The Work Opportunity Tax Credit (WOTC) is a federally mandated program, administered at the state level, that provides tax credits to encourage employers to hire individuals from specific targeted groups. With up to 10 different eligibility types, these credits range from $2,400 to $9,600 per new hire. Whether your business is expanding or you regularly onboard new employees, these tax credits can offer significant financial benefits. The key to maximizing these credits lies in implementing an effective screening process to identify eligible hires and ensure timely claim submissions.

WOTC Eligibility Requirements

As a private, for-profit employer, you may receive credits against your federal tax liability for qualifying employees. The value of the credit depends on several factors, including the employee’s eligibility category and hours worked. Compliance is crucial, as claims must typically be filed within 28 days of the hire date.

Available Credits

Credits are calculated individually for each new hire, prorated based on hours worked and the percentage of wages paid. Both full-time and part-time employees may qualify, and there is no limit on the number of eligible employees you can claim each year. The maximum credits available per new employee are:

• $1,200 — summer youth.
• $2,400 — qualified adult hire.
• $5,600 — unemployed veteran hire.
• $9,000 — long-term family assistance recipient hire (over two-year period).
• $9,600 — disabled veteran hire.

Targeted Groups

Employers can claim WOTC for employees who have worked at least 120 hours and meet one of the following criteria:

• Designated Community Resident (DCR)
• Long-Term Family Assistance Recipient
•  Qualified Ex-Felon
• Qualified IV-A Recipient
• Qualified Long-Term Unemployment Recipient
• Qualified Supplemental Nutrition Assistance Program (SNAP) Benefits Recipient
• Qualified Supplemental Security Income (SSI) Recipient
• Qualified Summer Youth Employee
• Qualified Veteran
• Vocational Rehabilitation Referral

WOTC Screening

To claim WOTC credits, employers must screen and certify eligible employees, typically requiring the submission of up to three forms per claim. The criteria for WOTC can be sensitive and must be handled with care to ensure compliance and maintain positive employee-employer relationships. Our WOTC screening program integrates seamlessly with your hiring process, ensuring no opportunity for credits is missed.

Expert Guidance to Maximize Your Credits

Our credits and incentives team, comprised of professionals with deep federal, state, and employment tax experience, will assist you in:

• Identify eligible claims.
• Help document eligibility.
• File timely claims.

While WOTC is a federal program, it is administered at the state level, and multi-state operations may face varying requirements and deadlines. Additionally, there may be state-specific credits available, which can be identified through our comprehensive WOTC screening program.

The WOTC program provides an effective and confidential solution for businesses looking to capitalize on available tax credits. To determine if this program is right for your business, please contact us for more information.

WOTC Example Savings:

• Company Size: 300 employees
• Annual New Hires: 100
• Qualifying Percentage: 15%
• Average Tax Credit: $2,400
• Employer Credit: $36,000

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