Tax Credits

Tax Credits & Training Subsidies Presented by Good Work Network through funding from the Department of Social Services, Child Care & Early Childhood Education Division Table of Contents        School Readiness Tax Credit & QRS Housing Credits Hiring Incentives – WOTC, WtW, OJT, Job1 Renewal Communities LA Pathways Training Program Incumbent Worker Training Program Dealing with costs of the QRS School Readiness Tax Credit  What Credits given to child care providers, parents, teachers, and businesses, receipt of credits based on participation in QRS  Purpose Designed to improve centers and quality of child care available thereby improving children’s school readiness, school performance, and later in life high school graduation rates and job performance. http://www.goodworknetwork.org/pppresent/pptlinks/TaxCredits SchooReadiness.pdf Available 2008 School Readiness Tax Credit START TIME: This tax credit will not be initiated until January 1, 2008. Some things to be considering in the mean time: * Familiarize yourself with the Quality Rating System @ www.qrslouisiana.com, Agenda for Children * Schedule an appointment with a Technical Advisor from Agenda for Children (504) 586-8509 * Apply for QRS – Linzi Conner (504) 988-7829 * Request a Mental Health Consultant (Call Marylynn Gagnon (504) 988-7387) * Make sure all employees are enrolled in LA Pathways Available 2008 Technical Advisors     Will meet with centers whether they are applying for QRS or not Can explain QRS one-on-one Will do site visits and make suggestions to help get you ready Once QRS assesses you they give your score to the Technical Advisors (are intermediaries between QRS and providers) Mental Health Consultant     Consultants are trained in child psychology, development, and health and can answer questions about children’s development and functioning They observe center functioning and will provide suggestions of how to respond to any determined issues They are familiar with QRS requirements and can offer guidance on how centers can become more compliant Services are free for providers QRS System that assigns centers a star rating between 1 and 5 to designate its quality and competence in a number of areas. The system rates centers based on points given for qualifications in four components:     Administration Practices Family & Community Involvement Program Staff Qualifications QRS Ratings    Achieving star ratings is a process The system is not designed for providers to immediately receive 5-stars Based on ITER-S/ECER-S (a social- emotional instrument used to determine the quality of child care) http://www.goodworknetwork.org/pppresent/pptlink s/QRSModel.doc 1 - Star First step – get up to licensing standards  1 – star requirements are simply meeting basic requirements of licensing  Any citations must be corrected by time licensing comes back, then automatically achieve 1-star rating  There are no tax incentives for 1-star centers 2 - Star     QIC (part of the QRS) They come in by appointment They only like to meet with you after you have met with Technical Advisors If not approved there is an appeal process…they can come back…time limits not yet determined *Many providers get stuck at 2-stars because they do not offer benefits. Staff must be registered with LA Pathways. 3 - Stars     Actual QRS assessors come in by appointment and perform site visit Only done after centers have been granted 2stars by QIC QRS reports your score to Agenda and Agenda will report to providers If not granted above 2-stars, there is an appeal process but time frame has not yet been finalized (could be a year) Benefits of Getting Started Now     Lots of supports set in place right now QRS is optional, but in future many grants and incentives may only be offered to centers who are participating in the QRS. School Readiness Tax Incentives are only available to providers in QRS and amount of credit increases as your center’s star rating increases, SRTC incentives will increase a center’s income Good employee recruiting and marketing tool What are Tax Credits?    A tax credit is a reduction in the amount of taxes a taxpayer owes. For example, if a person receives a tax credit of $1500 it would decrease the amount owed to the IRS at tax time by $1500, allowing the taxpayer to save money. In the case of a center this can almost be viewed as earned income. School Readiness Tax Credits Benefits to Providers: Star Rating of Center Proposed Tax Credit (per child on Child Care Assistance) $1500 $1250 $1000 $750 No credit 5 star 4 star 3 star 2 star 1 star How Credits Will Work    No paper work will be necessary DSS automatically reports center’s info to the Dept. of Revenue (# children enrolled and center’s * level) – this determines how much there credit is Copy of this report also goes to centers and they record credit amount on taxes, but no forms or paperwork Benefits to Parents >Incentive for parents to place their children in centers which have higher star