IRS highlights tax benefits available for small businesses

The Internal Revenue Service (IRS) has provided some guidance for small businesses. The agency recently posted a news release to remind small business owners of a tax credit that is available for those who hire long-term unemployment recipients.

What is this tax credit? The Work Opportunity Tax Credit (WOTC) is available for qualified first and second year wages paid to eligible employees.

The WOTC extends beyond those who were long-term unemployment recipients to also include other job applicants that face barriers to employment. This includes unemployed veterans, ex-felons, food stamp recipients and long-term family assistance recipients.

How does a business owner apply for this credit? The credit is available on Form 5884. The business owner should claim the WOTC on the eligible business’ income tax return. The employer must also ask for a certification for the employee from the state workface agency to establish that the employee is part of one the eligible groups noted above.

The IRS also requires the employee work for at least 120 hours and not have a previous history of employment with your business. The IRS also notes the worker is disqualified as an eligible party if related to the business owner.

The IRS determines the available credit based on the wages paid to the worker.

What if a tax credit or tax filing leads to an investigation? In some cases, the IRS may investigate a business’ tax returns. Businesses that are the subject of an investigation have options. It is often wise to seek legal counsel to discuss these options. An attorney can provide guidance through the investigation and help the business avoid additional tax difficulties.

No Comments

Leave a comment
Comment Information
  • ABA | American Bar Association
  • AV Preeminent | Peer Rated for Highest level of Professional Excellence | 2018
  • Virginia State Bar | 1938
  • Super lawyer | 2018
  • DC Bar
  • American Bar Academy of Attorney - CPAs | The power of the dual view
Email Our Team

Contact Us to Get Started Today

Located in the Washington, D.C area, we serve clients in the District of Columbia, Maryland and Northern Virginia, as well as across the country and overseas. For a free initial consultation, call 202-381-1261 or complete our brief online form.

Bold labels are required.

Contact Information
disclaimer.

The use of the Internet or this form for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be sent through this form.

close

Privacy Policy

Six Convenient Office Locations in and around the DC Metropolitan Area

Washington, D.C.
1629 K Street NW, Suite 300
Washington, D.C. 20006

Phone: 202-618-1873
Fax: 888-235-8405
Map & Directions

Columbia Office
10440 Little Patuxent Parkway, Suite 300
Columbia, MD 21044

Phone: 410-497-5947
Fax: 888-235-8405
Map & Directions

Annapolis Office
888 Bestgate Road
Suite 400
Annapolis, MD 21401

Phone: 410-497-5947
Fax: 888-235-8405
Map & Directions

Fairfax Office
8280 Willow Oaks Corporate Drive
Suite 600
Fairfax, VA 22031

Phone: 703-621-7169
Fax: 888-235-8405
Map & Directions

Rockville Office
199 E. Montgomery Avenue
Suite 100
Rockville, MD 20850

Phone: 240-599-5009
Fax: 888-235-8405
Map & Directions

Baltimore Office
400 East Pratt Street
8th Floor
Baltimore, MD 21202

Phone: 443-743-3381
Fax: 888-235-8405
Map & Directions