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streamlining wotc

Streamlining WOTC – Find Out With Quentelle!

The employment landscape in the United States is extremely complex, and not everyone has the same opportunity or capacity to find work that they’re happy with. According to Trading Economics, the US unemployment rate fell to 3.5 percent in December 2022, matching the figures reported in September and July, which were the lowest since February 2020 — falling short of market estimates of 3.7 percent.

The most recent jobs report followed a sharp drop in weekly jobless claims to three-month lows and a smaller-than-expected drop in the number of job openings in November 2022, both of which indicated a still-tight and strong labor market and suggested that the US central bank would likely continue raising interest rates for some time. In December 2022, there were 717 thousand more people working, or 159.2 million people overall.

The unfortunate fact is that many people continue to face significant barriers to getting jobs. However, this is where the Work Opportunity Tax Credit (WOTC) comes into play, which is federal tax credit the government provides to companies in exchange for hiring individuals from specifically targeted groups who have encountered barriers to secure employment.

What is WOTC?

WOTC stands for Work Opportunity Tax Credit. As defined by the U.S. Department of Labor, “the Work Opportunity Tax Credit (WOTC) is a federal tax credit available to employers who invest in American job seekers who have consistently faced barriers to employment.”

In other words, employers can use the WOTC as a tax incentive to recruit and hire long-term unemployed candidates that are members of a WOTC target group. The WOTC program aims to support these people in becoming financially independent and reward employers who give them a chance to work and earn a living. Employers who recruit someone from a WOTC-specific population may do so in order to satisfy their business needs and receive a tax credit. Employers who hire WOTC-eligible people not only give them a chance to work but also get a grateful and loyal employee that tends stays longer. As a result, this creates a win-win situation for employers and, of course, for employees.

Work Opportunity Tax Credit (WOTC)

The Work Opportunity Tax Credit, also commonly known as the WOTC tax credit, is a federal business credit generally available to private, for-profit companies that hire individuals from certain categories who have trouble finding employment.

There are 10 WOTC target groups in total. Some of those include:

  • Select Veterans
  • Ex-felons
  • Long-term unemployed individuals
  • Members of households that receive select public assistance
  • SSI Recipients

How Does WOTC Work for Employers?

Employers must administer a number of moving parts that are critical to claiming and earning the tax credit. At a high-level, employers must apply for and obtain a certification from the State Workforce Agency which confirms the new recruit is in fact a member of a WOTC target group. After obtaining the required certification, the credit is calculated based on the target group, hours worked and wages earned within their first year of employment. Taxable employers can deduct the WOTC credits from their income taxes as a general business credit, while tax-exempt businesses can deduct it from payroll taxes.

How Can Employers Find Job Candidates in WOTC Targeted Groups?

Employers can connect with qualified job seekers who could be in a WOTC target group with the aid of the American Job Centers and its partner organizations and initiatives. American Job Centers (AJCs) may help companies find qualified candidates, organize job fairs, carry out skills assessments, and support employees who are changing careers.

If a job seeker is a member of a WOTC targeted group, a state workforce agency (SWA) or collaborating source agency can make that determination. In some cases, the job-ready candidate is issued this pre-certification by the state agency to utilize in their employment pursuit. By notifying potential employers of the tax credit’s availability should they hire the person, the conditional certification acts as a public record of WOTC pre-certification. It also gives businesses a way to obtain a WOTC certification for the prospective employee.

Who is Qualified for the Work Opportunity Tax Credit?

Employers can hire individuals thanks to WOTC, but only from a select pool target group of applicants that the government permits. According to the Internal Revenue Service, here are the targeted groups that are qualified to be hired for WOTC:

  • Qualified IV-A recipient: This is a member of a household that is getting assistance from a state program financed by Temporary Assistance for Needy Families (TANF), Part A of Title IV of the Social Security Act (TANF).
  • Qualified Veterans: Veterans who have had periods of unemployment totaling at least four weeks but fewer than six months within the 12-month period beginning on the date of employment. Veterans who were discharged or freed from active duty in the United States within one year of being eligible for benefits for a disability related to their service. Or veterans entitled to benefits for a handicap resulting from service, and have been jobless for at least six months.
  • Qualified ex-felons: A candidate who was recruited within a year after either being found guilty or being released from jail for a crime.
  • Designated Community Resident (DCR): A person who, as of the date of employment, is at least 18 years old, under 40, and whose primary home is in either a rural renewal county (RRC) or an empowerment zone (EZ).
  • Vocational Rehabilitation Referral: An individual with a physical or mental disability who has been referred to the employer while getting or after completing treatment programs under a state plan authorized under the Rehabilitation Act of 1973.
  • Qualified Summer Youth Employee: A person who lives in an empowerment zone and is at least 16 years old but under 18, and only works for the employer between May 1 and September 15.
  • Qualified Supplemental Nutrition Assistance Program (SNAP) Benefits Recipient: A person who, as of the date of employment, is at least 18 years old, under 40, and a member of a family that received SNAP or other state assistance programs for at least three of the preceding five months or at least six months prior to the date of employment.
  • Qualified Supplemental Security Income (SSI) Recipient: A person who received SSI benefits for any month that ended within the 60 days prior to the employment date.
  • Long-Term Family Assistance Recipient: A person who, at the start of employment, was a part of a family that had received IV-A assistance for at least the previous 18 months in a row, or did receive it for at least 18 months starting after 8/5/1997 and it had not more than two years since the start of the earliest of those 18 months or had stopped receiving it because a federal or state law had limited the maximum credit amount of time they could receive it.
  • Qualified Long-Term Unemployment Recipient: A person who, at the start of employment, had not worked for at least 27 weeks in a row but had also gotten unemployment benefits for some or all of that time.

The Amount of Credit

The WOTC amount varies by target group, but the bulk of the credit is comprised of 25 to 40 percent of the first $6,000 in earnings that are paid to within their first year of employment and works for the employer for at least 120 hours. They must also be certified as a member of a targeted group under the WOTC program. In this example, employers can earn a tax credit up to $2,400.

Those who work less than 400 hours or at least 120 hours for the company are paid at a rate of 25 percent. For select target groups, such as long-term unemployed and disabled veterans; the WOTC qualified wages increase from $6,000 to $24,000. Therefore, a company could get up to $9,600 in federal tax credits for such employees. As a result, the exact amount of tax credit will depend on the certification, hours worked and qualified wages earned.

How Do Employers Claim the Work Opportunity Tax Credit?

As a federal tax credit, the WOTC is constrained by the amount of Social Security taxes payable by the business or its income tax burden. Utilizing IRS Form 5884 and/or Form 3800, the employer can submit a claim for the credit as part of the yearly tax filing process. However, before the credit is earned, employers must file a Pre-Screening Notice, known as IRS Form 8850 within the employees first 28-days of employment with the state’s Workforce Agency. In response, the State Workforce Agency determines WOTC eligibility and will issue a certification to the employer for employees that meet WOTC eligibility. This is used to confirm that the employee actually belongs to one of the WOTC targeted categories and is also known as IRS Form 8850.

How Can Quentelle LLC Help?

Quentelle, a top-ranked HR service provider, offers a range of HR solutions supported by an award-winning technical platform. We deliver a streamlined solution proven to automate the administration of Work Opportunity Tax Credits, other point-of-hire credits, as well as verification of employment and unemployment insurance claims. If your company is looking to streamline WOTC, Quentelle has you covered — our WOTC solution will maximize your profitability and reduce your Federal tax liability with ease.

Here is how Quentelle LLC can help you with WOTC.

Tax Credits

The experts at Quentelle can assist you in maximizing and streamlining your point-of-hire tax credits by utilizing our integrated technological solutions. Any sort of employer can be eligible to claim the WOTC tax credit, regardless of the number of eligible employees in their workforce. This extends to certain tax-exempt employer claims made in the US in addition to taxable employer claims. Tax-exempt employers may only use the tax credit for payroll taxes, but taxable businesses may use it to offset income taxes (incurred on the wages paid to specifically targeted group employees).

Both the company and the job seeker are needed to complete two forms throughout the hiring procedure (IRS Pre-screening Form 8850 and DOLF Form 9061). This is to be done the day before or the day the employee’s job begins. If this form completion criterion is not met, you will not be qualified to receive the WOTC tax credit.

Quentelle provides you with a range of cutting-edge solutions, including process automation for WOTC tax credits. Automating all the intricate calculations allows us to maximize your tax benefits. We submit and track the necessary paperwork to make sure all important deadlines are met.

WOTC Reporting

As mentioned above, several key elements must be taken into account when deciding whether a new recruit qualifies for the Work Opportunity Tax Credit (WOTC). Among the many steps, employers must ensure that WOTC certified employees have in fact worked a minimum of 120 hours or 400 hours before earning and claiming the respective credit. Employers that use our solution, take advantage of our advanced reporting platform to automate the calculation as well as the quarterly and annual reporting of their WOTC credits.

