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Hurricane relief law offers tax credit for employers

The Disaster Tax Relief and Airport and Airway Extension Act signed on September 29, 2017 provides tax relief for taxpayers impacted by Hurricanes Harvey, Irma and Maria. One key provision in the bill allows companies located in areas deemed disaster zones to seek an employee retention credit to continue to pay their employees during the time their business was inoperable due to the hurricane. A business is considered inoperable, for example, if hurricane damage causes the business to be inaccessible to employees, raw materials, utilities or customers. Any employee whose place of employment was impacted by the hurricane is eligible for the credit. Employers can seek a tax credit for 40 percent of wages (up to $6,000 per employee) paid to employees during the time the business became inoperable up until the business resumes operations, or until January 1, 2018.

An eligible employee could have also generated the Work Opportunity Tax Credit (WOTC) prior to the hurricane. Wages paid to a WOTC-employee are eligible for the retention credit unless those same wages are concurrently generating the WOTC benefit itself. In other words, you can’t claim both benefits on the same wages — but you can claim the two benefits one after the other.

For more information about tax credits or the hurricane relief bill, contact us today at 866.799.9580 or reach out to your Rehmann advisor.