Did you know that the Work Opportunity Tax Credit, or the WOTC, can credit your business up to $9600 for each qualified new hire? Yes, you read that right! Keep reading to learn more.
The Work Opportunity Tax Credit is known to be one of the most under-represented tax credits available to businesses. So, what is the WOTC?
WOTC is a federal tax credit program that allows eligible businesses to receive tax credits upon hiring employees from a clearly defined marginalized group. To elaborate, to qualify for this program, you need to hire individuals from groups and communities that have faced significant challenges securing employment.
Now, let’s focus on the stats. As stated earlier, with this government program you can receive up to $9,600 per eligible new hire depending on which marginalized community they represent or the target group they come from. So, why exactly is WOTC so generous? The idea is simple: your business creates employment for individuals known to have high unemployment rates. The WOTC recognizes your work and rewards you for taking social responsibility in the form of tax credits.
Tax credits received from counts for up to 40% of the employee’s wages if the qualified new hire works for at least 400 hours in the first year. Alternatively, if the qualified new employee does not work for 400 hours in their first year but works at least 120 hours, you can claim the WOTC for up to 25% of the new-hire wages. To receive the tax benefits the qualified new hire MUST work at least 120 hours in their first year.
Additionally, WOTC cannot be claimed for rehires and you, as an employer, need to secure certification that states that your new employee belongs to said, marginalized group. With WOTC, your business, on average, can claim up to $1,560 per qualified new hire depending on their wages in their first year of work.
The potential tax credit amount per new hire can be up to:
$2,400: WOTC Core Target groups
$5,600: Unemployed Veterans
$9,600: Disabled Veterans
$9,000: Long-term Welfare
To claim any kind of tax credit can be quite a hassle and that is exactly why you need to be one step ahead when it comes to securing WOTC. For this, you must start by screening potential hires for eligibility, securing the right form and paperwork, and filing the tax credit in time.
Are you ready to save your business some money? Read all about it [here] and find out all you need to know before applying and making the most of this tax credit.
If you have questions or need assistance, please contact us at https://calendly.com/mc-mctr/15minroi or call us at 206.547.8277 to make an appointment.
