Steps to Maximize the Work Opportunity Tax Credit for Your Company
Mar 25, 2015
What does the acronym WOTC mean to you as a business owner or HR professional? It may not mean anything to you today, but it should moving forward. WOTC stands for Work Opportunity Tax Credit. According to the U.S. Department of Labor, WOTC “is a Federal tax credit available to employers for hiring individuals from certain target groups who have consistently faced significant barriers to employment” and “joins other workforce programs the incentivize workforce diversity and facilitate access to good jobs for American workers.” This credit can vary from 25% to 40% of the employees first year’s salary depending on how many hours worked.
Examples of the specific “target” groups within WOTC include:
Vocational rehabilitation referrals
Social security recipients
The process for employers to participate in the WOTC program is easy. First, employees must fill out IRS Form 8850 when the employee starts working. Then, this document must be submitted by the employer to the state’s workforce agency for certification or denial within 28 days of the employee’s start date. Once certification is received by the employer, IRS Form 5884 is used to claim WOTC and is filed with the employer’s federal tax return. Overall, it is a simple process that can have a significant impact on the employer’s bottom line.
At Extra Help, Inc., we have been successful in implementing this program and we encourage our clients to do the same. If you have any questions about WOTC and how to get this process started for your business, please contact your nearest Extra Help, Inc. location.