The EZ Credit piggy-backs with WOTC, adding an extra layer of profitability for smart businesses
Big businesses have long understood the value of the Work Opportunity Tax Credit (WOTC). Now, tech innovations like ours are extending the WOTC to businesses of all sizes, resulting in supercharged profitability, such as 40% boosts in cash flow.
Certain businesses qualify for even greater benefits through the Empowerment Zone (EZ) Credit, although few know the credit exists, or know whether or not they qualify. We consider it our responsibility as a WOTC service provider to inform our clients of this and other WOTC “piggyback” credits. We even calculate the EZ Credit for our clients who qualify. Unfortunately, not all WOTC providers hold themselves to this standard.
This blog seeks to spread awareness of the EZ Credit in order to extend its benefits to every business who deserves it.
What is an Empowerment Zone?
Since 1993, the federal government has designated certain economically distressed areas of the United States as Empowerment Zones in an effort to stimulate recovery through tax incentives, grants, and other programs.
There are currently 30 Empowerment Zones in urban communities, and 10 in rural communities. They include:
- Pulaski County, Arkansas
- Tucson, Arizona
- Desert Communities, California (part of Riverside County)
- Fresno, California
- Los Angeles, California
- Santa Ana, California
- New Haven, Connecticut
- Jacksonville, Florida
- Miami/Dade County, Florida
- Southwest Georgia United, Georgia (part of Crisp County and all of Dooly County)
- Chicago, Illinois
- Gary/Hammond/East Chicago, Illinois
- Southernmost Illinois Delta, Illinois (parts of Alexander and Johnson Counties and all of Pulaski County)
- Kentucky Highlands, Kentucky (part of Wayne County and all of Clinton and Jackson Counties)
- Aroostook County, Maine
- Boston, Massachusetts
- Baltimore, Maryland
- Detroit, Michigan
- Minneapolis, Minnesota
- Mid-Delta, Mississippi (parts of Bolivar, Holmes, Humphreys, Leflore, Sunflower, and Washington Counties)
- St. Louis, Missouri/East St. Louis, Illinois
- Cumberland County, New Jersey
- New York, New York
- Syracuse, New York
- Yonkers, New York
- Griggs-Steele, North Dakota (part of Griggs County and all of Steele County)
- Cincinnati, Ohio
- Cleveland, Ohio
- Columbus, Ohio
- Oklahoma City, Oklahoma
- Philadelphia, Pennsylvania/Camden, New Jersey
- Columbia/Sumter, South Carolina
- Oglala Sioux Tribe, South Dakota (part of Jackson County and all of Bennett and Shannon Counties)
- Knoxville, Tennessee
- El Paso, Texas
- Middle Rio Grande FUTURO Communities, Texas (parts of Dimmit, Maverick, Uvalde, and Zavala Counties)
- Rio Grande Valley, Texas (parts of Cameron, Hidalgo, Starr, and Willacy Counties)
- San Antonio, Texas
- Norfolk/Portsmouth, Virginia
- Huntington, West Virginia/Ironton, Ohio
Who qualifies for the EZ Credit?
For-profits organizations with employees who lived and worked at least 90 days within Empowerment Zones qualify for the EZ Credit.
How much EZ Credit can I claim?
Qualifying businesses can claim 20% of eligible employees’ wages up to $15,000 each tax year. For this reason, the EZ Credit reduces federal tax liabilities by up to $3,000 per eligible employee annually. There is no maximum allowable number of eligible employees.
How does the EZ Credit work with WOTC?
The WOTC rewards employers who hire and retain employees from one of ten targeted groups that have historically faced disadvantages in securing work. One targeted group is Designated Community Residents (DCR), which includes residents of Empowerment Zones.
For that reason, WOTC claimants sometimes have everything they need to also claim the EZ Credit. DCR WOTC employees can earn their employer up to $2,400 in tax credits. When these employees also qualify for the EZ Credit, they can earn their employer an additional $3,000 per year!
How Arvo helps
While the EZ Credit offers exciting potential, especially when paired with WOTC, it’s essential to approach them with a solid understanding of eligibility criteria and requirements. Tax laws can be intricate and subject to change, making it vital for companies to seek guidance from qualified tax professionals or accountants experienced in employment tax credits.
We have helped hundreds of businesses claim over $650MM in employment tax credits since 2014. Plus, our fees are 100% contingent–meaning you don’t pay anything until and unless you generate a profit via our services.
Whether you’re brand new to the WOTC and/or EZ Credit, or have been using a different servicer to access the benefits of either program, contact us today to discuss how our customizable solutions can get you more of the money you deserve for employing residents of Empowerment Zones.