Our platform not only helps employers to recruit people from specific target groups and categories, such as veterans, convicted felons, and food stamp beneficiaries who are eligible for the credit but also figures out the precise amount of tax credit you earn for each employee. Additionally, our platform leverages our proprietary algorithms to help you forecast your tax credits accurately and efficiently.

Verification of Employment

It goes without saying that the government and IRS have particular requirements and qualifications for who a company may hire in order to benefit maximum tax credit from the WOTC. Employers should be aware of their WOTC eligibility and ensure they hire a qualified candidate. Hiring the wrong so-called eligible employee may result in a bad investment and zero total tax credit and tax savings.

For these reasons, Quentelle will assist you in ensuring that your company hires the best applicant for each job post in order to maximize business performance and guarantee that the applicant is genuinely WOTC eligible. Quentelle offers a simplified solution that easily screens for Work Opportunity Tax Credits (WOTC) for new hires thanks to a relationship with Walton, a top supplier of employment tax credits.

By utilizing a quick, easy-to-use questionnaire during the recruiting or onboarding process at your business, Walton is able to ascertain your eligibility for tax credits and seek them on your behalf. We provide the best and most robust employment selections and Verification Processes in order to thoroughly assess a potential candidate’s employment history and determine if they fulfill the stringent requirements for WOTC employee qualification.

HR Analytics and Metrics

After making sure that the applicant is a qualified employee for the WOTC program, you want to ensure that they can operate in a way that will support the goals of the company. Employers must remain focused on selecting excellent employees instead of only focusing on WOTC-qualified candidates.

Quentelle provides an HR Analytics engine as a by-product of the multi-dimensional data collected and managed by our technological platform. We allow businesses that struggle to get access to important data in the realm of HR and workforce management in order to manage their hiring process efficiently and guarantee hiring with the best possible employee performance. Our platform makes use of artificial intelligence (AI) to gather, question, and examine vast volumes of data from applicants in order to find trends and patterns that enable businesses to hire employees that can operate efficiently — AI enables us to swiftly analyze enormous volumes of data and helps us find patterns that ordinary human intelligence is unable to recognize.

Contact Us!

Working with a trustworthy partner is extremely crucial given how essential WOTC is to both the company and the applicants — you will need a reliable and trusted partner that can help you meet the needs of your company, retain individuals, and help you achieve the company’s goals.

Quentelle is a leading HR services provider; we are aware that any successful firm has to have strong human resources. As a result, we provide a variety of HR solutions that are supported by a cutting-edge technological foundation. We offer a range of services, such as assessing candidates for Work Opportunity Tax Credits and other point-of-hire hiring tax credits, verifying employment and income, processing unemployment benefit claims, counseling on unemployment tax, and more. We also provide a partner-focused strategy that gives our customers the greatest experience possible.

If you’re looking for the finest HR solution available, look no further than Quentelle. You will have peace of mind knowing that you’re getting the most complete and user-friendly possible solution for your HR needs. Schedule a demo today and learn more about how our world-class solutions and services can help in recruiting the most qualified WOTC workers, which will help your business achieve greater success.

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Your Guide To Work Opportunity Tax Credits

Your Guide To Work Opportunity Tax Credits

The Work Opportunity Tax Credit (WOTC) is a federal tax credit provided to employers under the Internal Revenue Code, Section 51, which is administered jointly by the Department of Labor and the IRS. The purpose behind WOTC is to encourage employers to hire job seekers who are experiencing difficulties in finding employment. When an employer hires someone from the WOTC target group, they can claim this tax credit.

What Is the WOTC Program?

Under the Consolidated Appropriations Act of 2021, the WOTC program has been authorized until December 31st, 2025. This means the tax credit for employers is available for wages paid to qualified workers that are employed on or before this date. To claim the credit, employers are required to apply for a certification to the designated workforce agency in their state, which will verify that the newly hired worker belongs to one of the targeted groups.

Once the taxable employer has obtained the necessary certification, they are eligible to claim the work opportunity tax credit as a general business credit. The credit will apply against the employer’s income taxes. Tax exempt employers claim the WOTC federal tax credit against their payroll tax.

A Brief History of the WOTC Program

The Work Opportunity Tax Credit (WOTC) program was launched on October 1st, 1996 to give tax incentives to for-profit employers that would provide employment to qualified individuals from certain targeted groups with historically high rates of joblessness. In addition to the economic goals, the program had a goal to incentivize workplace diversity. Since the introduction of the program, the WOTC has been extended and modified a number of times. In 2006, a similar but separate credit for the recipients of long-term welfare was merged with the WOTC. The program expansions in recent years have led to the total cost of the WOTC to exceed $1 billion.

How Does WOTC Work?

How Much Is the Tax Credit for the WOTC Program?

In general, the Work Opportunity Tax Credit is equal to 40% of up to $6,000 of a qualified worker’s wages, or the wages incurred on their behalf. A qualified individual is someone who is:

  • A certified member of one of the target groups.
  • Currently in their first year of employment.
  • Working for the employer to provide service for at least 400 hours.

At the rate of 40% for a maximum wage of $6,000, the maximum amount of tax credit is typically $2,400. For workers who perform services for at least 120 hours, but less than 400 hours, the applicable rate is 25%. For some qualified veterans, wages of up to $24,000 would be considered for calculating the WOTC.

If a worker has been re-hired, the employer may not claim the WOTC for them. Generally, the employer is allowed to carry the unused WOTC for the current year back one year and thereafter forward up to 20 years.

Who Qualifies for WOTC Credits?

The tax credit WOTC program is available to employers that are for-profit or tax-exempt as long as they hire job-seeking individuals (who consistently faced significant barriers to employment) from one or more of these 10 targeted groups:

  • Qualified veterans
  • Qualified veterans with disability
  • Qualified veterans who are unemployed
  • Qualified ex-felons
  • Qualified recipients of TANF (Temporary Assistance to Needy Families) formerly known as AFDC (Aid to Families with Dependent Children)
  • Qualified recipients of vocational rehabilitation
  • Qualified recipients of SNAP (Supplemental Nutrition Assistance Program), formerly known as Food Stamps
  • Qualified recipients of SSI (Supplemental Security Income)
  • Qualified recipients of long-time family assistance
  • Qualified recipients of long-term unemployment

How Does My Business Participate in WOTC to Claim Tax Credits?

Taxable as well as specific tax-exempt employers of all sizes are eligible to participate in the WOTC program. Before an offer of employment is given (or on the day the offer is made), the job candidate as well as the employer are required to complete Form 8850, which constitutes a formal request to claim WOTC.

From the date the new employee begins work, the employer must submit Form 8850 within 28 days to the designated state agency’s local office (state workforce agency in the location where the employee works for the business). The Department of Labor may require additional forms to provide the certification.

Once the employer receives a certification from the local agency confirming that the employee belongs to one of the target groups, the taxable employer should complete Form 5884, while the employer who is tax-exempt will complete Form 5884-C to claim the WOTC.

Wages to Be Considered for Tax Credit

After a worker has been hired, it is important to determine the exact amount of wages that must be counted for WOTC for that worker. In order to qualify for the tax credit, the wages should have been paid in the worker’s first year of employment. Secondly, the worker should have completed at least 120 hours on the job during the first year. In other words, the employer must wait until a worker has accumulated 120 hours of work before filing for the credit.

All payments that the employer has made to the worker during the covered period can be included. The following aspects must be complied with:

The “wages” should be wages on which the employer has paid out federal unemployment tax. The business should have directly paid those wages. If the wages were paid by the business indirectly or were subsidized through a third party, those will not be considered towards the Work Opportunity Tax Credit.

If the worker has completed at least 120 hours on the job in the first year, the employer can claim WOTC of 25%. If they have worked for a minimum of 400 hours, the tax credit of 40% can be claimed. For all types of employee categories, there are different limits of maximum hours for which tax credit can be claimed.

It is noteworthy that the worker wages that have been used to determine eligibility for WOTC cannot also be used for calculating other types of worker tax credits, such as Medical Leave Credits, Paid Family and Medical Leave, Employee Retention Credit, or forgivable loan proceeds under the Paycheck Protection Program.

The Procedure to Apply for WOTC

After the employer has hired an employee, and received a letter from the workforce agency in the state confirming that the employee qualifies, the employer can claim WOTC by submitting an IRS form depending on the type of business. The form to be completed and submitted is as follows:

  • IRS Form 5884: If the employer’s firm is a partnership, trust, S corporation, estate or cooperative, they should submit this form.
  • IRS Form 3800: All other business owners and taxpayer employers may submit this General Business Credit form.

