Additional Tax Relief for Businesses(p10)

This benefit applies only to the counties in Table 1. 
 

An eligible employer who conducted an active trade or business in a Midwestern disaster area can claim the employee retention credit. The credit is 40% of qualified wages for each eligible employee (up to a maximum of $6,000 in qualified wages per employee). Generally, you must reduce your deduction for salaries and wages by the amount of this credit (before the tax liability limit). Use Form 5884-A to claim the credit.

The following definitions apply to employers affected by the severe storms, tornadoes, or flooding.

For this purpose, an eligible employer is any employer who meets all of the following.

• Employed an average of not more than 200 employees on business days during the tax year before the applicable disaster date.
• Conducted an active trade or business on the applicable disaster date in a Midwestern disaster area.
• Whose trade or business was inoperable on any day after the applicable disaster date and before January 1, 2009, because of the damage caused by the severe storms, tornadoes, or flooding.

For this purpose, an eligible employee is an employee whose principal place of employment on the applicable disaster date with such eligible employer was in a Midwestern disaster area. An employee is not an eligible employee for purposes of the severe storms, tornadoes, or flooding if the employee is treated as an eligible employee for the work opportunity credit.

Qualified wages are wages (up to $6,000 per employee) you paid or incurred before January 1, 2009, for an eligible employee beginning on the date your trade or business first became inoperable at the employee's principal place of employment immediately before the applicable disaster, and ending on the date your trade or business resumed significant operations at that place. In addition, the wages must have been paid or incurred after the applicable disaster date.

This includes wages paid even if the employee performed no services, performed services at a place of employment other than the principal place of employment, or performed services at the principal place of employment before significant operations resumed.

Wages qualifying for the credit generally have the same meaning as wages subject to the Federal Unemployment Tax Act (FUTA). Qualified wages also include amounts you paid for medical or hospitalization expenses in connection with sickness or accident disability. Qualified wages for any employee must be reduced by the amount of any work supplementation payment you received under the Social Security Act.

For agricultural employees, if the work performed by any employee during more than half of any pay period qualified under FUTA as agricultural labor, that employee's wages subject to social security and Medicare taxes are qualified wages. For a special rule that applies to railroad employees, see section 51(h)(1)(B).

Qualified wages do not include the following.

• Wages paid to your dependent or a related individual. See section 51(i)(1).
• Wages paid to any employee during the period for which you received payment for the employee from a federally funded on-the-job training program.
• Wages for services of replacement workers during a strike or lockout.

For more information, see Form 5884-A.

This benefit applies only to the counties in Table 1. 
 

An employer who conducted an active trade or business in a Midwestern disaster area can claim the employer housing credit. The credit is equal to 30% of the value (up to $600 per month per employee) of in-kind lodging furnished to a qualified employee (and the employee's spouse or dependents) from November 1, 2008, through May 1, 2009. The value of the lodging is excluded from the income of the qualified employee but is treated as wages for purposes of taxes imposed under the Federal Insurance Contributions Act (FICA) and the Federal Unemployment Tax Act (FUTA). Generally, you must reduce your deduction for salaries and wages by the amount of this credit (before the tax liability limit). The employer must use Form 5884-A to claim the credit.

A qualified employee is an individual who had a main home in a Midwestern disaster area on the applicable disaster date, and who performs substantially all employment services in a Midwestern disaster area for the employer furnishing the lodging. The employee cannot be your dependent or a related individual. See section 51(i)(1).

For more information, see Form 5884-A.

This benefit applies only to the counties in Table 1. 
 

You can elect to deduct 50% of any qualified disaster recovery assistance clean-up costs for the tax year in which the costs are paid or incurred, instead of capitalizing them. Qualified disaster recovery assistance clean-up costs are any amounts paid or incurred on or after the applicable disaster date, and before January 1, 2011, for the removal of debris from, or the demolition of structures on, real property located in a Midwestern disaster area that is:

• Held by you for use in a trade or business or for the production of income, or
• Inventory or other property held primarily for sale to customers in the ordinary course of your trade or business.

Qualified disaster recovery assistance clean-up costs are limited to amounts necessary due to damage attributable to the severe storms, tornadoes, or flooding in the Midwestern disaster areas.

This benefit applies only to the counties in Table 1. 
 

The rehabilitation credit is increased for qualified rehabilitation expenditures paid or incurred on or after the applicable disaster date, and before January 1, 2012, on buildings located in a Midwestern disaster area as follows.

• For pre-1936 buildings (other than certified historic structures), the credit percentage is increased from 10% to 13%.
• For certified historic structures, the credit percentage is increased from 20% to 26%.

For more information, see Form 3468, Investment Credit.