They say timing is everything. When it comes to Form 5884, they’re right.
The Work Opportunity Tax Credit (WOTC) incentivizes employers to hire individuals from specific target groups. Organizations who claim WOTC smartly can see their bottom lines grow by 40% or more.
One strategy top WOTC earners use to maximize their credit is filing Form 5884 at just the right time. Doing so can lead to more certifications and increased tax credits.
This blog explains the benefits of this strategy in depth.
What is WOTC?
WOTC is a federal tax credit available to eligible employers who hire individuals from designated target groups, including veterans, ex-felons, SNAP recipients, and more. The credit is calculated based on the number of hours worked and the qualified wages paid to eligible employees.
What does Form 5884 do?
Form 5884 is an essential document used to claim your WOTC tax credit. Learn about it in depth here.
Essentially, Form 5884 substantiates with the IRS the WOTC amount subtracted from your annual tax liability.
Patience pays off
WOTC is calculated by the number of hours worked by certified employees. Certification is issued by state workforce agencies, and can be a lengthy process.
For that reason, filing Form 5884 immediately after your tax year closes can result in lost credit due to certifications remaining in process. Top WOTC claimants understand that if their WOTC doesn’t offset their tax liability, they can delay filing Form 5884 up until they file their taxes. As this allows more time for state workforce agencies to issue certifications, smart businesses recognize that there can be a lot to gain by being patient.
Leave WOTC worry behind
It’s essential to remain compliant with all federal and state employment laws. Always follow the IRS guidelines for pre-screening, certifications, and consult with a tax professional or accountant to ensure that your tax strategy is not only effective, but legal.
When used strategically, the WOTC can be a valuable tool for reducing your business’s tax liability and increasing cash flow. Although strategically timing the filing of Form 5884 can pay off, we understand that it can be difficult to understand when the optimal time to file is.
Over the last decade-plus, we’ve helped hundreds of businesses claim over $650M in employment tax credits–and WOTC is our specialty. We are well-equipped to help you claim the WOTC you deserve, with superlative results.
Contact us today to ensure Form 5884 is filed at exactly the right time for your business. We’ll make sure the rest of your WOTC program is optimized while we’re at it.