Boost Your Business with Tax Credits: Unlock More Cash Flow and Higher Net Income
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The Power of the Work Opportunity Tax Credit Program
The Work Opportunity Tax Credit (WOTC) is a valuable federal tax credit program that incentivizes employers to hire individuals from specific target groups who face barriers to employment. By participating in the program, employers can not only make a positive impact on their communities but also benefit from significant tax savings.
Target Groups
The WOTC program targets various groups, including veterans, individuals with disabilities, ex-felons, Temporary Assistance for Needy Families (TANF) recipients, Supplemental Nutrition Assistance Program (SNAP) recipients, and more. Each target group has its own eligibility criteria and corresponding tax credit tier amounts.
Exploring Benefits
Veterans who have been unemployed for at least four weeks can qualify for a tax credit of $2,400, while disabled veterans can yield a maximum credit of $9,600. TANF and SNAP recipients, as well as designated community residents, may be eligible for a tax credit of $2,400. Other target groups, such as vocational rehabilitation referrals, ex-felons, Supplemental Security Income (SSI) recipients, and long-term unemployment recipients, also have their respective tier amounts.
Claiming the WOTC
To claim the WOTC tax credit, employers must obtain certification from the appropriate state workforce agency or participating agency before filing their federal income tax return. It’s crucial to stay updated on the latest guidelines and regulations associated with the program, as eligibility criteria and requirements may change over time. Employers should consult the official resources provided by the U.S. Department of Labor and the Internal Revenue Service (IRS) to ensure compliance and maximize their tax savings.
Promoting Diversity and Inclusivity
Participating in the WOTC program not only offers financial benefits but also allows employers to contribute to the economic empowerment of individuals facing employment barriers. By hiring from these target groups, businesses can make a positive social impact while simultaneously reducing their tax liability.
Maximizing Benefits
The Work Opportunity Tax Credit (WOTC) program provides a win-win situation for employers and individuals facing employment challenges. By taking advantage of this program, employers can access valuable tax credits while promoting diversity and inclusivity in their workforce. Stay informed about the latest guidelines and requirements to make the most of this beneficial program and contribute to a more inclusive society.Give us a call at (563) 583-2115 to get started today, or schedule an appointment with one of our advisors.
How to Effectively Claim the Work Opportunity Tax Credit
The Work Opportunity Tax Credit (WOTC) is a valuable incentive program to potentially reduce your tax liability while making a positive impact in your community. As a small business owner, you have the opportunity to uncover the immense benefits and potential that tax credits can have on your business. In this article, we’ll break down the basics of the WOTC and explain how it can benefit both your business and the individuals you employ.
Determine Employee Eligibility
The first step in claiming the WOTC is to determine whether an employee falls into one of the targeted groups specified by the IRS. These groups include qualified IV-A recipients, qualified veterans, qualified ex-felons, designated community residents, vocational rehabilitation referrals, summer youth employees, SNAP recipients, Supplemental Security Income recipients, long-term family assistance recipients, and qualified long-term unemployment recipients.
Apply for Certification
To certify that an employee qualifies for the WOTC, you need to submit these forms to the state workforce agency (SWA) in your state within 28 calendar days from the employee’s start date.
- Have the job applicant complete Form 8850 before or on the day of making a job offer.
- Complete the remaining sections of Form 8850 at the time of the job offer.
- Fill out the conditional certification Form 9061 (or request Form 9062 if the applicant already has it).
- Check to see if any additional forms are required for the applicant’s specific targeted group.
- The SWA will provide you with a letter confirming the employee’s eligibility or denial.
Tax Credit Calculation
Once an employee is certified as eligible for the WOTC, you need to determine the qualified wages that can be considered for the tax credit. Qualified wages are the wages on which you paid Federal Unemployment Tax Act (FUTA) tax during the employee’s first year of work. However, wages paid while receiving payment from a federal on-the-job training program or reduced by Social Security Act payments should be excluded.
Additionally, you need to identify the maximum allowable wages for each employee category, which depend on the target group. These limits can be found in the IRS instructions for Form 5884.
Claim the Work Opportunity Tax Credit
- Use Form 5884 (or Form 5884-C for tax-exempt organizations that hired qualified veterans) to calculate the allowable credit based on the qualified wages determined in your tax credit calculation.
- Enter the maximum allowable wage on Form 5884, Line 1A (for employees working between 120 and 400 hours) or Line 2 (for employees working more than 400 hours).
