News You Can Use: Tax Credit Available for Businesses Located in Hurricane Disaster Zones
Since many BKS clients were impacted by the catastrophic 2017 hurricane season, we want to make you aware that you may qualify for a tax credit that allows eligible employers to recoup some of the wages paid or incurred during periods of inoperability caused by hurricanes Harvey, Irma and/or Maria.
The tax credit is part of the Disaster Tax Relief and Airport and Airway Extension Act of 2017 (HR 3823), which was passed last September.
Below is information to help you determine if you should pursue the credit.
Does my business qualify?
Eligible businesses are defined as active employers with locations within disaster zones whose business became inoperable as a result of damage sustained by Hurricane Harvey, Hurricane Irma or Hurricane Maria, but continued to pay employees during their recovery efforts during these specified periods:
- Hurricane Harvey – August 23, 2017 until the date the location resumed operations or January 1, 2018
- Hurricane Irma – September 4, 2017 until the date the location resumed operations or January 1, 2018
- Hurricane Maria – September 16, 2017 until the date the location resumed operations or January 1, 2018
Which of my employees are eligible?
Eligible employees are defined those whose principal place of employment was in one of the disaster zones.
How much is the credit?
If your business qualifies, you may be eligible to claim an employee retention credit equal to the lesser of $2,400 or 40% of the wages paid to each eligible employee (up to $6,000) during the timeframes listed above.
What documentation do I need to have to claim the credit?
To claim the credit, you will need to prepare lists of:
- Each impacted office
- Eligible employees
- The date on which each office became inoperable and when they resumed significant operations
- Any other eligible employees for which the work opportunity tax credit is being claimed during the same period
In addition to the documentation above, you will need to be able to isolate the wages paid to eligible employees during the period.
Where can I get more information?
For more information on the relief available, visit the IRS Hurricanes IRMA and Maria and Hurricane Harvey pages.
As a reminder, flood insurance has a waiting period to go into effect and the 2018 hurricane season is just around the corner! If you do not have flood insurance in place, please contact your BKS advisor today to begin the process and ensure you are protected before the next storm hits your area.
BKS is not in the business of providing tax services and you should consult with professional CPA’s or attorney’s as to tax matters. This is for informational purposes only.