Tax Incentives Blog

5 Employment Tax Incentive Tips to Drive Your Hotel Growth

Posted by Rose Davidson on Jul 24, 2017 4:44:46 PM

business-163464_1280.jpgMany hotels are familiar with the benefits of pursuing employment-based incentives.  With increasing operating costs and rising minimum wage requirements, it can be difficult to stay profitable.  Participating in employment-based incentives programs help many hotels offset these growing costs so that they don’t have to compromise on quality or jeopardize the customer’s experience.  You may be asking how these hotels continue to drive growth in today’s market.  Here are five employment-based tax incentives tips that successful hotels are using to thrive.

Participation – In order to generate tax savings, you have to participate in one or more employment-based tax incentive program.  The Federal Work Opportunity Tax Credit (WOTC) is one of the most popular employment based tax credit programs available.  The WOTC is a federal tax credit program that incentivizes employers to hire individuals who typically face barriers to employment such as ex-felons or Veterans.  The tax credit can range from a maximum of $1,200 to $9,600 for each qualified new hire depending upon the new hire’s target category and there are currently 14 different target categories under which an employee may qualify. 

Screening – If you decide to participate or are already participating in an employment tax incentive program like WOTC, implementing a successful employee screening program is critical to your success.  If new employees are not screened for eligibility in a timely manner, lucrative tax credits will go unclaimed. 

Reporting – One of the best ways to monitor the success of your employment based incentives program is consistent reporting.  It is imperative to track the number of new hires you are employing along with the number of new hires that are being screened to accurately gauge the success of your incentives program.  Reporting aids in the identification of issues that an employer can rectify early, rather than waiting until the end of the tax year to realize their employment based incentives program wasn’t running up to par.

Knowledge of your employee base – Knowing your employees can help you better understand your potential when it comes to maximizing your incentives, especially when it comes to incentives that offer benefits for targeted employment.  For example, if your hotel employs a large number of Veterans and you are taking advantage of the WOTC program, you know you have the potential to generate up to $9,600 for each qualified Veteran you hire. 

Knowledge of additional “piggyback” employment-based incentives - There are a number of states that offer tax credits that “piggyback” off the WOTC, meaning they may use some of the same qualifying criteria as the WOTC, but the credit may be used to offset state income tax liability rather than federal.  Since they utilize the same qualifying criteria as the WOTC, a company can generate credits for both the Federal and State programs without any additional effort.  Some states also offer separate tax credits for hiring Veterans, disabled individuals or unemployed individuals.

Understanding some of the intricacies of employment-based incentives can help you maximize your tax saving benefits and also help drive your hotel’s growth.

To continue your education regarding employment incentives, specifically the WOTC program, download your complimentary, educational guide.

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Topics: Employment Incentives, WOTC

Rose Davidson

Written by Rose Davidson

Rose is the Director of Credits and Incentives for the Southeast area. She has over 12 years of experience in federal and state tax credits and has deep technical knowledge of many federal and state tax credit programs, including the Federal Work Opportunity Tax Credit, the Federal Empowerment Zone Employment Credit, various state enterprise zone credit programs and Georgia statutory tax credits.

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