Last fall we alerted you to the Employee Retention Tax Credit available to employers impacted by Hurricanes Harvey, Irma, and Maria, and since then we have been assisting our clients in securing this tax credit. This month, Puerto Rico announced a similar program providing a cash benefit to employers impacted by Hurricanes Irma and Maria. The Puerto Rico cash benefit program differs from the US tax credit, and employers are not allowed to claim both benefits on the same qualified wages.
While the general eligibility provisions are the same for both benefits (i.e., the business was rendered inoperable as a result of hurricane damage and the employer continued to pay employees during the period of inoperability), there are additional considerations for the newly announced Puerto Rico cash benefit, including unique electronic filing requirements, form specifics, and eligible municipalities. Additionally, the amounts available to employers under the two programs differs, with the US tax credit being 40% of wages paid, up to a maximum of $2,400/employee, and the Puerto Rico cash benefit being 32% or 26% (based on the business’s net income subject to tax) of wages paid up to maximums of $1,560 and $1,920/employee, respectively.
Based on the differences in the programs, amounts, and document requirements, it is important that you work with your First Advantage Tax Account Manager to review the opportunities. Because both benefits cannot be taken on the same wages, our team will assist with analyzing the tax implications within your operational structure of claiming the federal tax credit on its US income tax returns as compared to the Puerto Rico cash benefit.