To complete this form, the employer must calculate the cumulative wages of qualified employees, based on their employee category and the number of hours worked. This figure should be multiplied by the total number of hours an employee has worked during the year. Thereafter, the appropriate percentage (25% or 40%) must be applied to the final figure. The complete form will be added to the employer’s tax return to compute their individual or business income tax liability.

WOTC Screening

Employers use the WOTC screening process to determine whether a potential new employee may qualify for inclusion in their tax credit calculations. They will consider whether the potential hire belongs to the qualifying category of employees and, in any case, after getting hired the employee should be able to meet the requirements for the minimum number of hours worked.

The job applicant and the employer must complete and submit Form 8850, which is the state workforce agency’s pre-screening form. In addition, Form 9061 from the Department of Labor must be submitted in order to be eligible for the federal tax credit. Once the state workforce agency determines that the worker is qualified, the next step for the employer is to apply for the tax credits to the IRS.

The Impact of WOTC on Business Taxes

Businesses can apply the WOTC to their tax liability for the particular year, along with any other tax credits. The credits must be applied in a specific order. The appropriate tax form to be submitted for claiming the WOTC will depend on the type of business. “Pass-through businesses” where the business profit or loss is passed through to the business owner should include the WOTC application on Form 1040. The maximum amount of tax credit under the WOTC program is limited to the amount of income tax liability of a business or the Social Security tax owed.

How Does the WOTC Affect the Employee?

Employees that qualify under the WOTC program do not receive any financial benefit for being a part of a special category. However, the potential incentive for the employers improves their chances of getting hired. For every qualified employee, the employer may stand to gain a tax credit of anywhere between $1,500 and $9,600. This may be a significant reason for an employer to hire candidates under the WOTC program.

Advantages of WOTC for Employers

Reduction in Federal Income Tax Liability

By making use of the Work Opportunity Tax Credit benefits, an employer can lower their company’s federal tax liability by a substantial extent, or even eliminate it entirely in some cases. However, it’s crucial to remember that the amount of tax credits cannot exceed the total amount of income tax liability of the business.

If the employer does not have any income tax liability, they may still apply for the WOTC. Unused tax credits are allowed to be carried back 12 months as well as carried forward for up to 20 years on future tax returns. This means the employer can use their tax credits at a future date, once they have a corporate income tax liability.

Reduction in the federal tax liability can significantly bring down the costs of doing business for an employer. The savings achieved through the WOTC program could be utilized for business expansion or to finance the company’s core business operations.

Improvement in Cash Flow and Profits

By some estimates, an employee hired under the WOTC program can help boost the business profitability by up to 80% when compared to an equivalent non-qualified employee. With a lower tax bill, the company’s cash flow can improve and there can be a positive impact on the company’s profitability bottom line.

No Restriction on the Number of WOTC-Qualified Workers

The WOTC program imposes no limits on the number of qualified employees that an employer can hire for the purpose of gaining tax credits. No matter whether a company hires 5 or 500 eligible workers, their WOTC tax credits will continue to accumulate and strengthen the financial position of the business.

Large Number of Candidates Are Potentially Eligible

Even if a business has never participated in the federal WOTC program before, there is a fairly high probability that they already have employees or may hire new candidates that qualify under this program. In general, about one in five new employees are eligible for this tax credit in most industries. The qualifying rate may be even higher in certain industries.

The Department of Labor data shows that in 2018, the number of new hires under the WOTC program was 5.6 million. Consider the average rate of WOTC eligibility of about 20%, it amounts to nearly $2.5 billion in tax credits for that period that taxable employers could claim.

Businesses Should Recognize the Benefits of Participating in WOTC Program

According to market analysts, less than 50% of eligible employers participate in state or federal incentive programs, such as Work Opportunity Tax Credit. Although the pandemic increased the trend of companies taking advantage of government-backed initiatives to support business, many companies continue to miss out on the potential leverage they can gain from tax credit programs such as WOTC.

Lack of knowledge as well as lack of experience are two primary reasons why companies across all geographical locations may be lagging behind in participation in these programs. At the top management level, many business decision makers express unawareness about whether their company is utilizing the tax incentives such as WOTC. Some business owners say that they are unsure whether their company qualifies for these benefits. This reflects a significant lack of awareness that results in missed opportunities for qualifying businesses.

While at the outset, it may appear that the WOTC program involves complicated procedures to take advantage of the tax incentives, the advancements in automation and customization of services by firms such as Quentelle have made it much easier and faster. When companies team up with Quentelle to maximize their WOTC advantage, it will likely improve their profits consistently year after year.

It is worth it for companies to check through their HR departments to find out whether they qualify for WOTC benefits. An appointment with one of the knowledgeable team members at Quentelle can help business decision makers – including managers, CEOs and business owners – understand how technology can make the WOTC process simplified, compliant, and cost-effective. The message from Quentelle is clear – no business should miss out on tax credits just because they did not seek the professional opinion from a specialist.

How to Increase Employer Participation in WOTC with Quentelle?

From an employer’s perspective, maximizing WOTC benefits can be a time-consuming process. To stay compliant and to make the most of the program, the employers are required to deal with a number of challenges, including completing thorough paperwork, keeping diligent records, monitoring wages and hours worked, meeting the state agency deadlines, preparing meticulous documentation to support the WOTC claims, and accurately computing and recording the tax credits.

To complete this entire administrative process in-house, the employer may have to allocate considerable time, resources, and talent. Employers are often reluctant because getting involved in this process may distract their teams from the core business activities. However, there is a practical solution to avoid the complexities related to WOTC tax credit handling, and stop losing out on significant tax credit benefits.

By partnering with Quentelle, employers can relieve their in-house HR teams from the burden of WOTC administration and streamline the complete process using Quentelle’s automated platform. This enables an employer to maximize their legitimate tax credit opportunities without compromising their core business activity and without increasing their staff or administrative expenses.

The Quentelle platform not only speeds up the process to ensure the state agency submission deadlines are always met, it also improves the accuracy of information and documentation to ensure full compliance with the federal and state WOTC regulations. Make Quentelle a seamless part of your WOTC tax credit process, and improve your bottom line, while redirecting your own team’s energies towards more productive and creative business operations.

Partner with Quentelle to Boost Your Profits and Productivity

Quentelle, in conjunction with the leading tax credits specialist Walton, has created a win-win for employers to maximize their tax credits, while diversifying their workforce by hiring employees that qualify for the WOTC program. Employers who otherwise might be reluctant to hire workers from certain eligible categories for various reasons can have the opportunity to gain in tax credits when they utilize the benefits of WOTC by teaming up with Quentelle.

Many employers are increasing their profitability and cash flow and saving millions of dollars in business tax liability by participating in the WOTC program. At the same time, providing employment to eligible workers from the disadvantaged categories helps strengthen the company’s value system and work culture, improves employee morale, and bolsters the company’s reputation as a socially responsible organization.

With the cutting-edge digital platform technology from Quentelle, WOTC is no longer a paper intensive, cumbersome, and time-consuming process for employers. Quentelle’s advanced solutions from Walton have simplified the entire process, while making it faster and more accurate at the same time. By partnering with Quentelle, a business can leverage the excellent WOTC benefits and improve their productivity, profitability, and cash flow.

Overcome the Hurdles to WOTC Benefits with Quentelle

Is your organization missing out on potential WOTC benefits because it is unwilling to commit in-house resources to this tedious and resource intensive process? Let Quentelle help you make the most of your rightful WOTC opportunity, while freeing up your resources and talent from the onerous responsibilities of filling out and submitting forms within deadlines, preparing support documentation and records, and ensuring compliance with the law.

Considering that the IRS only gives you 28 days for the submission of the required documentation, traditional labor-intensive approaches to WOTC administration can prove to be costly and error-ridden. In particular, when your company is hiring a large number of new workers, completing and tracking the WOTC paper trails can be even more daunting. This is where Quentelle, in partnership with Walton, is helping employers replace their manual in-house WOTC process with its automated platform service.

Quentelle’s professional support and service for WOTC tax credits begins with the introduction of a small questionnaire as part of the hiring process to identify all the eligible candidates. The automated screening and onboarding process with the digital platform capabilities of Quentelle lets your company eliminate the burden of in-house identification and processing of tax credits. This reduces the demands of time and effort on your HR teams, while ensuring that your business enjoys maximum tax credit benefits.

Let Quentelle Turn WOTC to Your Business Advantage

Ever since the WOTC program came into existence in 1996, it has continually evolved and gained acceptance as a useful tool to promote more equitable job creation, while rewarding employers for their participation in this endeavor. Companies of any size can be eligible to receive Work Opportunity Tax Credits. There is no cap on how much an organization may earn by way of WOTC, as long as it does not exceed their income tax liability.

