Employer Solutions / HRMS Newsletter – November 2019
Keeping You Up-To-Date With Information About Employer Solutions / HRMS
3 Things Employers Don’t Know About Work Opportunity Tax Credit (WOTC)
Work Opportunity Tax Credit (WOTC) is a federal tax credit available to employers who hire individuals from disadvantaged groups of workers. This includes individuals who have received SNAP (Food Stamps), long term unemployed, ex-felons, and Veterans. There are ten (10) target groups overall, and the tax credit can range from $2,400 to $9,600, varying by category. On average 10-15 percent of new hires may qualify. The majority of for-profit employers are able to take advantage of the Work Opportunity Tax Credit.
There is no specific type of employer or industry that can use the WOTC credit to reduce their tax liability, however, it does very well for employers who have a lot of turnover, or who are continually hiring such as retail, construction, manufacturing, and transportation.
So, what do employers need to know?
Yes, as a federal program it does have an expiration date. The next expiration date is January 1st, 2020. Knowing that can put some employers off when they are uncertain that it will continue. WOTC has been renewed several times since the 1990s. There has been a lot of buzz about renewing WOTC so-far this year, so again, we expect it to be renewed, and possibly even made permanent.
It only applies to New Hires.
So, the bottom line is, if you don’t screen your new hires, you miss out on tax credits. There’s no look back for current employees, even if you’re just finding out about WOTC today. You can’t use WOTC with rehires either. There’s a 28-day window from the day you hire someone (when they start working for paid compensation) until you can submit the WOTC survey to your State Workforce Agency. That’s something we help with.
It’s worth billions to employers.
Last year, the state of North Carolina issued $188 million in WOTC Tax Credits to employers in that state. Massachusetts issued over $100,000,000 in 2017. And in the first six months of 2017, Tennessee issued a staggering $215,530,000 to employers for hiring qualified new hires. This makes the Work Opportunity Tax Credit one of the most valuable tax credits for employers.
Many companies offer WOTC screening for your new hires. We make it easy to use by eliminating language barriers, giving you three easy ways to screen (by phone, web, or paper). To learn more, please plan on attending our informational webinar.