The recently approved Protecting Americans from Tax Hikes Act of 2015 included a multitude of helpful tax benefits for McDonald’s Owner/Operators.
If you have a restaurant in an urban area, or in some select rural areas, you may qualify for Empowerment Zone Tax Incentives, which the act extended through Dec. 31, 2016.
You can find out here (http://egis.hud.gov/ezrclocator/) if your restaurant is included in a federally-designated Empowerment Zone. If it is, you can receive significant tax credits for hiring employees who live in Empowerment Zones and increased deductions for qualifying renovations on your restaurant.
We’ve seen many McDonald’s Owner/Operators use these incentives to significantly reduce their taxes, and in turn, boost their cash flow.
The EZ Employment Credit is up to a $3,000 credit per qualified employee. The credit is equal to 20 percent of up to $15,000 in annual wages.
Both full and part-time employees can qualify for the credit, so if a part-time employee earned less than $15,000 for the year, the credit would be 20 percent of whatever they earned.
You can also receive a Work Opportunity Tax Credit of up to $2,400 for each new employee between the ages of 18 and 39 who lives in an Empowerment Zone. Like the Empowerment Zone Tax Incentives, the WOTC also was extended under the Protecting Americans from Tax Hikes Act of 2015, though this benefit runs even longer – through Dec. 31, 2019.
In an Empowerment Zone, you also can receive a WOTC Summer Youth Tax Credit of up to $1,200 for 16 and 17 year old employees.
The Work Opportunity Tax Credit is equal to 40 percent of the first $6,000 in annual wages and the Summer Youth Tax Credit is equal to 40 percent of the first $3,000 in annual wages.
McDonald’s Owner/Operators within Empowerment Zones also can take an additional $35,000 deduction on top of the maximum $500,000 Section 179 deduction for new business equipment. Section 179 expensing determines the amount of an investment a small business is allowed to write off entirely in the first year rather than being depreciated over multiple years.
If your restaurant is within an Empowerment Zone and you’re currently not taking advantage of these incentives, give us a call to see about setting them up.