ratings Star Rating of Center Increase Max credit Max credit for to existing per child 2 or more credit children 200% 150% $1575 $1313 $3150 $2625 5 star 4 star 3 star 2 star 100% 50% $1050 $788 $2100 $1576 Note: The center’s rating affects the tax credit to the parent. How Credits Will Work   Augments already existing state childcare tax credit Only need to verify star level of center through receipt that will be given to them by center Benefits to Teachers >A credit between $1500-$3000, depending on the teachers level of education    Designed to increase retention of qualified teachers Acknowledges that centers face difficulties in recruiting and retaining highly qualified workers Tax systems have been seen as efficient and effective ways to implement wage supplements Note*$1500-$3000 will increase yearly with inflation Available 2008 Teachers     *Note* teachers get credit for working in any center that is simply participating in QRS Unlike other portions of credit, amount of credit is not based on star level of center, rather on teacher’s education level Retention - teachers can only get credits after 6 months of employment at one center Recruitment – attract teachers due to QRS participation Benefits to Businesses: -Businesses can receive a tax credit for eligible expenses including:     Construction, renovation, or expansion of a child care center Equipment purchased for a center Maintaining or operating a center Subsidizing child care for employees *May be opportunity here for approaching businesses for help/support. Available 2008 Benefits to Business Star rating of Center Proposed tax credit 5 star 4 star 20% of eligible expenses 15% of expenses 3 star 2 star 1 star 10% of expenses 5% of expenses No tax benefit School Readiness Tax Credit...Refer to Attachment A Historic Preservation Tax Incentives    Residential Rehabilitation Credits Commercial Restoratation Credits Restoration Tax Abatement Residential Rehabilitation Tax Credit >credits available for renovations of old & historic buildings to be used as a residence   Up to 25% tax credit for rehabilitation of a building being used for personal residence Exact amount of credit is determined by the renovator’s Adjusted Gross Income state tax credit info and application.pdf Restoration Credits >credits available for renovations of old & historic buildings to be used for commercial purposes 26% rehabilitation credit is available for the rehabilitation of a certified historic structure. *Costs of renovations must exceed $5,000. (May include buildings built after 1936.)  10% rehabilitation credit is available for the rehabilitation of non-historic buildings built before 1936 that are to be used for commercial, non-residential purposes. http://www.goodworknetwork.org/pppresent/pptl inks/TaxCreditsIMH.doc  Restoration Tax Abatement >further incentive to rehabilitate an old facility   Usually the value of a house increases when it is rehabilitated and so do property taxes, leading to greater expenses for the owner. The Restoration Tax Abatement freezes property tax values at pre-improvement levels for five years. Employment Incentives & Training Subsidies  Job1 & OJT  WOTC & WtW  Renewal Communities  LA Pathways  IWTP/SBET Job1 & On-the-Job-Training (OJT)     Adult and youth programs They will pay for employees training They will pay for between 50% and 100% of employees salary for 6 months Aimed at getting target groups into quality and long-term employment Job1 Youth ages 14-21, employment really focused on 18-21 year olds  Youth must be enrolled in Job1 program  ‘work experience contracts’ http://www.goodworknetwork.org/pppre sent/pptlinks/Job1.doc  Job1 & OJT – Adult Program     Similar to Job1, except adults do not have to meet eligibility requirements to be enrolled in the program OJT pays 50% of employees salary for 6 months Job1 pays 100% salary for 6 months Depends on skills/qualifications of employee / employer’s risk Work Opportunity Tax Credit (WOTC) & Welfare-to-Work tax Credit (WtW)    Two hiring incentives for employers designed to get target populations into quality and longterm employment Employees must be from one of nine target groups to qualify To show up on 2008 taxes, employees must be employed before 12/31/2007 Work Opportunity Tax Credit A tax credit for employers of up to $2,100 per WOTC employee hired (up to 35% of first $6,000 of wages). *Wages paid under On-the-Job-Training (OJT) are not eligible for reimbursement, but if the WOTC paperwork is completed on or before the employee's first day on the job, WOTC eligible wages may begin the day after OJT ends, but not to exceed 12 months from hire date. *Employee must work 400 hours or 180 days for employer to be eligible for reimbursement. The period worked under OJT does count towards this time. Work Opportunity Tax Credit  Benefits to Business  Up to $2,400 for each new adult hire;  $1,200 for each new summer youth hire Tax Credits - WOTC.doc Qualifying Employees  Nine target groups hired on or after 1/1/07: 1) Veteran who is a member of a family that is receiving or recently received Food Stamps 2) Recipient of Supplemental Security Income (SSI) benefits 3) Vocational Rehabilitation Referral who completed or is completing rehabilitative services 4) Ex-felon who has a hiring date which is not more than one year after the last date of conviction/released from prison Qualifying Employees  Member of a family. . . 