Employers that were hesitant in the past to make use of this federal government-backed incentive because of the administrative hurdles involved are now joining hands with Quentelle to make the most of the WOTC program. With Quentelle’s digital platform and automation of the WOTC process, you no longer have to worry about missed tax credits, high error rates, delays in submission of forms and documents, and dissatisfied HR staff burdened with a manual process.

With the platform capabilities of Quentelle to streamline the administrative WOTC process, it is easy to efficiently capture and maximize tax credits where you are eligible while staying compliant with the ever-changing regulatory requirements. When you partner with Quentelle, your organization will begin to generate significant tax savings, which you can channel to more productive areas of your business to gain a durable competitive advantage.

Here are some of the key benefits of automating the WOTC tax credit process with Quentelle:

Cost Reduction

When you perform the administrative tasks related to WOTC tax credits in-house, you have to hire skilled staff dedicated to perform this process. This can significantly increase your HR expenses. On the other hand, when you move your tax credit management and handling responsibilities to Quentelle, you get access to industry-leading technology, streamlined business processes, and significantly lower costs.

This is possible because the experienced professionals backed by the automation platform capabilities of Quentelle can perform the same tasks much faster, more accurately, and at a lower cost to your organization. Moreover, you will also save money because you no longer have to make continued investments in updating and maintaining the internal infrastructure needed to carry out the same tasks in-house.

Higher Speed and Accuracy

With the cutting-edge digital systems of Quentelle along with a team of trained professionals, the time taken to complete forms and paperwork, prepare support documents, and track and store employee data is substantially cut down. When the entire WOTC process is handled in-house using traditional methods, it becomes far more time-consuming, taking away the focus and attention of your teams that could otherwise have been utilized for core business activities.

When employers try to cut down the time spent on the tax credit process in-house, it is likely to cause higher dissatisfaction among the responsible HR teams. At the same time, the risk of errors increases when there are tight deadlines to be met. With Quentelle, you get the advantage of speed combined with accuracy. The automated system makes the manual and repetitive processes much faster, while the trained WOTC experts minimize the chances of errors because they are updated with the latest changes in regulations and stay current with the process.

Customized and Reliable Services

As a customer-centric platform, Quentelle is committed to helping your organization meet its unique requirements related to tax credits and other peripheral items. It has the agility and flexibility to tailor its services and adjust them to your changing business needs. This flexible approach lets you utilize Quentelle’s services based on your current organizational demands. This provides you superior cost efficiency to achieve maximum financial benefit.

Reliability is one of the high points when you choose a top-rated platform such as Quentelle. The company follows industry best practices and has put in place robust systems to enable timely communication and reporting, and to deliver fast, secure, and satisfactory outcomes for all customer requests. Because the teams at Quentelle are specialized in the tasks they perform, they can ensure high-quality performance and full compliance with the regulatory requirements.

What Does WOTC Mean for My Company’s Human Resources Infrastructure?

The WOTC program is valuable for any eligible employer not just because it can help improve the business bottom line, but also because it bolsters the company’s human resources infrastructure and its reputation as a responsible employer. Used correctly, WOTC has the potential to strengthen the objectives of inclusion and workplace diversity in a business organization.

Employee morale is often higher in organizations where people are hired from the widest possible cross-section of the available talent pool. Worker turnover rates are reduced and productivity per employee is likely to improve in these organizations. Moreover, when the employer includes a WOTC survey as part of their application process, the HR team can gain better insights into the opportunities for diversity and multiple skill sets and experiences that may be available.

What Should I Look for in an HR Platform that Integrates WOTC Functionality?

As an employer, you need a proven and established service provider with an advanced HR platform that fully integrates WOTC functionality. The integration will streamline your HR process, minimize the scope for errors, and deliver faster and more cost-effective results. Choose an HR platform that is intuitive, user-friendly, and is designed to make the WOTC integration incredibly simple.

Top-Rated WOTC Solution Provider

Quentelle, through its partnership with a leading employment tax credits provider Walton, provides a streamlined solution that makes the task of screening Work Opportunity Tax Credits easy and efficient. When you administer a short, but proven questionnaire as part of your organization’s process of hiring or onboarding, it enables Walton to quickly and accurately determine eligibility and pursue WOTC and other tax credits for your business.

Simplified Screening, Unmatched Results

Quentelle makes the screening process simple by leveraging the power of Walton. Walton utilizes a number of integrations with dedicated Applicant Tracking, Job On-Boarding, and Payroll Taxes service providers. This gives Walton the ability to automate the WOTC screening process and deliver a fast and friendly user experience while optimizing results. With support from Quentelle and the cutting-edge solutions from Walton, you can increase your tax savings, ease the workload of your team, and strengthen your human resources infrastructure.

Partner with Quentelle for Winning HR Tech Solutions

Is your company spending too much time and effort trying to navigate the Work Opportunity Tax Credit (WOTC)? Let Quentelle do the heavy lifting for you and help you achieve superior operational efficiency in multiple HR tasks with our award-winning technology platform. A growing number of companies are choosing Quentelle’s suite of proven and innovative solutions. To schedule a demo, call us at (888) 565-5515 or simply fill out this online contact form and we will respond as soon as possible.

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Verification of Employment and UI Tax

Verification of Employment and UI Tax – What You Need To Know

Employment verification is a process to enable mortgage lenders, financial institutions, government agencies, and employers to confirm an applicant’s present and/or past job status. The process helps establish that the applicant has the requisite work background that they claim to have. Verification of employment may also help identify any fabricated job titles, gaps in employment, and false or misleading claims.

Financial institutions and mortgage providers frequently need to perform VOE checks before they may approve a loan for an organization’s current or former employee. Quentelle utilizes the advanced and reliable VeriSafeJobs solution to automate and speed up the verification of employment process based on the requests it receives from these financial lenders.

Quentelle also receives similar VOE requests from government agencies. When employees seek government assistance, the concerned agency can utilize the Quentelle platform to obtain employment verification. Quentelle offers this service free of charge to government agencies on behalf of the employers it represents.

Why do Mortgage Providers Require Verification of Employment for Loan Approvals?

Why do Mortgage Providers Require VoE for Loan Approvals

Verification of employment is one of the time-tested ways for financial institutions and mortgage providers to protect their financial interests as well as serve home buyers and other loan seekers more effectively. Lenders rely on the VOE process to ensure the loan applicant or a home buyer will be in a financial position to make their loan repayments on time.

Mortgage lenders usually accept a maximum debt to income (DTI) ratio of 43 percent. In simple terms, it means that the borrower’s aggregate debts, including monthly mortgage payments, vehicle loan payments, credit card payments, and other monthly bills must not be higher than 43 percent of their gross monthly income.

Apart from the overall DTI ratio of 43 percent, mortgage providers also usually like to ensure that the monthly home loan payment of a borrower is not higher than 33 to 35 percent of their gross monthly income. Together with the DTI ratio requirement, this general condition helps in rationalizing the lending process for the mortgage company.

Verification of employment plays an important role in this because the lender can be sure that the information submitted by a loan applicant is correct. Although it may appear that VOE is an impediment in the way of borrowers who want to buy the house of their dreams, but in reality, this process helps protect prospective home buyers from obtaining a mortgage they may be in no position to afford.

Mortgage Loans and Gaps in Employment

While employment history is often a key element in a loan application, lenders usually require only a work history of the last two years. Therefore, if the borrower has had employment gaps before that period, it may not affect their loan application. However, when gaps in employment exist in the last two years, it may become a concern for the mortgage provider especially if the length of the unemployment period is 6 months or higher. An unemployment period of just one or two months in the last two years will usually not matter much for a mortgage approval.

Some Employment Gaps are Reasonable

When an employment gap occurred for a valid reason, the mortgage lender or financial institution will give due consideration to it. For instance, a loan applicant may have taken a maternity leave for six or more months, or may have taken time off to pursue higher education.

Temporary disability and layoffs may also result in extended gaps in employment, which a lender is likely to understand. However, multiple job changes within a span of a few months, a short employment history of less than two years, and substantial increase or reduction in income in recent times might be viewed as red flags by some lenders.

Loan Applicants can Explain the Employment Gaps

A loan applicant can increase their chances of their loan getting approved if they provide a valid explanation supported by relevant documents about their prolonged employment gap. Finishing school, going on maternity leave, or performing the role of a caregiver for a sick family member are the kind of reasons that can be backed by documentary evidence.

Sometimes the borrower may be able to demonstrate that they continued to make their existing debt payments consistently during the period of employment gap, which could strengthen their loan application. In general, lenders are looking for employment stability to assess a borrower’s ability to make future mortgage payments.

