INCOME TAXES

The provision for income taxes is comprised of the following:



	Years ended
(in thousands)	2018			2017			2016
Current taxes:
Federal	$	5,088		$	12,134		$	12,082
State	5,208			3,979			5,448
Foreign	1,542			3,545			2,677
Total current taxes	11,838			19,658			20,207
Deferred taxes:
Federal	(1,283		)	3,645			(20,693		)
State	120			(195		)	(4,064		)
Foreign	(766		)	(1,014		)	(539		)
Total deferred taxes	(1,929		)	2,436			(25,296		)
Provision for income taxes	$	9,909		$	22,094		$	(5,089	)

The items accounting for the difference between income taxes computed at the statutory federal income tax rate and income taxes reported on the Consolidated Statements of Operations and Comprehensive Income (Loss) are as follows:



	Years ended
(in thousands, except percentages)	2018			%		2017			%		2016			%
Income tax expense (benefit) based on statutory rate	$	15,889		21.0	%	$	27,140		35.0	%	$	(7,119	)	35.0	%
Increase (decrease) resulting from:
State income taxes, net of federal benefit	3,826			5.1		2,667			3.4		1,373			(6.8	)
Tax credits, net	(12,303		)	(16.3	)	(9,964		)	(12.9	)	(17,141		)	84.3
Transition to the U.S. Tax Cuts and Job Act	(194		)	(0.3	)	2,466			3.2		—			—
Non-deductible goodwill impairment charge	—			—		—			—		17,694			(87.0	)
Non-deductible/non-taxable items	1,191			1.6		1,157			1.5		630			(3.1	)
Foreign taxes	735			1.0		(342		)	(0.4	)	993			(4.8	)
Other, net	765			1.0		(1,030		)	(1.3	)	(1,519		)	7.4
Total taxes on income (loss)	$	9,909		13.1	%	$	22,094		28.5	%	$	(5,089	)	25.0	%

Our effective tax rate for fiscal 2018 was 13.1%. The difference between the statutory federal income tax rate of 21.0% and our effective income tax rate results primarily from the federal Work Opportunity Tax Credit (“WOTC”). This tax credit is designed to encourage employers to hire workers from certain targeted groups with higher than average unemployment rates. During fiscal 2018, we recognized $1.1 million of tax benefits from prior year WOTC. Other differences between the statutory federal income tax rate of 21.0% and our effective tax rate of 13.1% result from state and foreign income taxes, certain non-deductible expenses, tax exempt interest, and tax effects of stock-based compensation.

On December 22, 2017, Staff Accounting Bulletin No. 118 was issued to address the application of U.S. GAAP in situations when a registrant does not have the necessary information available, prepared, or analyzed in reasonable detail to complete the accounting for income tax effects of the Tax Cuts and Jobs Act (the “Tax Act”). For the year ended December 30, 2018, we completed accounting for the Tax Act by recording immaterial adjustments to our transition tax and revaluation of net deferred tax assets at December 31, 2017. We also determined that unremitted earnings of our foreign subsidiaries should no longer remain subject to an indefinite reinvestment assertion and recorded a $0.4 million deferred tax liability related to foreign withholding taxes.

U.S. and international components of income (loss) before tax expense (benefit) was as follows:



	Years ended
(in thousands)	2018		2017		2016
U.S.	$	73,051	$	69,119	$	(8,221	)
International	2,612		8,431		(12,119		)
Income (loss) before tax expense (benefit)	$	75,663	$	77,550	$	(20,340	)

The components of deferred tax assets and liabilities were as follows:



(in thousands)	December 30, 2018			December 31, 2017
Deferred tax assets:
Allowance for doubtful accounts	$	1,049		$	876
Workers’ compensation	4,162			1,420
Accounts payable and other accrued expenses	3,957			4,000
Net operating loss carryforwards	2,103			2,388
Tax credit carryforwards	1,562			1,615
Accrued wages and benefits	7,016			4,644
Deferred compensation	5,438			4,484
Other	636			841
Total	25,923			20,268
Valuation allowance	(2,079		)	(2,508		)
Total deferred tax asset, net of valuation allowance	23,844			17,760
Deferred tax liabilities:
Prepaid expenses, deposits and other current assets	(2,054		)	(2,096		)
Depreciation and amortization	(17,402		)	(11,881		)
Total deferred tax liabilities	(19,456		)	(13,977		)
Net deferred tax asset, end of year	$	4,388		$	3,783

Deferred taxes related to our foreign currency translation were de minimis for fiscal 2018, 2017 and 2016.

The following table summarizes our net operating losses (“NOLs”) and credit carryforwards along with their respective valuation allowance as of December 30, 2018:



(in thousands)	Carryover tax benefit		Valuation allowance			Expected benefit		Year expiration begins
Year-end tax attributes:
State NOLs	$	1,373	$	—		$	1,373	Various
Foreign NOLs	730		(730		)	—		Various
California Enterprise Zone credits	1,562		(1,349		)	213		2023
Total	$	3,665	$	(2,079	)	$	1,586

As of December 30, 2018, our liability for unrecognized tax benefits was $2.2 million. If recognized, $1.7 million would impact our effective tax rate. We do not believe the amounts of unrecognized tax benefits will significantly increase or decrease within 12 months of the year ended December 30, 2018. This liability is recorded in other non-current liabilities on our Consolidated Balance Sheets. In general, the tax years 2015 through 2017 remain open to examination by the major taxing jurisdictions where we conduct business.

The following table summarizes the activity related to our unrecognized tax benefits:



	Years ended
(in thousands)	2018			2017			2016
Balance, beginning of fiscal year	$	2,210		$	2,242		$	2,195
Increases for tax positions related to the current year	377			356			348
Reductions due to lapsed statute of limitations	(397		)	(388		)	(301		)
Balance, end of fiscal year	$	2,190		$	2,210		$	2,242

We recognize interest and penalties related to unrecognized tax benefits within income tax expense on the accompanying Consolidated Statements of Operations and Comprehensive Income (Loss). Accrued interest and penalties are included within other long-term liabilities on the Consolidated Balance Sheets. Related to the unrecognized tax benefits noted above, we accrued a de minimis amount for interest and penalties during fiscal 2018 and, in total, as of December 30, 2018, have recognized a liability for penalties of $0.2 million and interest of $1.0 million.