5) Receiving or recently received Temporary Assistance to Needy Families (TANF) for at least 18 consecutive months ending on the hiring date 6) Received TANF benefits for any 9-month period during the 18-month period ending on the hiring date 7) Received Food Stamps Qualifying Employees  Resident of. . . 8) 18-24 year old resident of one of the federally designated Empowerment Zones (EZs), Enterprise Communities (ECs), or Renewal Communities (RCs) 9) A 16-17 year old EZ/EC or RC resident must work at least 90 days between May 1 and September 15 as a Summer Youth Employee Work Opportunity Tax Credit...Refer to Attachment D Welfare-to-Work  As much as $8,500 over two years for each new hire 35% of qualified wages for the first year  50% of qualified wages for the second year (*Qualified wages are capped at $10,000/year)  Regulations     There is no limit on the number of workers who can qualify WOTC and WtW can not be claimed for the same employee Forms must be filed within 28 days of hiring employee For for-profit businesses only Renewal Communities Credit of up to $1,500 for each employee who lives and works in a Renewal Community  Applicable to both new hires and existing employees through 2009  File Form 8844 as part of your regular tax filing http://www.goodworknetwork.org/pppresent/pptl inks/RenewalCommunity.doc  Renewal Communities    Renewal Communities (RCs) are distressed areas in urban and rural communities that the federal government has targeted for development and where businesses are eligible for tax incentives. These incentives help to spur business and job growth in communities that have been suffering from high levels of poverty and unemployment. Businesses can claim the tax incentives by operating in, and hiring residents who reside in these areas. Renewal Communities Check if your address is in a renewal community: www. hud.gov/crlocator 1-800-998-9999 or 1-202-245-1299 Renewal Communities     Orleans Parish only Business and employee must reside in Renewal Community Can not be applied to relatives who work for you No limit on number of employees who can qualify LA Pathways Providers must be enrolled in the LA Pathways Child Care Career Development System to participate Subsidizes training for providers and employees – (reimbursements go straight to training provider)  Creates a career ladder – lets you and others know your qualifications Visit: http://www.pathways.louisiana.gov  LA Pathways Enrollment in System is free and easy  Download enrollment form from internet or call to request one by mail, fill out and return by mail or fax  Pathways offers scholarships for CDA assessments, Family Child Care Home Accreditation, and college courses Enrollment form: LA Pathways - EnrollmentForm.pdf  Incumbent Worker Program >Help available to pay for staff training Reimbursements of up to $3,000 per employee per year can be granted to providers whose staff completes accepted training  Compensation paid directly to employer  Incumbent Worker Program  Benefits to Child Care Centers       Recruitment and retention Sustainable competitive advantage of center Increased productivity Increased profitability Helping staff meet QRS requirements Helping centers meet basic licensing requirements of training hours Incumbent Worker Program Application Process:  Determine which training is needed and which training provider you will use  Complete SBET application [SF-424 Appendix A & B - available online] &Technical application  Training costs are reimbursed after training has been completed and documentation is submitted. Incumbent Worker Program...Refer to Attachment C Costs Associated with QRS In long run credits are seen as way to cover some of the costs and help pay for things like employee raises  Some grants are available to help offset some of the costs  Grants Available for Renovations and Equipment  DSS Repair & Improvement Grants (Class A or have pending application, must have children on assistance) http://www.goodworknetwork.org//pppresent/pptlinks/RepairImprovementFA Qs.pdf >Up to $10,000 for building renovations, repairs, improvements  Institute of Mental Hygiene Mini-grants >Up to $15,000 available for equipment, training, programs (Orleans parish only, center must have been operating before Katrina) http://www.goodworknetwork.org//pppresent/pptlinks/TaxCreditsIMH.doc Other Funding Available   Quality Incentives Bonuses available for Class A, NAEYC accredited centers http://www.goodworknetwork.org//pppresent/pptlinks/QualityIncentivesProgr am.pdf THANKS QUESTIONS?