You may have heard the term “WOTC”, but you’re not quite sure what it means. Or maybe you generally know that it has something to do with taxes and credit. But, if you’re being honest you’re unsure what the precise details and specifics are. If so, you’re not alone.
In this article, we’re going to talk to you about the absolute basics of WOTC, who qualifies, and why it’s one of the most underutilized opportunities for tax credits for most businesses.
Let’s talk about the what, who, and why of WOTC.
What is WOTC?
The WOTC (the abbreviation for the phrase Work Opportunity Tax Credit) is a federal program that gives tax credits to companies that hire people who otherwise can face challenges to secure employment.
It is a federal tax credit program that was originally put in place in the mid-’90s (1996). And, it has been continually extended since then. It focuses on helping people such as ex-felons, veterans, and those who receive support from places like the Supplemental Nutrition Assistance Program (SNAP, or commonly known as food stamps), to name a few.
Overall, WOTC is in place to promote the hiring of people who may otherwise not be able to find a job.
Who is WOTC For?
Work Opportunity Tax Credits benefit people who are looking for employment as well as companies who hire them.
In terms of the people that you could hire to potentially qualify for the WOTC, there are many criteria that someone could meet. There is quite a bit of nuance and specifics. But, many credits fall into the two main categories of veteran target groups and non-veteran target groups.
Non-veteran target groups include anyone who was previously convicted of a felony. They also include people who have been unemployed for a period that is formally considered long-term for starters. Furthermore, it includes anyone who is receiving SNAP assistance and those who are considered to be recipients of Long-Term Family Assistance (that meet certain timeframes and criteria). Those are just some of the non-veteran target groups that WOTC is designed to benefit.
Veteran target groups typically serve those who have a service-connected disability. Other WOTC categories target unemployed veterans. There are also considerations to keep in mind regarding their hire dates and their discharge or release date. Additionally, any veterans who are members of a household that received SNAP assistance can also be eligible.
In addition to giving an individual an opportunity, and hiring an employee that may prove to be a valuable asset, there are also benefits to your company financially. When you hire someone eligible for a WOTC, you reduce your federal tax liability– often significantly per eligible employee hired.
There are many opportunities to apply for WOTC tax credits, but there are companies still missing out.
Here at Quentelle, we specialize in a simple and smart way to get you every WOTC credit you’re entitled to. Let’s schedule a demo and we’ll show you how.