Employer Hurricane Tax Credit for Wages Related to the 2017 Storms

Were you in a hurricane federal disaster area?

 

Were you forced to close and unable to operate your business due to hurricane related reasons?

 

Did you pay your employees for time when you were closed and unable to operate your business due to hurricane related reasons?

 

If you answered YES to ALL three of the above questions, the IRS is willing to reimburse you for a portion of the wages you paid employees when you were closed and unable to conduct business.  The maximum amount of the reimbursement is $2,400.  The credit is 40% of the wages you paid to an employee up to $6,000 of wages during the period you were closed.  This covers the period starting with the hurricane and ending on December 31, 2017.

 

As an example:  Situation # 1 –  you paid an employee $1,000 for the week after the hurricane and you were closed the entire week.  The IRS will give you a tax credit of $400 ($1,000 times 40%) against your personal income tax liability.

 

Situation # 2 – assume the above but you were only closed for one day instead of five days.  The employee is considered to have earned $200 for that one day.  The IRS will give you a tax credit of $80 ($200 times 40%) against your personal income tax liability.

 

This credit is per employee.  If you have 5 employees, then in situation # 1, your total tax credit is $2,000 (5 employees @ $400) as a direct reduction in your tax liability.  In situation # 2, the tax credit would be $400 (5 employees @ $80) as a direct reduction in your tax liability.

 

The credit is obtained by filing Form 5884-A.

Posted in: Tax Credits

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