Learn how to get the most from WOTC

The Work Opportunity Tax Credit (WOTC) program is a federal employment tax credit program that rewards employers who hire and retain disadvantaged job-seekers with credits against their annual tax liability. The credits are calculated as a percentage of wages paid to WOTC-certified new hires. The percentage raises when the eligible employee achieves certain hours-worked milestones. There are maximum allowable credit amounts per eligible employee, but there is no maximum overall credit. In 2023, the IRS issued approximately $5 billion in WOTC credits. 

Learn how to maximize your WOTC credits using the strategies below. 

Don’t miss WOTC opportunities

In order to earn WOTC credits, you must screen job applicants for WOTC eligibility on or before the day on which you extend a job offer. For that reason, it is crucial to design and implement an effective WOTC screening process–otherwise, you might miss the chance to claim WOTC for eligible employees!

Arvo’s cutting-edge WOTC survey integrates seamlessly with major ATSs and payroll providers, and is proven to result in higher completion rates, faster completion times, and higher eligibility rates. Our clients enjoy the peace of mind that results from knowing they are not missing any valuable WOTC opportunities. 

Know WOTC target group maximums

New hires for whom you receive WOTC certification can earn you WOTC credit against your annual business tax liability. WOTC certification is issued when an employee is determined to belong to a WOTC target group by the appropriate state workforce agency.

You can make more money with WOTC by understanding that each WOTC target group has its own maximum allowable credit. Therefore, hiring more qualified veterans, for example, can result in more overall WOTC credit than hiring exclusively qualified summer youth employees.

Increase WOTC-eligible new hires

Because there is no overall limit to how much WOTC credit you can claim, it stands to reason that hiring more WOTC-certified employees leads to more WOTC credit. Therefore, strategically attracting more WOTC-eligible job-seekers to apply for your open positions can help you earn more money with WOTC.

It is always important to remain mindful of fair hiring practices and anti-discrimination laws when advertising job openings and interviewing candidates. For that reason, consulting with WOTC experts is a good idea when strategizing about increasing your WOTC-eligible new hires. 

Retain WOTC-certified employees

You may claim up to 25% of total wages paid to a WOTC-certified employee as credits against your tax liability once the employee works at least 120 hours. You may claim up to 40% of their total wages once they work at least 400 hours. For that reason, you can make more money with WOTC by retaining your WOTC-certified employees beyond the 400-hours-worked milestone.

Additionally, evidence exists to suggest that WOTC employees are more likely to remain with an employer long-term than other employees. Because of this, retaining your WOTC employees can offer benefits beyond a lowered tax liability, including a lower turnover rate and higher employee satisfaction.

Increase WOTC certification rate

To obtain certification from a state workforce agency for a WOTC-eligible employee (a necessary step for claiming the WOTC), employers must submit all appropriate forms and supporting documentation before the mandatory deadline(s). Doing so can prove challenging, and may be more or less challenging depending on the state in which your business operates. In 2023, 25% of WOTC requests in the US received certification. Nearly 48% were denied. The remainder were designated as “pending.”

Considering these statistics makes clear the value of doing everything you can to increase your WOTC certification rate, especially if you hire WOTC-eligible employees in high volume. Employers who enlist Arvo Tech’’s help often see their WOTC certification rate double or even triple.

Call Arvo Tech

Ready to make more money with WOTC? Arvo Tech has helped businesses navigate this lucrative but complicated tax credit program for over ten years. Our team of tax experts is here to help you boost your bottom line by up to 40% thanks to our dedicated client support, cutting-edge tech tools, and large team of tax experts.