How the Work Opportunity Tax Credit (WOTC) Can Help Your Business and Community: Running a business means you’re always looking for ways to save money and make a positive impact. The Work Opportunity Tax Credit (WOTC) is one of those hidden gems that can help you do both. It’s a federal tax incentive that encourages businesses to hire individuals from specific groups who often face challenges in finding employment. This not only helps your business reduce its tax bill but also creates opportunities for people who need it most.

Who Qualifies for the WOTC?

To get the benefits of the WOTC, your new hires must come from certain groups, including:

• Veterans – Especially those who are unemployed, disabled, or receiving food stamps.
• Long-Term Unemployed – People who have been out of work for 27 weeks or more.
• SNAP Recipients – Individuals receiving food stamps through the Supplemental Nutrition Assistance Program.
• TANF Recipients – Those enrolled in Temporary Assistance for Needy Families.
• Ex-Felons – Those who were convicted of a felony and hired within one year of their conviction or release.
• Designated Community Residents – People living in certain designated areas, like empowerment zones.
• Vocational Rehab Referrals – Disabled individuals referred by state vocational agencies.
• Summer Youth Employees – Young people aged 16-17 from empowerment zones who are employed between May 1 and September 15.

You don’t have to hire from all of these groups—just hiring from any one of them can qualify your business for the credit.

How Much is the Credit Worth?

The amount you can save depends on several factors:

• Wages Paid: The tax credit is based on the wages you pay to eligible employees during their first year of work.
• Hours Worked: Employees need to work at least 120 hours for you to claim 25% of their wages, and if they work 400 hours or more, you can claim 40% of their wages.
• Maximum Credit: Depending on the group, the credit ranges from $1,200 to $9,600 per employee.

So, if you hire several qualified individuals, those savings can really add up!

How to Claim the Work Opportunity Tax Credit (WOTC)

It’s a straightforward process, but timing is key. Here’s how to claim the WOTC:

1. Pre-Screening: You’ll need to submit IRS Form 8850 (Pre-Screening Notice and Certification Request) to your state workforce agency within 28 days of hiring. This confirms that the employee qualifies for the WOTC.
2. Certification: Your state agency will then certify the employee’s eligibility. Once approved, you can calculate the tax credit based on the employee’s wages and hours worked.
3. Keep Records: Make sure to maintain clear records of wages, hours worked, and the employee’s eligibility, especially in case of an audit. Proper documentation is crucial!

Why the WOTC is a Win-Win

The WOTC isn’t just a tax break—it’s a way to do something good for your community. By hiring from these targeted groups, you’re giving people a chance to improve their lives and contribute to society. Plus, your business benefits from tax savings, creating a win-win situation for everyone.

Ready to Make a Difference?

The WOTC is a fantastic way to reduce your tax bill and help people who really need it. Whether you’re looking to hire veterans, ex-felons, or young people from disadvantaged areas, this tax credit makes it easier for you to do good while benefiting your business.

If you’d like to learn more about the WOTC and how it can help your business, feel free to reach out. We’re happy to walk you through the process and help you take advantage of this opportunity.

Conclusion
The Work Opportunity Tax Credit is a smart way to support your business while making a positive impact on the lives of others. Whether you’re looking to give back to veterans, help someone reenter the workforce, or provide opportunities for young people, the WOTC can help you do just that—while saving on taxes.

To hear my most recent podcast on Spotify – click here!
To hear my most recent podcast on ApplePodCast– click here!