The Process of Verification of Employment for Mortgages

The Process of VoE for Mortgages

The process to verify employment for the purpose of mortgage approval is not very different from other VOE processes. However, some minor distinctions may exist. In general, the process may include the following steps:

  • The borrower files a loan application detailing their employment history and income information, among other things. Documents such as W-2 forms or pay stubs may have to be submitted at this stage.
  • The lending company communicated with the borrower regarding any additional proof or documentation they may require.
  • The mortgage lender processes the loan application. If no specific issues are found, the lender will proceed with the verification of employment.
  • The lender may choose to verbally verify employment by placing a phone call to the loan applicant’s most recent employer. If any discrepancies are found between the loan application and the employer’s version, the lender will communicate with the loan applicant.
  • In case the loan applicant is self-employed, they will need to submit their proof of income from the IRS. This income document can be obtained by completing Form 4506-T. An official tax transcript issued by the IRS will show the applicant’s income, based on which the lender may approve the loan.
  • Sometimes when a lender approaches an employer with a VOE request, the employer may direct them to a third party verifier. This could make the verification of employment process longer and costlier (the verifier will charge a fee). Third party employment verifiers can additionally offer background checks, but it is important to ensure the background check or background screening is performed in accordance with the FCRA (Fair Credit Reporting Act) regulations.

In general, the manual, in-house process of verification of employment for lenders can be tedious, resource intensive and time consuming. If the employment verification takes a long time to complete, it can frustrate the borrower who may sometimes turn to another lender by the time the VOE is done.

Frequent time lags in the VOE process and slow loan approvals may limit the business turnover for the financial institution. Inaccuracies or mistakes in the employment verification process may create compliance issues or increase the incidence of loan defaults and loss of profitability. Higher operational costs may also impact the bottom line when loan companies attempt to handle the complete employment verification process in-house.

Automation in VOE is Helping Improve the Lending Process

Smart automation in employment verification with a platform such as Quentelle is helping banking institutions and mortgage providers make faster and better lending decisions. Verification of employment, which is considered one of the major pain points in the lending business, becomes streamlined and easy with Quentelle. Over time, it allows the lenders to achieve higher profits and deliver superior services to home buyers and other borrowers.

Traditional Approach to Employment Verification is Inadequate for Lenders

Considering the highly unpredictable and competitive nature of the lending business, loan providers are under constant pressure to sustain their market position while remaining profitable. Using traditional in-house approaches to verification of employment, the lenders experience cost inefficiencies and compliance risks due to potential mistakes by HR teams. On the other side, borrowers are becoming increasingly demanding with high expectations for service and speed.

If it takes a slightly longer than usual time to verify employment, the lender may risk losing the business to their competitors. If they try to rush through the VOE process, mistakes may occur, which can seriously hurt the bottom line. This is where all types of lending institutions, banks, and mortgage companies are now more receptive than ever to move their verification of employment service to Quentelle, which is a cutting-edge digital platform for VOE.

Automation can Streamline the Verification of Employment Process

The decision of loan approval must fundamentally be based on the borrower’s ability to repay. Borrowers with stable employment are more likely to have this financial ability. To identify these borrowers, it is critical for a lender to have a system in place that makes the verification of the employment process reliable, speedy, and accurate. The Quentelle platform is equipped to intelligently automate this function.

Automation in VOE

Repetitive, manual, error-prone and time-consuming tasks such as verification of employment are an ideal fit for automation with Quentelle. It can relieve the employer’s in-house talent of performing mindless administrative work, improve accuracy in verification, and enable the processing of more loan applications within a shorter period of time. At the same time, the Quentelle VOE service can help maintain compliance, while delivering speedy service that drives higher customer satisfaction levels.

Why More Lenders are Choosing Quentelle for Employment Verification

Lending institutions and mortgage companies are increasingly relying on the technology platform of Quentelle for verification of employment. The platform automates the time-consuming and labor-intensive VOE process to complete it in the shortest possible time. Customers experience a dramatic reduction in the time and effort they would otherwise invest in issuing loan and mortgage approvals.

With Quentelle’s VOE solutions, lenders can process loans faster and more accurately, giving a boost to their mortgage lending turnover. Homebuyers and other borrowers are happier because of a more streamlined process and faster loan approvals. Quentelle creates a win-win for all.

More Predictable Timeline

Large and mid-sized lending companies have a regular requirement for employment verification, considering the high number of mortgage applications they receive. Automating the VOE process with Quentelle not only reduces manual paperwork and expedites the process, it also allows for a more predictable timeline. Loan officers as well as loan applicants will have a better idea of how much time the approval will take. The mortgage provider can also set more accurate revenue goals and strategies when there is greater predictability in the lending system.

Better Privacy and Security

When traditional methods of employment verification are used, the in-house handling of the paperwork and documentation does not ensure foolproof safety and confidentiality of the information exchanged. On the other hand, when the mortgage lender utilizes the Quentelle platform, concerns related to privacy and data security are virtually eliminated. The platform’s automated and technology integrated VOE software provides comprehensive data protection and cyber security. Sensitive customer information remains accessible only to the authorized personnel, and the risks of data loss are avoided with cloud storage technology.

Higher Cost Efficiency

In comparison to the traditional means of employment verification, the automated Quentelle platform proves to be significantly more cost effective for the lenders due to superior operational efficiency. The lending organization no longer needs to have a large in-house team to handle the repetitive VOE tasks manually. The automated solution from Quentelle not only makes the verification of employment process easier and friction-less, it also helps cut down the operational costs for the lender to get it done within a tight budget.

Greater Business Focus

When a bank, financial institution or a mortgage lender has access to Quentelle’s automated VOE solutions, it becomes possible to fulfill the employment verification requirements quickly, securely and more reliably. This frees up the time of the talented in-house teams to focus their attention on more strategic and valuable business work. The net result is that the lender manages to close more loans, the bottom line improves due to higher accuracies in the system, the customers are happier, and the company’s market reputation gets bolstered over time.

Improved Compliance

When financial lenders select a technology platform to automate their task of employment verification, they should make sure of the service provider’s technology capabilities, security certifications, and a track record to adhere to the FCRA compliance requirements at all times. Quentelle has robust systems in place to ensure to protect sensitive customer data and follow the norms laid out by the regulating agencies. Quentelle’s stringent verification of employment policy and procedures are designed to ensure full compliance with the law and minimize the lender’s risk of lawsuits.

How Does Employment Verification Work for Employers Looking to Hire Candidates?

Employment verification is a vital element in the pre-employment screening, which serves to assure the new employer that the candidate is a good fit for their organization and the job position they would hold. Employment verification works as follows:

  • The new employer reaches out to the candidate’s past employers to verify details about the candidate, such as: (a) job titles; (b) period of employment; and (c) reasons why they left the job or why they were terminated.
  • These employment reference checks may be carried out as written communication, but sometimes the HR representative of the new employer may also speak directly to the former manager or supervisor of the candidate.
  • This type of background screening and reference checks with the previous employer are usually performed as part of the hiring process – prior to offering a confirmed job to the candidate.
  • The new employer has a legal obligation to notify the candidate about this type of background check and their employment decision.
  • Unlike employee background checks, there is no limit on how far back in time an employer can go with employment verifications from multiple past employers.

Why is Employment Verification Vital to the Hiring Process?

Employment verification is critically important because employees are the strongest asset of any company. Carrying out this meticulous verification for every new hire can be time-consuming for an employer, and errors of omission may sometimes occur.

The right way to conduct background screening and employment verification is to engage the services of a professional firm that has the capabilities and experience in this field to do it in a reliable, timely, and cost-effective manner.

Risk of Employment Fraud

Job applicants may sometimes commit resume fraud if they are desperate to get a job. In their job application and resume, they may submit false information about their academic qualifications, certifications, licenses, and prior work experience; overstate their job duties in the previous job; or fail to provide the correct reasons for exiting from their previous employment. To protect your organization from this type of fraud, verification of employment history is a time-tested approach.

Stakes are High in Positions of Trust

If you hire someone without employment verification, the risk is higher that they may be unfit for organization’s culture and may create disruptions or influence other employees in a negative way. The stakes increase further in positions of trust where the new employee will have access to the company’s confidential data and information or deal with money and finances. Data theft, financial theft, or other wrongdoings of an untrustworthy new employee may result in serious financial losses, damage to business reputation, and risk of costly lawsuits.

Challenges of High Employee Turnover

You may think that even if you end up hiring an unfit candidate in absence of employment verification, you can fire them to get rid of the problem. However, failure to have a system for employment screening tends to increase worker turnover. The hidden costs are enormous. At one end, you will lose in terms of the costs involved in hiring, training, and investing in a new employee. On the other end, frequent terminations due to theft, illicit drug use, violence, and breach of company policies will demoralizes your existing workforce and affect business productivity.

