If you hire employees and pay wages, the answer is likely “Yes!”
The Work Opportunity Tax Credit (WOTC) rewards employers who hire disadvantaged job-seekers with valuable tax credits. The maximum credit value ranges from $2400-$9600 per eligible employee. Because there is no overall cap on how much credit an employer can claim, businesses who embrace WOTC can transform their profitability.
Of course, the first question business owners often ask about WOTC is “Does my business qualify?” As described by the IRS: “The WOTC may be claimed by any employer that hires and pays or incurs wages to certain individuals who are certified by a designated local agency (sometimes referred to as a state workforce agency) as being a member of one of 10 targeted groups.”
We’ve broken down the ten targeted groups in this blog. Below, we’ll answer some common questions regarding which businesses are eligible for WOTC.
Businesses of all sizes qualify
Whether you run a small family-owned shop or a large corporation, you can claim WOTC for a percentage of wages paid to all certified employees. Small and large businesses alike can–and do!–gain significant financial advantages by participating in the program..
Businesses in every US state and territory qualify
WOTC is not limited by geography—businesses in all 50 states, Washington D.C., and U.S. territories can take advantage. As long as you hire and pay wages to employees who are certifiable as belonging to one of the targeted groups, you can claim WOTC.
Taxable & tax-exempt businesses qualify
Both taxable and tax-exempt entities are eligible for WOTC. In other words, both for-profit and non-profit businesses can claim the credit.
Businesses who hire seasonal and/or temporary staff qualify
If your business hires seasonal or temporary employees, you’re in luck! The WOTC can be claimed for wages paid to any type of eligible employee, so long as they meet the designated hours minimums.
Employee-owned businesses qualify
No matter who owns a majority of the shares of your company–including employees–you may claim the WOTC against wages paid to certified employees.
Businesses who outsource payroll or other functions qualify
You don’t have to run your own payroll in order to qualify for WOTC. Relatedly, your payroll provider cannot claim WOTC for your employees–only for their own.
Tell us about your business
We understand that there are many types of businesses, and that you may have questions about your eligibility to claim WOTC based on your individual circumstance. Don’t hesitate to contact our tax pros anytime for expert answers to your WOTC questions!