The Work Opportunity Tax Credit paves career pathways for SNAP recipients

Forty-four million people face food insecurity in the US annually, including one in five children. Maslow’s heirarchy of needs tells us that food access is a basic human need. Therefore, when access to food is threatened, it is difficult for individuals to focus on “higher-order” concerns such as improving their careers, even if doing so would lead to better food access. Instead, securing food for each day becomes a preoccupation that crowds out other considerations that could lead to healthier and happier lives in the future. This preoccupation may explain why people dealing with food insecurity can get caught in the so-called “vicious cycle” of poverty. 

The challenges of poverty multiply for families with children. Low-paying or part-time jobs often do not cover the costs of qualtiy childcare, leaving parents with few choices for improving their children’s nutrition through focusing on their careers. 

These and other reasons explain why lawmakers have supported two federal programs for many years designed to provide relief for families and individuals facing food insecurity–the Supplemental Nutrition Assistance Program (SNAP, aka food stamsp) and the Work Opportunity Tax Credit Program (WOTC). 

Hiring members of families who receive SNAP helps break the vicious cycle of poverty, and rewards businesses in multiple ways. 

What is SNAP? 

SNAP, originally known as the Food Stamp Program, has provided food purchasing assistance to qualifying individuals since 1939. SNAP is funded by the federal government and administered on the state level. For that reason, each state determines its own eligibility requirements for SNAP.

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 may otherwise rely on government resources to survive. 

Certain members of families receiving SNAP qualify for WOTC. Each certified new hire lowers their employer’s tax liability by up to $2400. 

Which SNAP recipients qualify for WOTC?

To qualify for WOTC as part of the Qualified SNAP Benefits Recipient targeted group, a new hire must:

1) Be 18-40 years old, and

2) A member of a household that has recieved SNAP benefits for:

• The previous six months, or
• At least three of the previous five months.

SNAP recipients are far and away the most common WOTC targeted group to receive certification. They accounted for nearly two-thirds of all certifications in 2023, totaling over 1.25 million employees. Because the average WOTC-eligible employee earns their employer $2150, this targeted group accounted for over $2.5 billion in WOTC for their employers in 2023.

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

Qualified SNAP 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 people facing food insecurity.