- Transfer the calculated credit to Form 3800, General Business Credit , which will be filed with your business tax returns.
- Keep a record of the certification and all supporting documentation for future reference and potential audits.
Successfully claiming the Work Opportunity Tax Credit can result in significant tax savings for your business while fostering employment opportunities for individuals from targeted groups. By following the steps outlined in this guide, you can navigate the process with confidence and maximize the benefits of the WOTC program.
Let Us Help
At Tax Credit Group, we specialize in helping businesses identify and claim various tax credits and incentives. Reach out to our team of experts to streamline the WOTC process and ensure you receive the maximum benefit from this valuable tax credit.
Don’t Miss This Last Chance to Earn 2015 Tax Credits
The Federal Government recently announced their renewal of the Work Opportunity Tax Credit Program. (WOTC) for 2015 through 2019 and that is really great news!
The WOTC program experienced some challenges in 2015 stemming from the late December renewal. Although the renewal was retroactive, it created a hardship for employers seeking to take advantage of these lucrative tax credits.
Due to the challenges last year, many people chose not to participate and apply for 2015 tax credits.
The most exciting news is that the IRS recently issued notice 2016-40. This notice makes 2 very important allowances you need to know about.
- You now have an opportunity to go back and get your Work Opportunity Tax Credits (WOTC) by submitting ALL employees you hired between January 1, 2015 and May 31, 2016!
- A new target segment has been added to the types of employees you can submit for tax credit. The new group is Long Term Unemployed and is available to all employees hired anytime in 2016.
With this provision ANY employer can currently submit all of their 2015 new hires for credit qualification!
This is a nearly unprecedented move by the IRS. Since the inception of WOTC in 1996, this is only the second time such an extension has been made available by the IRS.
RIGHT NOW is the absolute perfect time to get started and receive retroactive credits for all 2015 and 2016 new hires! This is the ideal scenario for all of you that were heavily considering WOTC last year but held off because of the pending renewal.
There’s only one catch! We Must get all of your 2015 new hires submitted ASAP!
We don’t want you to miss any available Work Opportunity Tax Credits (WOTC) or have them delayed.
The official deadline to submit last year’s employees under this transitional relief provision is June 29, 2016, but we want to get your employees submitted ASAP before all the other companies in your state submit theirs. Procrastinating will increase the risk of missing credits or having your credits delayed by several months because other companies submitted before you. We will handle all the leg work for you, but we need to get started sooner rather than later.
To get an estimate of just how much your 2015 WOTC tax credits are worth, use our calculator HERE or contact us HERE and we’ll help you get started.
Don’t miss this opportunity and over-pay your 2015 taxes!
5-year WOTC Extension Announced
It’s official! The Work Opportunity Tax Credit (WOTC) program has been renewed for five years (2015 – 2019). Last week, Congress voted to extend the WOTC program as part of the Tax Extenders legislation, and received the President’s official signature of approval on December 19th.
This renewal is especially exciting as it is the first time in it’s history WOTC has received a 5-year renewal which is a testament to it’s success. Secondly, Congress has added a new target segment for Long Term Unemployed Recipients, which can qualify more of your employees and increasing your potential tax credits.
Here is the actual wording from the bill:
The term ‘qualified long-term unemployment recipient’ means any individual who is certified by the designated local agency as being in a period of unemployment which is not less than 27 consecutive weeks, and includes a period in which the individual was receiving unemployment compensation under State or Federal law.
This is precisely what employers have been waiting on all year. In a nutshell, the program provides participants tax credits up to $2400-9600 for each qualified, new hire brought on board. This renewal is a solid investment in the American dream and provides work opportunities for millions while providing businesses the capital to expand their businesses that will create even more jobs.
It doesn’t take long to figure out that this program can be a great way for companies to invest in their growth by significantly reducing their tax liability. To learn how much your potential tax savings might be, try our tax savings calculator here.
WOTC Renewal Update
The Work Opportunity Tax Credit (WOTC) program scored a big victory this week. On 7/21/15, the Senate Finance Committee voted 23-3 to pass a two-year extension of this important program. This means that the bill is now ready for a full Senate vote. Although this is only the first step, the near-unanimous support for WOTC legislation marks a huge step forward in a program which has awaited renewal since December 2014.
WOTC is an employment incentive to reward businesses who hire from several target groups that historically have faced barriers to employment. The tax credit awards businesses up to $2400-9600 for each eligible new hire. Applications must be received within 28 days to state workforce agencies.
