WOTC breaks the cycle of poverty and improves cash flow by 40% or more
People experiencing poverty face significant barriers to obtaining and retaining employment in the United States, regardless of their willingness to work and/or the possession of valuable skills and characteristics. Because of these barriers, poverty is often described as a vicious cycle for the people enduring it.
The challenges of poverty multiply for families with children. Securing quality childcare can seem like an impossible task for unemployed parents, since low-paying or part-time jobs often do not cover the associated costs. These families face budget decisions on a daily basis that may strike some as unthinkable.
That’s why lawmakers have supported two federal programs for nearly thirty years designed to provide relief for families with children experiencing poverty–the Temporary Assistance for Needy Families (TANF) program and the Work Opportunity Tax Credit Program (WOTC).
Hiring TANF recipients helps break the vicious cycle of poverty, and rewards businesses in multiple ways.
What is TANF?
TANF has provided cash assistance to families with children experiencing poverty since 1996. As described in Title IV-A of the Social Security Act, TANF is funded by a block grant from the federal government, and administered on the state level. For that reason, each state determines its own eligibility requirements for TANF.
What is WOTC?
WOTC provides tax credits for businesses and organizations who hire and retain certified applicants from one of nine disadvantaged target groups. The credits range from $1200-$9600. There is no maximum allowable credit. WOTC’s purpose is to incentivize employers to create quality career pathways for Americans who would otherwise rely on government resources to survive.
Certain TANF recipients qualify for WOTC. Each certified new hire lowers their employer’s tax liability by up to $2400.
Who qualifies as a TANF recipient for WOTC?
To belong to the Qualified IV-A Recipient (TANF) WOTC targeted group, an individual must:
1) Be a member of a family receiving assistance under a state plan approved under part A of title IV of the Social Security Act relating to TANF, and
2) Have received TANF assistance for any 9 months during the 18-month period ending on the hiring date.
In 2022, over 57,000 people qualified for WOTC as TANF recipients. They earned approximately $122.5 million in WOTC for their employers.
WOTC employees help businesses grow
The benefits of a well-executed WOTC program extend beyond lowered tax liabilities. All things considered, WOTC employees are 408% more profitable for their employers than non-WOTC employees. That’s in part due to the fact that research shows that WOTC workers:
- Perform better than or equal to their peers
- Stay in their job as long or longer than non-WOTC employees
- Are less likely to leave their job in the first year than their peers
- Earn as much over time as their peers
- Progress through career ranks at the same pace as non-WOTC employees
- Are just as likely as non-WOTC employees to move to another job following their WOTC-eligible job (rather than unemployment)
Additionally, WOTC workers tend to come from diverse backgrounds, and bring diverse experiences to workforces. As a result, adding WOTC employees to your workforce can benefit DEI initiatives, and benefit your workplace culture in a myriad of ways–including driving innovation and growth, according to Harvard Business Review.
We’ve helped hundreds of companies realize >40% increases in cash flow through implementing WOTC.
Arvo provides risk-free WOTC services
TANF recipients are only one of nine groups eligible for WOTC. All things considered, over 20% of Americans qualify for WOTC. In fact, the IRS issued nearly $5 billion in WOTC in 2023! If your business isn’t claiming any part of that huge benefit, don’t wait any longer.
Our fees are 100% contingent, so there is no risk in integrating our WOTC tools and solutions.
If you already claim WOTC by another means and would like to learn how we can get you more, schedule a call with one of our tax experts today.
There’s no reason to wait to make a difference for your business and for families with children in poverty.