The Work Opportunity Tax Credit (WOTC) is a federal government tax credit that was established to help reduce the employment barriers faced by certain groups. This includes select veterans as well as individuals receiving government assistance such as SNAP (Supplemental Nutritional Assistance Program) and TANF (Temporary Assistance to Needy Families), to name a few. There is new proposed WOTC legislation introduced in 2021, that enhances the program. We’ll go over what this means for employers and discuss how you take advantage of these enhancements.
Quentelle’s premier team of employer tax credit experts are here to help you decode the legalese of these new WOTC legislation updates, and find a solution to maximize those benefits for your business.
What is WOTC?
WOTC was first introduced to Congress in 1996 as the Welfare-to-Work Tax Credit Act. The legislation was created with bipartisan support and signed into law by President Clinton on August 22, 1996. It passed both chambers of Congress without a dissenting vote. Since then, there have been several changes made to this credit including an extension in 2005.
Who is Eligible for WOTC?
There are currently nine different target groups that are eligible to participate in this program. The list includes:
- Qualified veterans
- Designated Community Residents (DCR)
- Vocational rehabilitation referrals
- Summer youth workers (over 16 years old, but under 18)
- SSI beneficiaries
- SNAP recipients
- TANF recipients
- Qualified long-term unemployment recipients
Businesses can receive a tax credit ranging between $1,500 and $9,600 for each certified target group member hired. The maximum amount of WOTC money that an employer can receive is limited by a wage cap based on the target group they belong to. For instance, a SNAP recipient can earn an employer a maximum credit of $2,400, while a disabled veteran that is also unemployed for 6+ months can earn $9,600 in tax credits for the same employer.
The Work Opportunity Tax Credit Program has undergone several modifications since its inception. However, this time it may be changing significantly.
WOTC Legislation 2021: What’s New?
The House of Representatives Ways and Means Committee approved tax provisions for the Build Back Better Act on September 15th, 2021. The approved provision proposes several changes to the tax code and includes significant enhancements to WOTC effective from the date of enactment of the Build Back Better Act, through December 31st, 2022.
The following is a summary of the proposed changes:
- Credit Amount Increase – increases the credit per certified employee (for most target groups) from $2,400 credit to $10,000
- WOTC; a 2-Year Credit – $5,000 per certified employee, for years 1 and 2, for a maximum credit of $10,000
- Re-hires Eligible – through a temporary waiver of the rehire exemption
- No Change for Certified Summer Youth – these hires remains the same as in the current program
While these proposed changes are still far from becoming law and may be temporary in nature, it could be the equivalent of putting WOTC on steroids. Next steps will involve intense negotiations with the Senate for a final bill.
If you’re interested in a provider who can help you maximize these benefits, look no further than Quentelle.
Quentelle’s HR Solutions Make WOTC Easier
Quentelle delivers a suite of HR solutions powered by an award-winning technology platform. Our WOTC service bundles include screening for WOTC, verification of employment and income, administration of unemployment insurance (UI) claims, and UI Tax consulting services. We are here to help you understand your hiring requirements under the new WOTC legislation in 2021. Contact us today to learn more about what Quentelle can do for you.
Tax credits are dispensed when a business does something valuable within the community. Giving to charity and providing child care, for example, earn tax credits. So too, can hiring. This is called the Point-of-Hire (POH) tax credit. Is your business claiming your full savings?
A business’ role as an employer is among its most important functions to the nation. Certainly, manufacturing shoes or selling groceries is important, but employing the populace is essential to the flow of industry. Each person on your team is one more person who is employed vs. unemployed. One more person receiving a reliable income and contributing their skills to the greater economy. Each time your company hires a new employee, you benefit the economy through that employment.
Employment is the path out of many situations of economic disadvantage and dependency. This is especially true in vulnerable and struggling population groups. From elevating youth into a career to employing veterans and the disabled, both federal and state governments offer business tax credits based on the opportunities offered to target-group employees. Accessing these credits requires each company to choose a Point of Hire tax credit solution to screen, verify, apply, and claim the credit each year.
