Hotel owners and operators wanting to save up to 20 percent on some of their federal taxes should look at the savings that may be available through three government programs, said Brandon Edwards,president of the Tax Credit Co. in Los Angeles.
The Obama administration’s small business bill, recently signed into law, and two existing plan,the Work Opportunity Tax Credit and the Hiring Incentive to Restore Employment Act(HIRE),can provide real savings.
“It’s terrific for the hotel industry,” Edwards said.
The new Small Business Jobs Act offers $12 billion in tax breaks to encourage investment and hiring,and new credits which would offset the alternative minimum tax. It is designed for small and mid-size businesses making less than $50 million in annual revenue.
In addition, the act allows companies,such as green hotels or hotels with green projects,to apply for research and development credits,Edwards said.
The HIRE act, signed by President Obama in March,is part of an $18 billion jobs bill. It was designed to help spur hiring by American businesses.It contains both a payroll tax reduction and federal income tax credit. The hiring incentive rewards companies for employing people who have been out of work for two months or more,Edwards said.
The tax incentive includes a 6.2 percent Social Security Tax exemption for employees hired between February 3 and December 31, on wages paid from March 19 to December 31,2010 and up to a $1,000 general business credit for each qualified employee retained for 52 weeks,he said.
The maxmum credit is $7,621 per qualified employee and an average credit of $750 for hourly employees to $1,500 for salaried employees.
Edwards’ company estimates it would apply from 20 to 35 percent of new hires.
The Work Opportunity Tax Credit was enacted under the Clinton Administration and renewed by Presidents Bush and Obama.
It offers a federal income tax credit and fully offsets the Alternative Minimum Tax. It offers a maximum $2,400 tax credit for average citizens,$4000 for veterans and $9,000 credit for long-term welfare recipients.
The average is $1,000 to $1,600 per qualified employee and would apply to 7.5 to 20percent of new hires.
In addition, several states offer similar tax credit
The key to getting the tax breaks is screening and tracking your employees to see which ones may qualify for tax incentives,Edwards said.
Edwards knows that hotels operate on slim margins and he noted they are always looking for ways to save money on energy costs and would be thrilled with a 20 percent savings. He said hotels can save up to 20 percent in tax incentives.
Tax Credit Co. has been in operation since 1996 and represents both Fortune 500 companies and small and mid-size businesses in maximizing the value of tax incentive programs.
Details on the programs are available from the IRS Web site or by contacting a tax expert.