One of the most valuable tax credit programs overlooked by businesses is employment tax credits. Many companies believe they would not benefit from this tax savings strategy due to the background of employees they hire or the complexity of employment incentive programs.
However, both state and federal employment credits give businesses the opportunity to improve their tax budget and increase their bottom line. While some companies consider administering programs such as the Work Opportunity Tax Credit (WOTC) on their own, a third-party tax consultant often elicits more honest responses from new employees.
The added legal assurance of using a third party protects your company, while tax consultants utilize specialized technology that makes the employment tax credit process more efficient.
Tax experts advise that you should check eligibility for incentive programs such as the WOTC at or before the time of hire due to strict deadlines for submitting documentation. Here are questions to ask of new hires on or before their first day of employment:
1. Is Your New Employee A Veteran?
Veterans who served on activity duty in the United States armed forces for more than 180 days, not including training, or who have been released from duty due to a service-related disability, may qualify your company to receive savings through the Work Opportunity Tax Credit.
2. Was your new hire Unemployed prior to be hired?
Individuals who were unemployed for at least 27 consecutive weeks and have received unemployment compensation for a period of time under State or Federal law may qualify your business to receive a tax benefit through the WOTC. The long-term unemployment target category will apply to a larger population of employees thereby giving taxpayers an opportunity to increase their overall credit.
3. Is Your Recently Hired Employee A Food Stamp Recipient?
Recipients of SNAP, or food stamps, and their family members may be eligible through the WOTC if they are age 18 to 39 years old. Potentially qualified employees should have received food stamps for the six months leading up to the day they were offered employment or at least three of the five months leading up to the date of hire.
4. Is Your New Hire A Supplemental Security Income Recipient?
The Supplemental Security Income program (SSI) is administered by Social Security and pays monthly benefits to individuals with limited income and resources who are disabled, blind or age 65 or older. New hires who have received SSI benefits for any months in the 60-day period leading up to their date of hire may be eligible for the WOTC.
When you partner with an outsourced tax consultant as you pursue employment incentives such as the WOTC, your business experiences increased success in capturing tax credits due to higher rates of employee compliance. Your consultant’s extensive employment credit experience is also a significant advantage.
Don’t miss out on this valuable tax credit due to fear of the legal consequences or misunderstanding the proper process for submission. Speak with a tax expert at CTI to learn how you are able to maximize savings through employment tax incentives.
Ready to discover more about the WOTC or other employment incentive opportunities? Download your complimentary, educational guide below.
