Location, Location, Location! Tax in on Opportunity Zone Credits

Listen up, all you spankin’ new entrepreneurs putting off your taxes last minute. We recently spoke with Jeff Weinkle, a tax manager at HA&W, and he gave us the scoop on a little tax credit called Opportunity Zones (within Job Tax Credits). We’ve fleshed out the details and process below, so be sure you find out if you’re in the sweet spot – and if you qualify, cash in on those credits!

Opportunity Zone Details + Qualifications

OZ qualification is based on average annual increase in your qualifying employment over the prior year. Here’s a simple math problem to determine your average: count total qualifying employees by month and divide by 12.

Qualifying jobs must be new to GA (sorry, folks, existing jobs transferred from another GA location doesn’t count) and employees must also be:

  • Full time (35 hours/week)
  • Paid an average wage (approx. $24k+)
  • Offer a health insurance policy to new employees(however, you are not required to subsidize the policy unless you’re already doing so for existing employees)

Within an OZ, you only need an average annual increase of 2 jobs to claim credits. Credits account for $3,500 per job, plus you may continue to claim them annually for 4 additional years if the net increase in qualifying employment is maintained over that time. If your company leaves an OZ, you may still be able to earn credits, but it will be at the credit amount applicable to the new location.

Credits are claimed on your company’s income tax return and are normally applied against income tax liability. However, companies within an OZ may elect to have the credits applied to their withholding tax account instead. The withholding option allows companies who can’t make use of income tax credits the opportunity to monetize them.

Steps to Claim Yo’ Credits

1. Complete “Part One” of the OZ Certification which can be done online here (for businesses within Atlanta) or the old fashioned way (see contact instructions here if you’re a pen and paper kind of guy/gal)

2. Claim your credit by filing Form IT-CA with the GA Income Tax return, along with a copy of the accepted OZ Certification (from Step 1)

3. Form IT-WH (the withholding election form) must be filed at least 30 days prior to filing an original tax return for the year (you can’t elect on amended returns). And guess what, y’all – you can file this form online tooNote: Typically it takes 2-4 months after filing the return for the state to apply the credits to withholding. After applied, your company will keep the amounts withheld from your employees’ paychecks (as GA income tax withholds each payroll period until the credits are all used).

Click here for additional details and make sure you take advantage of Opportunity Zone credits if you can. If you’re in a zone, you will likely benefit vs. regular Job Tax Credits.

Remember, “in this world nothing can be certain, except death and taxes.” Breathe on, file on!