Are you looking for a way to reduce your tax bill and save money on your company’s bottom line? If so, you may be interested in the Work Opportunity Tax Credit (WOTC). This tax credit is available to companies that hire employees from specific groups and can provide significant savings on your tax bill. In this article, we’ll show you how to qualify for WOTC and maximize the benefits it offers.
Before we dive into the qualifying steps, let’s first understand what WOTC is and how it benefits employers. WOTC is a federal tax credit that rewards companies for hiring individuals from certain target groups, such as veterans, ex-felons, and those receiving government assistance. Employers can claim a credit of up to $9,600 per employee, depending on the target group and the number of hours worked.
Industries such as staffing, construction, healthcare, hospitality, and manufacturing have typically taken advantage of WOTC to lower their hiring costs and increase their bottom line.
Qualifying for WOTC
To qualify for WOTC, companies must take three key steps:
Step 1: Hire Eligible Employees
To be eligible for WOTC, employees must fall into one of the target groups specified by the IRS. Some of these groups include veterans, ex-felons, individuals with disabilities, and those receiving government assistance. To determine eligibility, companies must screen potential employees using Form 8850 and ETA Form 9061.
Step 2: Submit the Appropriate Paperwork
After determining eligibility, companies must submit the necessary paperwork to claim the credit. This includes Form 8850 and ETA Form 9061, which must be filed within 28 days of the employee’s start date. Companies must also obtain a certification from the state workforce agency confirming the employee’s eligibility.
Step 3: Follow Up and Claim the Credit
After submitting the necessary paperwork, companies must follow up with the state workforce agency to obtain certification of the employee’s eligibility. Once certification is received, companies can claim the credit on their tax return. It’s important to note that companies can only claim the credit after the employee has worked a certain number of hours, depending on the target group.
Maximizing the Benefits of WOTC
In addition to the three qualifying steps, there are additional ways companies can maximize the benefits of WOTC. For example, companies can integrate WOTC into their hiring process by actively seeking out eligible employees and educating hiring managers on the program. Companies can also track their WOTC credits over time to ensure they’re receiving the maximum benefit.
Now that you know how to qualify for WOTC, it’s time to take action. Start by reviewing your current hiring practices and identifying opportunities to hire eligible employees. Educate your hiring managers on the program and integrate it into your hiring process. Finally, track your WOTC credits over time to ensure you’re maximizing the program’s benefits.
Qualifying for WOTC can be a game-changer for your business, providing significant savings on your tax bill and reducing your overall hiring costs. By following the three qualifying steps and taking additional actions to maximize the program’s benefits, you can unlock thousands in savings and improve your company’s bottom line.
About Arvo Tech
Arvo transforms cash flow for businesses through employment tax credit opportunities. Founded by tax experts, Arvo believes in the power of tax credits for improving business finances and built its cloud-based platform to help more businesses unlock the full value of federal and state incentive programs. Backed by technology and unparalleled client service, Arvo collaborates with companies to help them understand their qualifications and delivers actionable insights for leveraging programs that impact hiring decisions and fundamentally improve the economics of their business.