HireQuest, Inc. Income Taxes Disclosure

Note 13 – Income Tax

 

The provision for income taxes is comprised of the following:

 

		December 31,				December 31,
(in thousands)			2024				2023
Current taxes
Federal		$	1,418			$	1,080
State			551				614
Total current taxes			1,969				1,694
Deferred taxes
Federal			(1,479	)			(332	)
State			(269	)			(17	)
Total deferred taxes			(1,748	)			(349	)
Provision for income taxes		$	221			$	1,345

 

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of our deferred taxes are as follows:

 

		December 31,				December 31,
(in thousands)			2024				2023
Deferred tax assets
Workers' compensation claims liability			1,537			$	1,578
Bad debt reserve			86				49
Accrued vacation			89				80
Impairment of notes receivable			191				153
Stock based compensation			346				92
Net operating loss carryforward			48				92
Other			38				40
Total deferred tax asset			2,335				2,084
Deferred tax liabilities
Depreciation and amortization			(214	)			(1,702	)
Deferred gain on installment sale			(48	)			(57	)
Total deferred tax liabilities			(262	)			(1,759	)
Total deferred taxes, net		$	2,073			$	325

 

At December 31, 2023, the Company has a federal net operating loss carry-forward of approximately $209 thousand that was utilized in 2024.

 

Our effective tax rates were approximately 5.3% and 17.3% for 2024 and 2023, respectively. The items accounting for the difference between income taxes computed at the statutory federal income tax rate and the income taxes reported on the statements of income are as follows:

 

(in thousands except percentages)		December 31, 2024								December 31, 2023
Income tax expense based on statutory rate		$	871				21.0	%		$	1,634				21.0	%
Non-deductible executive compensation			55				1.3	%			142				1.8	%
Stock based compensation			-				0.0	%			(77	)			(1.0	)%
State income taxes expense net of federal taxes			166				4.0	%			468				6.0	%
WOTC			(884	)			(21.3	)%			(925	)			(11.9	)%
Other			13				0.3	%			103				1.3	%
Total taxes on income		$	221				5.3	%		$	1,345				17.3	%

 

U.S. federal income tax returns after 2021 remain open to examination. Generally, state income tax returns after 2020 remain open to examination. No income tax returns are currently under examination. As of December 31, 2024, and December 31, 2023, the Company does not have any unrecognized tax benefits, and continues to monitor its current and prior tax positions for any changes.