We strongly advocate for this program as it has served American companies well. WOTC has helped businesses save thousands annually in tax liability. Moreover, it expands opportunities for job candidates most in need.
The program has passed one gateway and is en route for a Senate vote. We will keep you posted as new developments take place.
WOTC Extension Questions
By this time most everyone knows that The IRS recently announced Notice 2015-13, which will provide some much needed relief for employers seeking WOTC credits from 2014.
As we’ve mentioned before, this is a nearly unprecedented move by the IRS. Since the inception of WOTC in 1996, this is only the second time such an extension has been made available. Again this is only for 2014, the WOTC program has waived its 28-day deadline to submit tax credit requests.
As we’ve had countless conversations with employers there are some consistent questions that have come up and we’d like to answer them here in case you might be curious.
When is the deadline for submitting last year’s forms?
April 30, 2015 is the deadline for submitting any new hires’ applications from 2014 only. All 2015 forms must be received within the regular timeframe of 28 days from new hires’ start dates.
Who is eligible?
All employees hired between January 1, 2014 and December 31,2014 are eligible to apply.
How often does this happen?
The rare extension has only occurred twice since WOTC was established in 1996. This is a great opportunity to recoup extra tax savings!
How far back can we go?
Any new hires made since January 1, 2014 are eligible.
When can I use the credits?
WOTC offsets federal income taxes and can be carried back to the prior year or carried forward 20 years.
There’s only one catch to this relief measure and that is the April 30, 2015 deadline. This means that ALL 2014 applications must be submitted by this date or they will not be processed.
To learn more about IRS Notice 2015-13 and how it applies to your business, email troyloney@taxcreditmgmtgroup.com now before time runs out.
2014 WOTC Tax Credits Still Available
The WOTC program experienced some unique challenges in 2014 stemming from the late December renewal. Although the renewal was retroactive, it created a hardship for employers seeking to take advantage of these lucrative tax credits.
The IRS recently announced Notice 2015-13, which will provide some much needed relief for employers seeking WOTC credits from 2014.
The problem that everyone has experienced is a loss of time resulting in missed credits due to the traditional 28-day submission window after a new hire’s start date.
With this provision ANY employer can currently submit all of their 2014 new hires for credit qualification!
This is a nearly unprecedented move by the IRS. Since the inception of WOTC in 1996, this is only the second time such an extension has been made available.
In reality, this means that all WOTC participating employers can go back and double check that all of their 2014 new hires were submitted for credit. For those employers that haven’t participated before, this is the absolute perfect time to get started and receive retroactive credits for all 2014 new hires! This is the best scenario for all of those we talked to that were heavily considering WOTC last year but held off because of the pending renewal.
There’s only one catch to this relief measure and that is the April 30, 2015 deadline. This means that ALL 2014 applications must be submitted by this date or they will not be processed.
To learn more about IRS Notice 2015-13 and how it applies to your business, email troyloney@taxcreditmgmtgroup.com now before time runs out.
Long Term Unemployed Could Become A Part of WOTC
There are two proposed modifications to WOTC that could be invaluable for employers across the country. The first proposal is to add Long Term Unemployed as a target group, and the second is to make WOTC a permanent establishment rather than requiring annual renewal.
Senior NJ Democrat Bill Pascrell and NY Republican Tom Reed have re-introduced bill H.R. 481 to add the Long Term Unemployed (those unemployed for 27 weeks or more) to the WOTC target groups. Initial estimates suggest that the passing of this bill would add roughly 4.7 million people to be eligible for employment under the WOTC umbrella.
With each qualified hire being valued at up to $2,400, this addition would potentially increase available tax credits by $11.28 Billion! Keep in mind that these available credits are in addition to the other 10 target segments.
The second proposal came from President Obama when he added WOTC as permanent legislation in his Fiscal Year 2016 budget. Although WOTC has been around for decades, it has required congressional renewal every couple of years. Often times this has created delays and lapses while employers have to wait for credits earned months prior. What this really means is that employers can offset the cost-burden of the hiring and training period when bringing new hires on-board. A permanent program would give jobs to Americans most in need and add money to employers in return.
WOTC has been an invaluable tool for employers providing countless billions in tax credits since it’s inception. We welcome both of these proposed changes whole heartedly and look forward to the day we can report that they’ve been voted into existence.
If you’d like to learn more about how these proposed changes could impact your business, we’d love to chat, just contact us here.