What is the Point of Hire Tax Credit?
The Point of Hire tax credit is a type of tax credit given to businesses for hiring employees in disadvantaged situations. Targeted groups include veterans, SNAP and SSI recipients, and youth from Empowerment Zones, among others who benefit acutely from access to employment and career opportunities. POH tax credits are usually offered at the state level. Point of Hire tax credit is based on and paired with the WOTC (Work Opportunity Tax Credit) provided by the federal government.
The POH tax credit is available to all businesses, rewarding opportunities provided during standard hiring procedures. The credit was designed to promote diverse hiring and encourage businesses to hire from disadvantaged populations who have the most to gain from employment opportunities.
How to Get Your Company’s POH Tax Credits
The first step of claiming your POH tax credits is pre-screening for qualification. Your business must qualify, and credits only apply to new hires within specific target groups. It’s important to carefully screen your POH applications to ensure that each claim is qualified for the tax credit and how much. You must file your pre-screening application within 28 days.
POH and WOTC Target Groups
Which newly hired employees qualify your company for Point of Hire tax credits? The target groups are usually identified by their access to financial services due to poverty-line existence. This may be from a medical condition, legal status, or disadvantageous financial circumstances. The POH and WOTC programs are designed to promote these disadvantaged groups by providing a tax credit to companies that help employ these groups and improve their prospects through career advancement.
- IV-A & TANF Recipients
- Temporary assistance for needy families
- Qualified Veterans
- Vocational Rehabilitation Referrals
- A person with physical or mental disabilities is referred to the employer while in a rehabilitative service plan.
- Summer Youth Employees
- 16-18-year-old youths from Empowerment Zones, enterprise communities, and renewal communities
- Employed between May 1 and Sept 15
- SSI Recipients
- Long Term Family Assistance Recipient
- Qualified Long-Term Unemployment Recipient
- Unemployed for longer than 27 weeks
POH vs. WOTC: What’s the Difference?
- Work Opportunity Tax Credit is a Federal Program
- Point of Hire tax credits are a type of tax credit offered by federal and state governments.
One of the biggest questions in Point of Hire programs is the relation to WOTC. When you look up either acronym, the other appears. They seem to be synonymous. Is Point of Hire the same as Work Opportunity Tax Credits? The answer is yes, and no.
WOTC is a point-of-hire program provided by the federal government to all eligible companies who employ certain financially at-risk groups. It is also an inspiring policy that many states took up individually. State programs that piggyback this and offer additional incentives are usually referred to simply as Point of Hire instead of using the federal Work Opportunity designator.
WOTC is the federal policy inspiration for most POH state programs. However, linguistically Point of Hire is the category, and WOTC is a point of hire style tax credit.
What is Required for POH Tax Credits
To claim your Point of Hire tax credit, you’ll first need a certificate of eligibility. To get this, you send a Form 8850 pre-screening application. If you get a certificate back, you can claim the credit with a Form 5884 or 3800. The most time-consuming part of the process is pre-screening to ensure that your circumstances qualify by the POH tax credit. The IRS also recommends that qualified tax-exempt employers not change their calculations in the assumption that the credit will be approved.
Pre-Screen to Determine Your POH Eligibility
The first and very important step is to confirm that your recent hire meets eligibility requirements. A close investigation may be necessary to determine all related factors and qualifiers. This includes very data-sensitive details about each new hire’s financial and personal status, information that must be respected and closely guarded while you have it, and may not be legal to discuss during job interviews for reasons outlined by the EEOC.
Fill and Submit Form 8850 to Request an Eligibility Certificate
Once you have determined internally that a hire is POH eligible, complete and file Form 8850, Pre-Screening Notice and Certification Request for the Work Opportunity Credit within 28 days of the first day of work, you will need to identify and outline each of the qualifying factors to expect a certificate of POH tax credit approval.
