The federal Work Opportunity Tax Credit (WOTC) program can generate your organization savings of up to $9,600 per qualified candidate, which can be a boost to the bottom lines of employers who are actively hiring.
According to the U.S. Department of Labor, about $1 billion in tax credits are claimed through the WOTC program annually. The Work Opportunity Tax Credit for most categories is $2,400, but certain categories, such as those for disabled veterans, can generate up to $9,600. The average amount of tax credits depends on the mix of target group new hires. It can add up to significant tax credits, whether the company is large or small. The tax credit creates an immediate boost to your bottom line because it reduces your tax bill dollar-for-dollar. Each $1 of WOTC saves you $1 in taxes.
If you’re not participating in the program, now may be the time to give it a try.
The WOTC program encourages employers to hire people who often have a difficult time finding a job. The targeted groups under WOTC include people such as military veterans, food stamps recipients, ex-felons, summer youth employees, and the long-term unemployed. You can find a full list of WOTC target groups by clicking visiting the IRS page.
Simply by hiring employees you need, you can generate additional income for your organization. Helping the people in these target groups to find jobs also helps your organization provide a recognized benefit to your community.
WOTC has been in force since the passage of The Protecting Americans from Tax Hikes Act of 2015 (the PATH Act). In the past, the WOTC program has been renewed on a bi-annual and sometimes even annual basis. Congress recently approved extending WOTC through December 31, 2025.
There is every expectation that the WOTC program will continue to be extended, but why wait and possibly miss out on an amazing tax credit program that rewards you for hiring?
For organizations that are hesitant to implement a WOTC program because of the administrative burden it may impose, there are many third-party vendors that can help oversee and manage the entire WOTC process from document retention to screening and submitting the WOTC information to your state workforce agency.
Some vendors provide employers with free tools, such as an online platform and Call Centers to improve verification of employee information required by WOTC. Integrating the WOTC application process into an online platform can allow for a seamless process for WOTC pre-screening, employee on-boarding, and Call Center screening.
Many of these vendors will provide these services for less cost than you might imagine, allowing your organization to keep its focus on what it does best – building your business to greater success.
Tax credits are a great way for organizations to increase their bottom-line. If you’re interested in learning about WOTC, the ERC, or a different tax credit, contact us to see how we can help your organization start earning.