Maximizing Tax Credits for Home Healthcare Employers

Running a home healthcare agency is rewarding, but let’s be real—it comes with its fair share of financial challenges. Rising labor costs, caregiver turnover, and keeping up with compliance can feel like a never-ending juggle. But what if we told you there are ways to ease that burden and boost your bottom line without cutting corners?

At Straight Talk CPAs, we understand the unique pressures you face. That's why we're diving into the world of tax credits and incentives specifically for home healthcare employers. Think of this as your guide to unlocking hidden cash flow and making your business more financially sound. We’ll explore how to leverage opportunities like the Work Opportunity Tax Credit (WOTC), Employee Retention Credit, and other valuable credits to help your agency thrive.

Many home healthcare owners are not aware of small business tax credits that they may be eligible for, and leave money on the table. With the right approach, you can integrate automated WOTC screening into your hiring and payroll processes, ensuring you capture every eligible dollar while improving caregiver retention. Maximizing home healthcare tax credits isn't just about saving money; it's about reinvesting in your team and expanding your services. This article will help you navigate the complexities of WOTC and other small business tax credits, ultimately helping you make informed decisions that will positively impact your agency's financial health.

The Work Opportunity Tax Credit (WOTC): Your Hiring Advantage

Let's start with a big one: the Work Opportunity Tax Credit (WOTC). WOTC is like a secret weapon that incentivizes employers to hire individuals from specific groups who often face significant barriers to finding employment. For home healthcare agencies, this can be a game-changer because the industry tends to have a higher-than-average percentage of employees who qualify.

Who Qualifies for WOTC?

The WOTC program targets several groups, including:

• Individuals receiving government assistance (SNAP, TANF)
• Veterans
• Long-term unemployed individuals
• Residents of Empowerment Zones

Depending on the employee's category, you could claim credits ranging from $2,400 to $9,600 per eligible new hire. And because there's no limit on how many WOTC-eligible individuals you can hire, the savings can really add up.

Example: Let's say you hire 10 new caregivers, and 4 of them qualify for the WOTC at an average credit of $4,000 each. That's an instant $16,000 back in your pocket!

How to Make WOTC Work for You:

• Screen Every New Hire: Make WOTC screening a standard part of your hiring process. Several online tools and services can automate this, making it easy to identify eligible candidates.
• Retain, Retain, Retain: The longer a caregiver stays with your agency, the more WOTC credit you can earn. Focus on creating a supportive work environment and offering opportunities for professional development.
• Certify Your Hires: Ensure you complete all the necessary paperwork to certify your eligible new hires. Don't leave money on the table because of a missed deadline!

Employee Retention Credit (ERC): A Pandemic Relief Tool

The Employee Retention Credit (ERC) was a temporary program designed to help businesses that were affected by the COVID-19 pandemic. While the program has ended, it's still worth exploring if you haven't already taken advantage of it.

How Did the ERC Work?

The ERC was a refundable tax credit for businesses that experienced either a significant decline in gross receipts or a full or partial suspension of operations due to government orders related to COVID-19. The credit was equal to 50% of qualified wages (including health plan expenses) paid to employees, up to a certain limit per employee.



Example: A Senior Helpers franchise claimed close to $3 million in federal credits with an annual revenue just north of $7.5 million. This shows the significant impact the ERC could have on a home healthcare agency's finances.

Is It Too Late to Claim the ERC?

Even though the ERC program has ended, you can still file retroactive claims for eligible quarters. Review your records and consult with a tax professional to determine if you qualify for any unclaimed credits.

Small Business Health Care Tax Credit: Affordable Coverage for Your Team

Attracting and retaining top talent in the competitive home healthcare industry requires offering quality benefits, including health insurance. The Small Business Health Care Tax Credit can help you provide that coverage without breaking the bank.

Who Qualifies?

To be eligible for this credit, you generally need to:

• Have fewer than 25 full-time equivalent employees
• Pay average wages below a certain inflation-adjusted amount (e.g., $62,000 in 2023)
• Cover at least 50% of employee-only health insurance premiums
• Offer a qualified health plan to employees

The credit can cover up to 50% of premiums paid for small business employers and 35% for small tax-exempt employers. The amount of the credit you receive works on a sliding scale. The smaller the employer, the bigger the credit.

Example: If you pay $50,000 a year toward employees’ health care premiums and qualify for a $10,000 credit each year, you can save $20,000 over two years.

Other Tax Breaks to Explore

Beyond the WOTC, ERC, and health care tax credit, here are a few other deductions and credits home care agency owners often miss:

• Home Office Deduction: If you use a dedicated space in your home for your business, you may be able to deduct a portion of your home expenses.
• Health Insurance Premiums: You can often deduct 100% of the cost of health insurance premiums for yourself and your employees.

Important Note:

Tax laws and regulations are constantly changing. Always consult with a qualified tax professional to determine your specific eligibility for these and other tax benefits.

Straight Talk CPAs: Your Partner in Tax Optimization

Navigating the world of tax credits and deductions can feel overwhelming, but you don't have to do it alone. At Straight Talk CPAs, we specialize in helping home healthcare employers like you identify and claim every tax benefit you're entitled to. We’ll work with you to develop a customized tax strategy that maximizes your savings and supports your business goals.

Ready to unlock hidden cash flow and take your home healthcare agency to the next level? Contact us today for a free consultation!