Unemployment Verification Form

When a former employee was removed from their job, they will most likely apply for unemployment benefits in their state. The individual must complete the Unemployment Verification form, which has a section for describing the reason for their removal from job.

The individual who has been terminated from employment might request that their ex-employer provides an unemployment verification letter. They may also request that the unemployment agency in their state provide this unemployment verification letter. This letter can serve as their proof of unemployment.

Unemployment Insurance and the Unemployment Audit Process

The state’s Unemployment Insurance agency will carry out an unemployment insurance audit according to the US Department of Labor guidelines. This audit process ensures compliance on part of the employers and helps answer any questions that may arise.

What Triggers an Unemployment Insurance Audit?

Most of the UI audits are performed randomly every year on a small percentage of employers in the state. The pool from which the employers are chosen includes all companies registered as employing businesses within the state.

For the purpose of the unemployment insurance tax audits, some employers may also be specifically chosen to verify whether they are accurately reporting the wages or they have appropriately classified the workers in compliance with the state’s UI laws.

Even if a company does not have an active Unemployment Insurance account, they could be chosen for the UI audit to assess whether they may be a liable employer. The UI tax audit is performed to verify that:

  • The employer is correctly reporting the workers’ wages.
  • The employer has appropriately classified all workers.
  • The employer has filed all the required reports.
  • The employer has reported the payroll correctly.

Duration and Time Period of the Unemployment Insurance Audit

The general time period of the audit is one calendar year. If the audit reveals discrepancies, it may be expanded to additional years and the tax auditor may request that you provide records for those years. The duration or length of the audit will vary according to a number of factors, such as the size of the company and the number of employees, the availability of proper records, and the extent of issues discovered, if any. The date and time of the audit will be set by the auditor, and the audit may be conducted at the employer’s premises or at their accountant’s office with authorization.

Interfacing with the Auditor

The business owner (employer) is usually not required to be personally present during the audit. They can designate their authorized representative to work with the auditor on their behalf. The auditor may work with the employer’s accountant or another service provider as long as they are an active agent on the company’s UI tax account. In a situation where the agent is unable to answer any questions from the auditor, the employer should be accessible by phone to provide answers directly.

Types of Records Examined in the Audit Process

The employer should maintain proper payroll records and all the necessary documents that are essential to track payroll. All information to the auditor should be reported correctly. Employees and independent contracts should be classified correctly. Records that the auditors typically request in an audit year are listed below. Based on the tax auditor’s findings and review, they may ask for your additional records at the time of the unemployment insurance audit.

  • IRS Forms 940, 941, 1096 and 1099
  • Form W-2/W-3
  • Income record of every employee
  • Financial statements
  • General ledger of accounts
  • Tax returns pertaining to business income
  • Journal of cash disbursement
  • Petty cash account
  • Payroll timesheets, journal, or register
  • Bank statements
  • Master vendor files or listing
  • Corporate minutes
  • Documents pertaining to non-payroll payments made, such as invoices, receipts, contracts, or certificates of insurance
  • Any other records pertaining to payments made to individuals towards services performed

Verification of Employment, Unemployment Insurance Claims, and Human Resources Platforms

Automating the VOE Process

Quentelle helps employers save valuable time and cut down administrative costs regarding verification of employment (VOE) and unemployment insurance claims with the use of advanced technology. Quentelle uses VeriSafeJobs for automating your VOE and income verification requests to help ensure compliance.

Advantages of VeriSafeJobs for Automation

Data Security and Privacy

Features, such as at-rest E2E encryption, FCRA compliance, vulnerability assessment, SOC 1 & 2 and SAS 70 certification, and proactive screening of potential threats keep your data private and safe.

Simple and Smart UX

You can have a simple and smart user experience with a user-friendly interface, quick implementation, and advanced metrics and reporting.

 Unparalleled Client Support

Your inquiries and concerns are addressed on time, every time, thanks to the excellent personnel training, experienced account management, and reliable support and service.

Securing WOTC Credits

Quentelle can provide your company with a streamlined solution that simplifies screening for WOTC (Work Opportunity Tax Credits). We do this through our partnership with Walton, which is a top technology provider for employment tax credits. Walton administers a proven and simple questionnaire during the employer’s process of hiring or on-boarding, which enables it to determine eligibility and seek Work Opportunity Tax Credits on your behalf.

When you implement the automated solutions from Walton, you will have the assurance that no effort is spared to optimize your tax savings. At the same time, your team will be free from this workload to focus on their core business activities. With this proven solution from Walton, you can pursue your hiring requirements while knowing that Quentelle will take charge to handle things efficiently behind the scenes.

ESD Issues

The Employment Security Department (ESD) is required to conduct annual compliance audits according to the guidelines of the US Department of Labor. If you are selected for an ESD audit, you will be contacted by the Department’s auditors to schedule a mutually convenient audit date. ESD will also send you a letter confirming the appointment along with a checklist for the required records and a pre-audit questionnaire.

What Does an ESD Audit Cover?

ESD auditors will conduct a number of functions during the audit, including:

  • Seeking evidence of any unreported workers, independent contractors, casual workers, and other individuals providing personal labor.
  • Comparing the sample time records and payroll with the wage and hours that have been reported to ESD.
  • Reviewing the nature of business and whether you have been assigned the appropriate tax rate (if you are a new employer).
  • Determining whether you have correctly reported independent contractors.

Documents Required in an ESD Audit

For an ESD audit, you may be required to provide employer’s records of the last three years (or more, if business practices are found to be suspect). Records typically reviewed in an ESD audit are:

  • Business ownership licenses and documents
  • Accounting, payroll, and employee time records
  • Financial statements, bank records, general ledgers, and check registers
  • Federal and state tax records (which include IRS 1099)
  • Copies of invoices, contracts, and registration numbers of each independent contractor
  • Opt-in forms for the corporate officer

Transforming Mortgage Lending with Quentelle’s Automated VOE Process

Choosing a professional automated system for verification of employment not only saves time for mortgage lenders to help them close more loans, it also improves compliance, saves on potential legal challenges, keeps customers satisfied thanks to faster loan approvals, and lowers the lender’s operational costs involved in employment verification with confidentiality.

Quentelle’s automated platform for verification of employment is designed to help mortgage providers put the borrower’s interests on top by streamlining the loan approval process. Home buyers are usually making the most important purchase of their life and fulfilling a dream to own a home. Quentelle is committed to empowering mortgage providers through its platform to make the home buying process more simplified and rewarding for everyone involved.

Advantages for mortgage providers with Quentelle include:

  • Superior accuracy and reliability achieved throughout the verification of employment process.
  • Reduction in loan origination time and expense is possible due to minimal friction with borrowers and employers.
  • Possibility to close a higher number of mortgages within a shorter timeframe thanks to an efficient, automated VOE process.
  • Higher scope for generating referrals because the faster and convenient automated verification process helps exceed customer expectations and drives greater satisfaction levels.

Quentelle – Your Dedicated Partner for VOE and More

When you need a professional service provider with the technology and expertise to perform verification of employment, handle unemployment insurance claims, and provide an automated platform for various critical human resource tasks, Quentelle is here to deliver outstanding services and solutions to you. Reach out to us to learn more about how we can help your company save precious time and money with our highly rated and services. To schedule a demo, call us at (888) 565-5515 or complete this online form.

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Employer Tax Incentive Programs

4 Employer Tax Incentive Programs You May Not Be Aware Of

Running your own business comes with a wide range of decisions to make. Many of these decisions will be based on costs and savings. Fortunately, there are certain tax incentive programs for employers that can help you to save money in the long run. Though it is possible that these tax incentive programs require certain actions that you may already be doing, you simply may not realize you could be taking advantage of additional savings. Certain tax credits allow you to invest funds elsewhere, such as increasing employee salary and benefits or updating equipment. Here are four tax incentive programs for employers every employer should be aware of:

Employer Social Security and Medicare Taxes

If you are a company that has employees who receive tips, this one’s for you. Certain food and beverage establishments pay Medicare and Social Security taxes on tips that employees receive. As such, your business might be able to claim this as an income tax credit. It will cover the part of the employer’s Medicare taxes and Social Security taxes that you pay. Do not let this tax incentive program pass you by as it can benefit your business and save you money; money that can be used to grow your business.

The IRS explains this as the ‘FICA tip credit’, also called the “45 B Tax Credit”. This is reported to the IRS via IRS form 8846. You can learn more about this tax credit here.

