For those of us that provide Work Opportunity Tax Credit (WOTC) services to business owners, it is easy to assume that most business owners are bird lovers. The perception that they are ornithology enthusiasts comes from frequently hearing many of them attempt their best Barred Owl imitation.
The Barred Owl’s hooting call, ‘Who Who’ is a classic sound that permeates the old forests and treed swamps of North America. This call carries well through the woods and is a recognizable bird call to imitate.
But when talking to a business owner attempting to claim WOTC federal tax credits, you should not mistake their utterance of ‘WHO WHO’ as a bird call. Rather, what you are hearing is a business owner needing to understand exactly who among their hired employees qualifies for the WOTC tax credits.
WHAT WHAT is the WOTC?
In recognition of the jobs you provide, the federal government offers employers the WOTC, a tax credit for hiring and retaining individuals from target groups with significant employment barriers, such as veterans, ex-felons, and so on.
Employers can claim up to $9,600 per employee in tax credits per year under the WOTC program. Additionally, there is no set limit to the number of individuals an employer can hire to claim the tax credit.
WHO WHO qualifies for the WOTC?
How do you know if you’re hiring WOTC qualified employees? The first step is understanding who qualifies of the WOTC program. Employers can hire from the following target groups:
- TANF recipients
- SNAP (food stamp) recipients
- Designated Community Residents (living in Empowerment Zone Counties)
- Vocational Rehabilitation Referrals
- Supplemental Security Income Recipients
- Summer Youth Employees (living in Empowerment Zones)
- Long-Term Unemployed Recipients
HOW HOW much of a tax credit can you get?
The tax credit that employers can claim is dependent on a few factors:
- The specific target group of the individual hired
- The wages paid to that individual during the first year of employment
- The number of hours that the individual worked in the first year of employment
The WOTC tax credit range is from $1,200 to $9,600, depending on the qualified employees target group:
- For employees who work at least 120 hours in a year, 25% of the employee’s first-year wages, up to the maximum credit
- For employees who work at least 400 hours in a year, 40% of the employee’s first-year wages, up to the maximum credit
- For Long-Term TANF recipients, the tax credit is calculated over a two-year period
WHO WHO at CTI can help me maximize my credits?
Searching for and screening job candidates who qualify for the WOTC, as well as applying to state workforce agencies and claiming the credit, does take some diligence and time. Let CTI’s elite tax specialists do the work to optimize the WOTC for you.
With the care and patience of a wise owl, CTI excels at screening applicants and employees for state and federal point-of-hire programs, monitoring your WOTC state agency applications, and quickly resolving issues to obtain prompt certificate approvals.
To learn more and begin your application process, schedule your complimentary WOTC consultation today.