The Empowerment Zone Employment Credit for qualified wages earned has been retroactively extended for qualified empowerment zone wages earned in 2018, 2019 and 2020. The Empowerment Zone designations expired at the end of 2017. The Tax Relief Act of 2019 provides for an extension of the designations to the end of 2020. However, the IRS has not yet issued guidance as to how to extend the empowerment zone designations. Once guidance has been issued, Griggs-Steele Empowerment Zone will pursue extending its designation through 2020 so these tax credits are available to empowerment zone employers.
What is an Empowerment Zone (EZ)?
It is a Federally designated area identified as a distressed urban and/or rural area that is in need of revitalization. Assistance was received for a period of time from the Federal Government in the form of grants, loans, technical assistance and tax incentives to aid in the economic development of the communities located within the boundaries of the EZ.
What is the Empowerment Zone Employment Credit?
It is an incentive to empowerment zone businesses (businesses located in the zone) to hire and retain employees who also live in the zone. It is a wage credit of up to $3,000 for each qualified employee.
Who is considered a Qualified Employee?
An employee who lives and works in the empowerment zone. They can be full time or part time as long as they have worked a minimum of 90 days during the year they are claiming the credit in.
There is no limit to the number of employees a business can claim as long as the employee lives in the zone and worked the minimum days.
Does your business Qualify?
To determine if your business qualifies please contact your accountant and/or tax preparer or check out the irs.gov website.
How to claim the Empowerment Zone Employer Tax Credit?
To claim the Empowerment Zone Tax Credit complete your company Federal Tax Return and use IRS Tax Form 8844