of an HRIS to satisfy those requirements.

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BerniePortal hosts documentation, like leave policies, all in one place and grants an extra

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layer of protection by gathering employee e-signatures to ensure everyone knows of any

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policy updates or notices.

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In addition to written policy requirements, you must carefully consider the many other

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detailed qualifications to apply for this tax credit.

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For example, this policy must be available for your entire organization.

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So if you have a subgroup of your workforce that doesn’t get to take advantage of this

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policy, you will not be eligible.

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This tax credit also interacts with employer contributions to short-term disability.

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Refer to your tax advisor for clarification on the criteria.

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You will know the details concerning benefits, policies, and other business practices.

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They can take that information to determine if Form 8994 is applicable to fill and file

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for tax credits for your organization.

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Tax credits incentivize businesses to improve their community, industry, environment, or

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the lives of those who struggle to find employment.

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As an HR pro, all of this likely resonates with your mission to foster a better workplace,

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and the savings are just a bonus.

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But always keep in mind that tax credits fall within the area of expertise of a hired professional.

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So, if the tax accountant qualifies your organization for tax credits, how did Melanie help her

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organization save thousands of dollars?

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Arms and Antiques needed to hire five people with different areas of very niche expertise

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in historical weapons.

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So, she reached out to her local veterans chapters to see if anyone was looking for

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full-time work and knew about guns.

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Her inbox was flooded with applicants, and some of them were more than ideal to fill

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her open roles.

Final Thoughts

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She shared that recruitment win with her tax advisor, who immediately knew to check if

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her organization could qualify for the WOTC concerning employing veterans.

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Arms and Antiquities did indeed qualify, and each new hire saved the organization quite

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a bit in taxes.

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Melanie’s creative thinking armed her tax professional with the ability to save money.

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And, Malenie hired people who had the knowledge she needed while also serving an often neglected

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labor market.

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As always, your role is as strategic as you make it!

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