CAVU HCM’s tax credit service helps organizations of all sizes identify and collect available local, state, and federal tax credits. A provided Payroll Tax Manager will research, apply for, and recoup credits available for your company based on factors such as:
Tax credits are entitlement subsidies: explicit amounts of money, measured dollar-per-dollar, that eligible companies can subtract from their total taxes owed. While criteria and eligibility range by state and industry, common credits are awarded based on overall earnings, size of payroll, employee backgrounds, geographic location, and more. Solving the complicated process, CAVU’s Tax Claim service researches applies and recoups tax credit claims your organization is eligible for.
Credits vs Deductions Tax Credits reduce the amount of total taxes owed, while deductions lower the amount of taxable income for the year. Similar in concept, the two differ in practice. For example:
A Federal tax credit, the Work Opportunity Tax Credit (WOTC) rewards employers for hiring individuals from certain targeted groups that face significant barriers to employment. Returns vary on a case-by-case basis, with employers eligible for as much as $9,600 per employee. Defined by the Internal Revenue Service, targeted groups include:
The Employment Retention Credit rewards eligible employers who retained paid employees after March 12, 2020, and before January 1, 2021. Refundable against certain employment taxes, the credit returns 50% of qualified wages paid during the specified time period; wages can be counted up to $10,000 per employee.