The Work Opportunity Tax Credit (WOTC) is a federal tax credit that encourages employers to hire individuals from several target groups. Individuals that make up WOTC target groups face significant barriers to secure employment. The credit can be worth up to $9,600 per eligible employee.

To be eligible for the WOTC, an employer must hire an individual who is a member of one of the following target groups:

• Summer Youth
• TANF* Recipients
• SNAP** Recipients
• SNAP** Veterans
• Unemployed Veterans
• Vocational Rehabilitation Referrals
• Designated Community Residents
• Ex-Felons
• Disabled Veterans
• Long-term Unemployed Veterans
• Long-term TANF Recipients***
• Unemployed and Disabled Veterans

Here are some of the benefits of the WOTC for Employers:

• Reduces federal tax liability
• Improves employee retention and productivity
• Creates a more diverse workforce
• Promotes corporate stewardship

Here are some of the benefits of the WOTC Employees:

• Increases the likelihood of finding employment
• Provides access to training and skills development opportunities
• Leads to higher wages and better benefits
• Moves them from into self -sufficient members of the society

Location-based tax credits are tax incentives offered by governments to businesses that locate or operate in specific geographic areas. These credits can be used to reduce a business’s tax liability, making it more affordable to do business in those areas.

There are many different types of location-based tax credits, but some of the most common include: Federal Empowerment Zones (FEZ), Indian Employment Credit (IEC), and Disaster Relief Credits and Incentives just to name a few.

The Employee Retention Credit (ERC) is a refundable tax credit that was available to eligible employers to help them retain employees during the COVID-19 pandemic. This credit was introduced by the Coronavirus Aid, Relief, and Economic Security (CARES) Act in March 2020 and was subsequently amended three times by the following laws: the Consolidated Appropriations Act, 2021, the American Rescue Plan Act (ARPA), and the Infrastructure Investment and Jobs Act.

To be eligible for the ERC, an employer must have met the following requirements:

• Employers must have had qualified wages paid to employees after March 12, 2020.
• The employer must have experienced a significant decline in gross receipts during 2020 or the first three quarters of 2021.
• The employer must have either fully or partially suspended operations during the pandemic or must have experienced a significant decline in the number of employees working.

Amount of the Credit

The amount of the ERC was based on the wages paid to qualified employees. The credit was equal to 70% of qualified wages paid in 2020 and 50% of qualified wages paid in 2021. However, the credit could not exceed $5,000 per employee per quarter.

Claiming the Credit

Employers could claim the ERC by filing Form 8974 with their federal income tax return. They must also complete Form W-11 to document the credit.

Expiration of the ERC

The ERC expired on September 30, 2021. However, employers who were eligible for the credit but did not claim it on their 2020 or 2021 tax returns can still claim it by filing a Form 8974-V with their IRS Taxpayer Assistance Center.

Other Considerations

The ERC was a complex credit, and there were many rules and limitations that applied. Employers should consult with a tax advisor to determine if they were eligible for the credit and how to claim it.

VOE is an acronym in HR that stands for Verification of Employment: A VOE is a request to verify an individual’s employment history. It is typically requested by potential employers, lenders, or government agencies to confirm an individual’s job title, salary, dates of employment, and other relevant information.

UI tax planning is the process of minimizing a business’s unemployment insurance (UI) tax liability. These UI taxes are levied on employers to fund state unemployment insurance programs, which provide benefits to workers who have lost their jobs. The amount of UI tax an employer pays is based on its experience rating, which is a measure of how many of its former employees have filed for unemployment benefits.

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