New and existing businesses hiring new employees may be eligible for certain federal and state tax credits and other incentives depending on the nature of the job and industry and status of the employees hired to fill the jobs. A brief description of some workforce related tax credits and incentive programs are provided below. For additional programs and the most up-to-date information, please contact your local SC Works Center or visit http://www.sctax.org/default.htm to access the South Carolina Tax Incentives for Economic Development and http://www.irs.gov for federal programs.
Work Opportunity Tax Credit (WOTC) – a federal tax credit program that provides and incentive to businesses that hire new employees from certain populations such as unemployed veterans, ex-offenders, individuals receiving Supplemental Security Income (SSI), vocational rehabilitation services, and other qualifying social services. The WOTC program can help reduce your federal income tax liability by providing your business with a 40% tax credit on eligible employees’ first year of wages after they have worked 400 hours (wage caps apply). With no limit on the number of qualified hires your business can claim, you can receive anywhere from $2,400 to $9,600 for each one of your newly hired, eligible employees. WOTC requests must be postmarked or e-filed within 28 days of the employee’s start date. Nonprofit 501C entities can participate when hiring WOTC eligible veterans only. Additional information can be found HERE or via email WOTC@dew.sc.gov.
Apprenticeship Credit – a state tax credit available to businesses that have employees who have been in an apprenticeship program beginning after 2007 and who are in a registered apprentice agreement with the Office of Apprenticeship of the Employment and Training Administration of the U.S. Department of Labor. A state corporate or individual tax credit equal to $1,000 for each apprentice employed under an apprenticeship agreement is available and can be claimed for up to four tax years for each apprentice. The apprentice must be employed by the tax payer for at least 7 full months of the tax year. Contact Apprenticeship Carolina at 803-896-5376 or visit www.apprenticeshipcarolina.com.
Credit for Employers Hiring Recipients of Family Independence Payments – a state tax credit for businesses that employ persons who receive Family Independence (FI) payments in this state for three months immediately before becoming employed. Businesses can receive basic credit amounts equal to 20% of wages paid to such employee for each full month of employment during the first 12 months of employment; 15% of wages paid during the second 12 months of employment; and 10% of wages paid during the third 12 months of employment. The employer must make health insurance available to the employee in the same basis as all employees. Other employer eligibility includes submitting an employee release and a written request certifying FI eligibility for each of the newly hired employees from the Department of Social Services. You have 15 days after the end of the tax year in which the FI payment recipient is hired to request verification. The total amount claimed per employee under both the job tax credit and the FI credit is limited to $5,500 unless that taxpaying business is located in a tier IV county that qualifies for a higher limit. For county classification information, contact the SC Department of Revenue at 803-898-5709. Any unused credit may be carried forward for 15 years. Contact SC Department of Social Services at 803-768-5700.
Small Business Health Care Tax Credit – a federal tax credit available to small businesses and tax-exempt organizations. To be eligible for the credit, employers must meet the following criteria: 1) have fewer than 25 full-time equivalent employees (two half-time workers count as one full-time equivalent employee); 2) pay at least half the cost of qualified “single” (employee-only) health insurance coverage for employees; and 3) pay wages averaging less than $50,000 per full-time equivalent employee per year. The credit may equal up to 35% of the qualified premiums paid by eligible small businesses and up to 25% paid by eligible small tax-exempt organizations for 2010 through 2013. For some small businesses and tax-exempt organizations, an enhanced version of the credit will be effective beginning January 1, 2014. Contact: Internal Revenue Service at www.irs.gov.
Federal Bonding Program – a federal program available to businesses that hire an employee whose background has blemishes. Your business may be able to receive insurance protection through Fidelity Bonding at absolutely no cost to you or the bond-eligible new hire. The SC Department of Employment and Workforce can issue your business a bond that will cover the first 6 months of the new hire’s employment and protect you against theft, larceny, forgery, and embezzlement. Following the 6 months free coverage (average insurance coverage of $5,000), the business has the option to purchase a second 6 months of coverage at a reduced cost. Click here for more information about the program.