In the HR world, you have many responsibilities, and crunching numbers may not be your specialty. However, as a member of a team that is responsible for strategically managing people as business resources, you need to stay up to date on the latest tax developments.
Tax Updates
Not only to ensure that you are paying all of the taxes you owe – but also to guarantee that you are not overpaying at tax time.
If you haven’t stayed abreast of the latest tax updates, you may be losing out on valuable chances to diminish your income tax liability. These opportunities include the Work Opportunity Tax Credit (WOTC).
What is the Work Opportunity Tax Credit?
The Work Opportunity Tax Credit (WOTC) was established to assist the chronically unemployed in finding jobs. It is a federal tax credit available to employers who hire people from certain target groups that face significant barriers to employment. Those groups include:
- Summer youth employees
- Veterans
- Long-term and short-term Temporary Assistance for Needy Families (TANF) recipients
- Food stamp recipients
- Supplemental Security Income (SSI) recipients
- Designated community residents
- Ex-felons
- Individuals referred by vocational rehabilitation services
Reward Employers
The driving force behind the program is to reward employers who hire individuals in these targeted groups with tax credits, effectively subsidizing the expense of hiring and employing them.
Since its establishment in 2006, millions of people have been employed through the WOTC program, helping them to transition from welfare to work. And every year, employers also claim around $1 billion in tax credits under the WOTC.
It’s a mutually beneficial program since the employment expenses are offset by savings in public assistance, higher payroll and other tax revenues.
How Does WOTC Work?
The driving idea behind the WOTC is to incentivize employers to diversify their workforce by targeting and employing workers who may otherwise have difficulty finding jobs. There is no set limitation on the number of people you can hire in order to claim the tax credit.
Under the WOTC, businesses can receive a tax credit of between $1,200 and $9,600 per worker. In order for employers to qualify for the tax credit, employees are required to work at least 120 hours during their initial year of employment.
If they do, then employers are eligible for a tax credit equal to 25% of the employee’s first-year wages, and up to the maximum for that individual’s target group. If the employee works at least 400 hours, the tax credit increases to 40% of their first-year wages.
What the Work Opportunity Tax Credit Means for You
The WOTC can reduce the cost of doing business in exchange for hiring individuals in specific target groups. By taking advantage of the WOTC, you can increase your income tax credits while staffing your business with employees who are eager to work.
You may even be hiring from these target groups already, so why not take advantage of the cost-savings?
Your Opportunity to Save
Taking advantage of the WOTC program is now easier than ever. Technological advancements have transformed how businesses acquire and make the most out of tax credits.
EPAY Systems, in partnership with Walton Management Services, offers a leading cloud-based human capital management platform that integrates seamlessly to deliver scalable business intelligence solutions.
Seamless Experience
Our solution offers a seamless experience for employers to screen job applicants to determine tax credit qualification and take advantage of lucrative tax savings, including:
- Seamless transmission of wage and new hire data
- Integrated subscription options with RecruitMilitary.com for hiring of veterans
- Advanced Always-ON reporting features to view tax credit results on demand
If you’d like to know more about how we can help you save time and money, contact us for a free consultation or take a tour of our payroll and fully integrated human capital management system.