Claim the POH Tax Credit with Form 588-C
After receiving a certificate, file a tax-exemption claim against the employer’s Social Security tax with a Form 5884-C or possibly a 3800 based on your circumstances.
Quentelle’s Point of Hire Tax Credit Solutions
Is your business missing out on potential POH tax credit exemptions? Capable employees are often included in target groups in the process of overcoming any disadvantages without mentioning the process to coworkers. However, certain fact-checking can provide you with greater resources to benefit more new hires and better career development programs for tax purposes.
The Quentelle team is here to help you through every step of the POH tax exemption process. Our POH tax exemption solutions include pre-screening, form submission, certificate acquisition precise tax exemption claim filing. To schedule a demo or a consultation with our business tax credit experts, contact Quentelle today.
On Wednesday, April 21, 2021, President Joe Biden announced a refundable tax credit available for select businesses that pay employees that need to take time off to get vaccinated for COVID-19. This is part of the administration’s effort to involve employers to promote vaccination.
“Today we hit 200 million shots,” Biden said. “It’s an incredible achievement for the nation. I’m calling on every employer, large and small, in every state to give employees the time off they need with pay to get vaccinated,” said the President.
Here’s what we know about it so far:
- The tax credit will apply to businesses with fewer than 500 employees
- The tax credit amount equals up to two weeks (80 hours), limited up to $511 per day for each employee, and $5,110 in the aggregate at 100% of the employee’s pay rate
- The tax credit is available between April 1 and September 30, 2021.
- Tax credit is refundable, meaning the employer is entitled to payment of the full amount of the credit if the tax credit amount exceeds the employer’s share of the Medicare tax
- Employers can claim the credit on using IRS Form 941 – Employer’s Quarterly Federal Tax Return
This tax credit was authorized under The American Rescue Plan Acct of 2021 (ARP) which was signed into law on March 11, 2021.
Quentelle, LLC, is pleased to announce today that Mike McConnell, Vice President of Quentelle has been promoted to Vice President and Chief Operating Officer.
“Mike is a proven and trusted leader that consistently delivers results. His unique skills and laser-focused operational expertise will streamline and continue to drive operational excellence,” said Stephen Wain, Chairman & Managing Member of Quentelle. “Mike’s ability to pursue excellence while engendering organizational growth and results make him uniquely suited for this position. As Quentelle grows our leading software platform and associated offerings, Mike’s ability to help bring products and services to market will usher in new opportunities for our clients.” Under his new role, Mike will assume responsibility for operations, engineering, marketing, sales, and service; leading all efforts to streamline product delivery and customer services/experience.
“Quentelle’s story has never been more compelling and relevant. It’s been amazing to see how our innovation has captured the hearts and minds of the customers and partners we serve,” said McConnell, “I am extremely excited to help lead the company to its next phase of innovation and operational excellence.”
“Mike has been instrumental in the rapid growth of our business and has delivered results and earned the respect of all members within our organization. I’m happy to work with Mike on the growth of Quentelle,” said Phil Ownbey, Quentelle’s President.
Prior to his appointment, McConnell was responsible for product deployment as well as marketing and service delivery. McConnell joined Quentelle in 2018 after selling a successful healthcare franchise business he founded Prior to that, he worked in various industries including manufacturing and defense electronics, spanning over twenty years. Michael earned a Bachelor of Science degree from Penn State University and is also a proud veteran of the US Armed Forces.
Headquartered in New Jersey, with staff nationally and worldwide, Quentelle is a business and artificial intelligence technology company, and the developers of ForeSite™, a data intelligence platform that allows third-party developers and their applications to provide state-of-the-art information as part of their applications. Quentelle is the developer of VeriSafeJobs™, a nationally recognized Verification of Employment/Income SaaS application that works under the ForeSite™ platform that services Fortune 500 and mid-size entities who require greater insight into the needs of their employees, as well as outside entities and government agencies. Quentelle works with information collected to provide actionable insights to enhance partner products and service offerings. Its platform works across many industries, and is currently working on areas such as HRIS, Medical, and Cybersecurity.