Work Opportunity Tax Credit

There are certain targeted groups that can earn your company a lucrative tax credit under the Work Opportunity Tax Credit (WOTC) program. These targeted groups include:

  • SNAP Recipients
  • TANF Recipients
  • Qualified Veterans
  • Ex-Felons
  • Designated Community Residents
  • Vocational-Rehabilitation Referrals
  • Supplemental Security Income (SSI) Recipients
  • Summer Youth Hires (ages 16-17)
  • Qualified Long-Term Unemployed Recipients

This list includes a fairly large amount of people and you may have already hired someone from these groups, without knowing. The credit amount ranges from $1,500 to $9,600 and depends largely on the target group the individual is certified under as well as the hours worked within their first year of employment.

Energy Tax Incentives

When you make your business more energy-efficient, not only can this help the environment and save you money on your energy bills; it can also qualify you for a tax credit. There are tax incentive programs for making energy-saving improvements as well as buying energy-efficient appliances. Some improvements that can fall under energy tax incentives include:

  • Solar water heaters
  • Fuel cell equipment
  • Solar panels
  • Wind turbines

Energy efficiency is constantly changing and it is important to stay up to date with the latest tax incentive programs for employers.

Disabled Access Credit

As equality and access continue to be implemented into our day-to-day lives, many businesses are doing what they can to help. When you have a storefront or public access for customers, you want to make sure everyone can maneuver in and out easily. All business owners also need to think about access and comfort for your employees. Making changes to guarantee accessibility for people with disabilities can make you eligible for the Disabled Access Credit. This is a one-time tax credit for small businesses that incur bills for providing access to disabled persons. You can claim each year that there are expenditures for disabled access.

How Quentelle Can Help Your Business

Tax credits are instrumental tools that can lower your business tax liability.  Depending on which tax incentive programs your business qualifies for, you may end up paying very little in taxes at the end of the year. This will help you invest additional funds to grow your business. Quentelle has experience delivering proven tax credit planning. Contact us online or give us a call at 888-565-5515 today.

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tax credit programs for business owners

6 Tax Credit Programs For Business Owners That You Can’t Afford to Miss

Dealing with taxes is an important part of running any business. Therefore, it is essential for business owners to be aware of all available tax credit programs that can offset your corporate tax bills. Many tax credits and deductions are designed to help businesses reduce taxes by participating in certain activities.

Generally speaking, these incentives function as an effective way for the government to incentivize and reward businesses for contributing to their respective communities. 

Tax credits are different from tax deductions. These two can often be confused. Tax deductions can only lower your taxable income and the tax rate that is used to calculate your tax, while tax credits reduce your taxes, giving you a larger return of your withholding. There are a few tax credit programs for business owners that cannot be missed outlined here.

Small Business Health Insurance Premiums (Form 8941)

This credit was outlined in the Affordable Care Act, most often referred to as Obamacare. It is a credit that companies can claim when they provide health insurance to employees in a small business. Businesses that are eligible meet these requirements:

  • Paying at least half of the employee’s health insurance premiums
  • Having fewer than 25 full-time employees
  • Purchasing a qualified health plan from the SHOP marketplace
  • Paying an average wage of less than $55,000 a year for each full-time employee

This credit can only be claimed for two consecutive years.

Work Opportunity Tax Credit (Form 5884)

There are certain targeted groups that can earn your company a lucrative tax credit under the Work Opportunity Tax Credit (WOTC) program. These targeted groups include:

  • SNAP Recipients
  • TANF Recipients
  • Qualified Veterans
  • Ex-Felons
  • Designated Community Residents
  • Vocational-Rehabilitation Referrals
  • Supplemental Security Income (SSI) Recipients
  • Summer Youth Hires
  • Qualified Long-Term Unemployed Recipients

The list includes a fairly large amount of people who have already hired someone from these groups, without knowing. The credit amount ranges from $1,500 to $9,600 and depends largely on the target group the individual is certified under as well as the hours worked within their first year of employment.

Credit for Increasing Research Activities (Form 6765)

There are several reasons why you will be eligible for tax credit programs for business owners related to research and development. The following types of activity may qualify you for this credit.

  • Environmental or ratification testing
  • Improving quality control processes
  • Developing new protocols
  • Proprietary products and seeking patents
  • New manufacturing processes
  • Improvements on quality control
  • Improvements in product efficiency

You should consult with your tax preparer to determine eligibility under this credit.

Disabled Access Credit (Form 8826)

The ADA has enacted various laws and policies to ensure that those with a disability have reasonable accommodations. Because of this, there are tax credits to match. The disabled access credit motivates businesses to make business locations accessible to customers and employees who have a disability. There are many benefits to making your business accessible.

Employer-Provided Childcare Facilities and Services (Form 8882)

Helping your employees obtain childcare by providing in-house facilities is a great way to ensure that your employees are comfortable and able to come to work. It is also another way to claim tax credits for your business.

New Markets Credit (Form 8874)

This tax credit is for businesses that invest in Community Development Enterprises and Community Development Financial Institutions. They are primarily geared toward low-income communities.

Learn About Tax Credit Programs For Business Owners & Quentelle’s Business Solutions Today

At Quentelle, technology is our passion, and we provide solutions for business owners. We can guide you on tax credit programs so you are always on top of your game.

Contact us online or call us at 888-565-5515 today.

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tax credit for hiring veterans

Can I Get a Tax Credit for Hiring Veterans?

Often, the brave men and women who defend our country return to the workforce after their service. Veterans are typically organized and disciplined. Plus, they bring a unique set of talents and skills to the job that sets them aside from the rest. Veterans are known for being able to work well in a team environment and following instructions well to get the job done. In addition to being assets to your workforce, did you know that you can get tax credit for hiring veterans and help your business that way?

When a business hires a veteran, they can take advantage of the Work Opportunity Tax Credit (more commonly abbreviated as WOTC).

Tax Credit for Hiring Veterans

Currently, there are some incredible tax opportunities available for hiring veterans. For example, the Wounded Warriors Tax Credit is in place to double the already applicable Work Opportunity Tax Credit for veterans who have been unemployed long-term who have service-connected disabilities (tax credit up to $9,600). Additionally, there’s The Returning Heroes Tax Credit. Namely, it is in place to make hiring unemployed veterans even more attractive than it already is (tax credit up to $5,600).

There are various factors to consider in which employment situations qualify for a Work Opportunity Tax Credit related to a veteran. Here are some common situations in which there is eligibility.

Any veteran with a service-connected disability who is hired within a year of being released from active duty or discharged. This also goes for any disabled veteran who gets (or is entitled to) compensation to a service-connected disability that is unemployed for a minimum of six months out of a year before the date they are hired.

Veterans who were unemployed within a one-year period before their hire date for a minimum of four weeks (but less than six months) are also eligible. Additionally, if a veteran is a member of a household that is receiving Supplemental Nutrition Assistance Program (SNAP) assistance, they are eligible.

Other Considerations 

There are other things to consider when looking at receiving tax credits for hiring veterans. For example, you might be able to qualify for the Qualified Long-term Unemployment tax credit in some cases if the person that you’re hiring is employed by you for a minimum of twenty-seven (27) weeks consecutively.

Additionally, if they work a minimum of one hundred and twenty (120) hours you can claim 25% of the wages from their first year of employment (up to $6,000). This would give you an income tax credit of $1,500.

Don’t Guess; Use Quentelle

As you can see, there are many opportunities for tax credits when hiring veterans. But, the specifics vary based on the WOTC eligibility criteria. When you hire a veteran, your company gains an asset. There’s no reason to miss out on the tax benefits as well.

Don’t guess at the specifics of the tax credits available — instead, use Quentelle — it’s smart and simple.  Let’s schedule a demo today to see what tax credits you’re missing out on.

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Employee Retention Credits

Employee Retention Credit: A Tax Break for Employers

The Employee Retention Credit (ERC) was rolled out after the passing of the Coronavirus Aid, Relief, and Economic Security (CARES) Act on March 27, 2020. It was a way for the government to encourage businesses to retain their employees on the payroll following the negative impact of the COVID-19 pandemic. The relief was extended from March 2020 to January 31, 2021. Eligible employers can claim certain payroll taxes against wages paid to their employees in the respective periods.

On December 27, 2020, the Consolidated Appropriations (CAA) Act 2021 was enforced under the CARES Act 2020, modifying the contents of the ERC. The new changes enabled employers to continue claiming the tax credits for another six months, running up to June 30, 2021. The program was again extended and will run-up to December 31, 2021, under the American Rescue Plan Act 2021. 

One of the key employee retention benefits is offering an incentive for employers to still pay wages. In 2021, over 30,000 businesses have already claimed more than $1 billion. However, more businesses still need to be educated, given that the program is guided by some laws and regulations which keep being updated, generating several complexities.

What is the Employee Retention Credit?

