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"Not only was Walton able to get us onboard expeditiously, but their solution delivered unprecedented results for our WOTC program."
VP, Human Resources
*Quentelle uses a proprietary algorithm to determine the results on this tool. This tool is intended to provide an estimate of potential savings based on the information you provide. Please note that your company's results may vary, based on a number of other components and we do not guarantee the results displayed on this tool. For more information, please contact us.
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Completion of Eligibility Pre-screening
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E-signed and Filed Form 8850
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WOTC savings potential realized
See how we helped a well known grocery retailer double its Work Opportunity Tax Credits implementing our proven solutions.
Comprehensive Tax Credit Solution
Through a partnership with Walton, a leading provider of employment tax credits, Quentelle delivers a streamlined solution that screens for Work Opportunity Tax Credits (WOTC) with ease. Administering a simple but proven short questionnaire during your company’s hiring or onboarding process empowers Walton to determine eligibility and pursue tax credits on your behalf.
Walton also pursues all other point-of-hire, federal, local and state tax credits that your company may qualify for as part of an integrated screening solution. This includes Federal Empowerment Zone and the Indian Employment Credit program, to name a few. With our proven solution, all you have to do is hire away. We take care of the rest, behind the scenes.
When it comes to screening, we like to keep it simple. Walton leverages a number of integrations with some of the most well-known and reputable Applicant Tracking, Onboarding and Payroll providers. This allows Walton the flexibility to automate your tax credit screening and deliver a simple and swift user experience while driving maximum results.
Turning over your company’s tax credits ensure you get the best of both worlds. You’ll rest assured knowing that no stone is left unturned to maximize your tax savings and you can eliminate your team’s workload by implementing Walton’s proven solutions.
Point-Of-Hire Tax Credits
Work Opportunity Tax Credit (WOTC) is a federal point-of-hire tax credit offered to employers if they provide jobs to individuals belonging to certain designated employee groups. These targeted groups include persons that face serious employment barriers. The federal government has extended the WOTC tax credit program until 31st December, 2025.
What Types of Workers Qualify for Point-of-Hire Tax Credits?
The worker groups with barriers to employment that you may hire to become eligible for WOTC tax credit include:
- Recipients of TANF (temporary assistance for needy families)
- Recipients of SNAP (supplemental nutrition assistance program)
- Recipients of state assistance for needy families with kids
- Residents of designated communities (residing in rural renewal counties or empowerment zones)
- Individuals who qualify for vocational rehabilitation
- Former convicted felons
- Recipients of SSI (supplemental security income)
- Recipients who qualify for long-term unemployment
You are not eligible to claim WOTC tax credit for the following individuals, even if they belong to the targeted groups: Your family members or dependents as well as individuals with majority ownership in your business.
Can Tax-Exempt Employers also Qualify to Claim WOTC Tax Credit?
All types of employers, irrespective of the size of their workforce, may qualify to claim WOTC tax credit. This not only covers taxable employers claim, but also some types of tax exempt employers claim in the US. The taxable employers are able to claim the tax credit against income taxes, while tax-exempt employers can only claim it against payroll taxes (incurred on the wages paid to specific targeted group employees).
The Process to Qualify an Employee for Point-of-Hire Tax Credits
During the course of the employment process, the employer as well as the job candidate is required to fill out two forms (IRS Pre-screening Form 8850 and DOLF Form 9061). This must be done prior to or on the day the work starts their job. You will be ineligible to claim the WOTC tax credit if this form completion requirement is not fulfilled.
Once the individual has joined employment, you are required to submit these two completed forms to the state employment or workforce agency on or before the 28th calendar day of their starting the job. The state agency will then determine whether the employee qualifies for you to obtain WOTC tax credit. Once the employee’s eligibility has been certified by the state agency, it will inform you by sending a determination letter.
Types of Wages are Taken into Account for Tax Credit
Once the worker’s eligibility has been determined, the next step is assessing the total amount of wages that will count towards the computation of Work Opportunity Tax Credit for that worker. The worker must have received the wages in the first year of job, and they must have worked for a minimum of 12o hours during the first year.
This effectively means that in order to file and qualify for the WOTC tax credit, you must wait until the eligible worker has accumulated 120 hours of work in their first year of employment. You must take into account the following conditions for the purpose of computation of the tax credit:
- Only such wages must be included on which you have paid unemployment insurance tax.
- Your business must have directly paid the wages (indirectly paid wages or wages that a third party has subsidized do not count.)
- Tax credit equivalent to 25% of the eligible worker’s wages can be claimed if they have worked for a minimum of 120 hours in the first year.
- Tax credit equivalent to 40% of the eligible worker’s wages can be claimed if they have worked for a minimum of 400 hours in the first year.
- Wages that are used for WOTC tax credit computation cannot be used for other types of worker state or federal tax credit.
How do Point-of-Hire Tax Credits Impact Your Business Taxes?
Once the WOTC tax credit has been computed, you can apply it to your company’s income tax liability incurred for the year. This must be done in a specified order along with other types of tax credits you may be claiming. The type of tax form you will have to use for claiming the credit will depend on the category or type of your business. The total amount of Work Opportunity Tax Credit is limited to the amount of Social Security taxes owed or the total amount of income tax liability of your business.
This effectively means that in order to file and qualify for the WOTC tax credit, you must wait until the eligible worker has accumulated 120 hours of work in their first year of employment. You must take into account the following conditions for the purpose of computation of the tax credit:
A Suite of Solutions to Improve Your Business Bottom Line
Quentelle offers you a suite of innovative and advanced solutions, including WOTC tax crzedit process automation. Our digital platform is helping a growing number of businesses add value to their business bottom line. To know more or to request a demo, call us at (888) 565-5515* or fill out this online contact form.