If you’re a business owner looking to expand your workforce and save on taxes, the Work Opportunity Tax Credit (WOTC) could be your perfect tool. The WOTC is a federal program that offers tax incentives to employers who hire individuals from targeted groups who face significant barriers to employment. These groups include veterans, long-term unemployed individuals, and those receiving government assistance.
Not only does this program help businesses save money, but it also opens up opportunities for marginalized job seekers to re-enter the workforce.
How WOTC Benefits Employers
The primary benefit of the WOTC is its potential to reduce your business’s federal tax liability. Employers can claim a tax credit that ranges from $1,200 to $9,600 per eligible employee, depending on the target group and the number of hours worked. For businesses looking to hire, especially during economic challenges, this can significantly offset costs while also fostering a more inclusive hiring process.
Who Is Eligible?
WOTC applies to several target groups, including:
1. Veterans
Hiring veterans can earn your business a substantial tax credit, especially those with service-related disabilities.
2. Long-term Unemployed
Individuals who have been unemployed for 27 consecutive weeks or more are eligible, encouraging employers to hire workers who have struggled to re-enter the job market.
3. Recipients of TANF or SNAP Benefits
These individuals may qualify, creating opportunities for employers to provide sustainable jobs to those who rely on government assistance.
How to Apply
Applying for WOTC is simple with a few easy steps.
1. Screen Applicants
Ensure they belong to one of the designated target groups.
2. Submit Form 8850
Complete and submit IRS Form 8850 within 28 days of the employee’s start date.
3. Certification
Once your state workforce agency certifies the employee’s eligibility, you can claim the tax credit when filing your business’s taxes.
Why Consider WOTC?
Besides the tax benefits, WOTC allows employers to support individuals who face employment barriers, contributing to social good while improving their own workforce. It also helps reduce hiring costs, creating a win-win scenario for businesses and employees alike.