It is a fully refundable tax credit which an eligible employer can claim a percentage against qualified wages paid to employees. For 2020, employers can claim 50% of all qualified wages up to $10,000 per employee paid between March 13, 2020, and December 31, 2020. So, you can claim up to $5,000 per employee. This also extends to those who initially borrowed the Paycheck Protection Program (PPP) loans.

In 2021, the American Rescue Plan Act increased the claim amount to 70% of all qualified wages paid to each employee from January 1, 2021, to December 31, 2021. The maximum limit per employee is retained up to $10,000 ($7,000 for each employee per quarter) for any quarter.

What are the Qualifications for Claiming the Tax Credit?

The American Rescue Plan Act approves the credit for any employer, college, university, hospital, and tax-exempt organization as defined under 501(c). It also extends to those who borrowed a loan under PPP.

The Internal Revenue Service issues two requirements that make an employer eligible:

  1. Any business or organization that has experienced a partial or full suspension in their operations due to government orders during COVID-19.
  2. A business that has reported a significant decline in gross receipts.

Not all businesses qualify for the first requirement, including those supplying critical goods and the ones that could resume operations through teleworking. Under the requirement for gross receipts, many businesses qualify.

From March 2020, an employer can make a claim provided the gross receipts in a calendar quarter are less than 50% of gross receipts compared to the same calendar quarter in 2019. However, if the business reports an increase in gross receipts of more than 80% of gross receipts in the next quarter for the same calendar quarter of 2019, it no longer qualifies.

For 2021, employers should prove that their operations were limited due to government closures or quarantines, leading to more than a 20% reduction of gross receipts in the quarter compared to the same calendar quarter in 2019.

What are Qualified Wages for Claiming Credit?

These are wages inclusive of those subject to FICA taxes plus specific health expenses. You need to have paid them between March 13, 2020, and December 31, 2021. In addition, the IRS qualifies health expenses to include both the before-tax deductions from both the employer and employee.

The basis for calculating qualified wages is the number of full-time employees you have hired. IRS defines a full-time employee as one who has worked an estimated 30 hours per week or 130 hours of service each month. The number of full-time employees was updated from 100 in 2020 to 500 in 2021 under the CAA.

So, for 2020, if you had hired more than 100 full-time employees in 2019, you can claim a credit against qualified wages paid for services not provided due to government closure or decline of gross receipts. And, if you had 100 or fewer employees in 2019, you can claim on all wages paid to employees, including those hours not worked due to suspension or gross receipt decline.

In 2021, having more than 500 full-time employees 2019 allows you to include only wages paid to employees for non-working hours because of forced closure or reduction in revenue. If you had employed 500 or fewer full-time employees in 2019, you could calculate credit against wages paid to all employees during the COVID-19 period. Generally, the IRS offers detailed guidelines on the components of ERC intending to help employers get informed and organize how to claim the tax credit to reap the benefits.
Essentially, small businesses can retain their employees even if they are not working, although larger businesses are exempted. If you are an eligible employer, this is a form of tax benefit which reduces your tax obligations. You can also request advance payments from the IRS if the payroll taxes cannot cover the credit amount. 

Just note that the advances are limited to employers with 500 or fewer employees. Furthermore, you can still claim it regardless of borrowing a PPP loan but not at the same time. Employees are also able to sustain their living as they get to keep their jobs.

Taking Action

This is still a challenging time for any business, whether big or small, and the credit program acts as a great relief against the pandemic. It is an opportunity that the government wants you to optimize as it offers a significant tax break to run your business and meet your set goals. As technology solution experts, let us help you manage through the technicalities of eligibility and wage rules. Please contact us, so we can offer you the support you need.

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man using magnifying glass to calculate finances

What Are Point of Hire Tax Credits?

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
  • Ex-Felons
  • 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?

  • WOTC:
    • Work Opportunity Tax Credit is a Federal Program
  • POH: 
    • 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.

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Business Man Looking at Employee Details

The Ultimate Employment Retention Credit (ERC) Guide

The Employment Retention Credit, widely referred to as the ERC, is a refundable tax credit program provided to small businesses by the government. The program is meant to help small enterprises subsidize the costs eligible employers pay their employees to aid employee retention.

Employers can now recover up to 70% of qualified wages through the program, including health benefit expenses paid to employees since the pandemic hit. However, the ERC program is complex, and the conditions have changed so much since its implementation, adding to the confusion.

Below, we break down everything you need to know about the Employee Retention Credit (ERC) program. We will take you through its importance, eligibility requirements, and how to mitigate the financial risks of keeping your workforce employed.

The Evolution of the Employment Retention Credit

The government enacted the ERC at the beginning of the pandemic to help more employers retain their employers as the economy was shaken. Since its enactment, three laws have brought about changes and expansion of the program. 

1. Coronavirus Aid, Relief, and Economic Security (CARES) Act 

On March 13, 2020, the CARES act was enacted for qualifying employers with 1-100 W2 qualifying employees. Employers could claim the credit against 50% of qualified employee wages paid between March 13, 2020, and December 31, 2020. The credit was allowable for wages amounting to $10,000 per employee annually.

2. Consolidated Actions Act (CAA)

The CAA established in December 2020 brought enhancements to the ERC. The most notable changes include an extension of the coverage period to cover the first two-quarters of 2021 instead of ending in December 2020. In addition, employers with 1-500 employees now qualify and can claim credit tax on 70% of qualifying wages up to $10,000 per applicable quarter.

3. American Rescue Plan Act (ARPA)

According to the ARPA, employers can claim up to 70% of qualifying employee wages or a maximum of $7,000 per employee for every quarter. This is applicable for two more calendar quarters between June 30 and December 31, 2021.

Who is Eligible For ERC?

An employer qualifies for employee retention benefits if they satisfy two primary requirements:

  1. They are faced with a significant decline in their gross receipts. To qualify in the tax year 2020, you must have experienced at least a 50% reduction in gross receipts compared to a corresponding calendar quarter in 2019. This changed with the CAA and ARPA seeing that now you qualify if you see 20% gross receipts compared to an identical calendar quarter in 2019 or the quarter you started the business.
  2. They are affected by a full or partial suspension of business operations due to government COVID-19 orders. You only qualify for the portion of the quarter when your business operations are disrupted and not the whole quarter.

Applicants who already received loans under the Paycheck Protection Program (PPP) still qualify for the tax benefits from employee retention. However, this is limited to wages that are not forgiven under the PPP. 

Fortunately, employers with PPP loans can maximize their ERC benefits by including all their eligible non-payroll expenses, such as operational expenses, rent, and utilities, in their PPP forgiveness report. Additionally, employers cannot use the same wage period to apply for both benefits.

The eligibility is also based on the number of company employees, which now ranges between one and 500 employees, excluding the employer.  

  • Employers with 500 or fewer employees can apply for ERC on all qualified wages paid to all full-time employees whether the employees were working or not during the particular quarter. 
  • Employers with more than 500 full-time employees ERC can only be levied on the wages paid to employees who were not working during a specific quarter due to a company suspending its operations or a significant gross receipts decline.

What Are the Qualified Wages?

According to the ERC, qualified wages are any compensation to part or all full-time employees for a specific quarter. These include qualified health plan expenses incurred by an employer. These wages must be subject to FICA taxes and paid after March 12, 2020.

Who Is a Full-Time Employee?

According to the ERC program, a full-time employee works at least 30 hours per week or 130 hours a month during any calendar month of 2019. The full-time employee equivalent for the ERC varies from the PPC forgiveness report.

How To Apply For ERC Credits

The ERC is fully refundable and applied after the deduction of employer Social Security taxes. Furthermore, you receive any amount of excess credit of your total liability for your Social Security taxes.

The IRS issued a Notice-2021-21 to provide employers with necessary guidelines on how to claim ERC credits. According to the notice, if you are eligible, you need to calculate your qualified wages, including your Social Security and Medicare taxes, and account for this credit on IRS File 941 Employer’s Quarterly Federal Tax Return.

You should also include any qualified family leave and sick leave wages approved under the FFCRA. Employers who have already filed their year 2020 taxes can utilize the File 941-X Adjusted Employer’s Quarterly Federal Tax Return or Claim for Refund to retrospectively claim their credits for the past qualifiable quarters when wages were paid. This, however, only applies to wages paid before December 2020.

Quentelle Can Help You Maximize Your ERC

If you are looking for help with the calculation of your ERC credits, look no further. Quentelle is here to provide you with tech-driven solutions for employment verification and point-of-hire credits. We use an advanced platform and employ the best practices to provide you with streamlined income and employment verification requests.

VeriSafeJobs is our world-class platform that not only gets the job done but also keeps your private data safe and secure all the time. With us, you do not have to worry about all the complexities of the ERC, as we will handle it all for you. 

If you’d like to find out more about how we can help you simplify your ERC eligibility or claim process, schedule a demo today to see everything our superior solution can do for you. 

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