Introduction
The Work Opportunity Tax Credit (WOTC) is a valuable program designed to help businesses reduce their tax liabilities by incentivizing the hiring of individuals from groups that face significant barriers to employment. This federal tax credit encourages employers to hire candidates who might otherwise struggle to find stable work. By offering financial incentives, WOTC promotes a more inclusive and diverse workforce, benefiting both businesses and employees.
Walton Management Group plays a pivotal role in simplifying the WOTC process. Our innovative WOTC Calculator and technology-driven solutions make it easy for employers to determine potential savings and ensure they never miss out on a tax credit opportunity. With Walton’s expertise, businesses can streamline the entire WOTC process, from pre-screening to certification, and maximize the benefits they receive.
What is the Work Opportunity Tax Credit?
The Work Opportunity Tax Credit is a federal program that provides employers with a tax credit for hiring individuals from specific target groups. These groups include veterans, ex-felons, and recipients of public assistance, among others. The goal of the WOTC program is to reduce the financial burden on employers while simultaneously promoting inclusive hiring practices for individuals facing employment barriers.
The WOTC tax credit can vary based on the eligible employee’s category and the duration of their employment. This initiative not only helps businesses save money but also contributes to the broader goal of reducing unemployment and economic dependency.
Who Qualifies for Work Opportunity Tax Credit?
To benefit from the WOTC, employers must hire individuals from specific groups identified by the U.S. government. These groups include:
1. Veterans
Veterans, especially those who have been unemployed for extended periods or have a disability, qualify for WOTC. Employers can earn a higher tax credit for hiring veterans with service-connected disabilities.
2. Ex-Felons
Individuals with felony convictions who are hired within a year of release are eligible. This helps ex-felons reintegrate into society through stable employment opportunities.
3. TANF Recipients
People receiving Temporary Assistance for Needy Families (TANF) benefits are eligible. Hiring TANF recipients helps move individuals toward self-sufficiency and reduces reliance on government assistance.
4. SSI Recipients
Individuals receiving Supplemental Security Income (SSI) due to disability qualify for WOTC. Employers can support these individuals in becoming more financially independent and gain loyal employees.
5. Long-Term Unemployed Individuals
Those who have been unemployed for 27 weeks or longer are eligible for the tax credit. Employers can help long-term unemployed individuals by offering them stable employment opportunities.
6. SNAP Recipients
Individuals who receive food stamps (SNAP benefits) can also qualify. By hiring SNAP recipients, employers help reduce dependence on welfare programs and support financial independence.
7. Designated Community Residents
People living in Empowerment Zones or Rural Renewal Counties, areas with high unemployment and poverty, are eligible. Hiring from these areas helps revitalize communities and creates job opportunities in economically disadvantaged regions.
8. Vocational Rehabilitation Referral
Individuals referred by vocational rehabilitation agencies due to a physical or mental disability qualify for WOTC. Employers can hire skilled candidates with disabilities, supporting workplace diversity and inclusion.
How to Apply for Work Opportunity Tax Credit?
The process of applying for a Work opportunity tax credit involves several key steps:
Step 1: Pre-Screening
Pre-screening is an essential first step in determining WOTC eligibility. Employers must ensure that candidates meet the criteria for the designated groups.Â
Step 2: Complete Form 8850
Once a candidate is pre-screened, employers must complete the WOTC Pre-Screening Notice and Certification Request (IRS Form 8850). This form requires basic information about the candidate and their eligibility.
Step 3: Submit Form 8850
Employers must submit the completed Form 8850 to the state workforce agency (SWA) within 28 days of the new hire’s start date.Â
Step 4: Wait for Certification
The SWA reviews the submission and issues a certification if the candidate is eligible.Â
Step 5: Claim the Credit
Once a certification is received, the employer can claim the Work opportunity tax credit when filing taxes.Â
How Walton Management Makes WOTC Easy to Apply?
Walton Management’s technology simplifies every step of the Work opportunity tax credit process, ensuring that businesses can take full advantage of their WOTC eligibility without hassle.Â
1. Pre-screening with the WOTC Calculator
Walton’s WOTC Calculator allows employers to estimate the potential savings based on specific industry results. This calculator uses a proprietary algorithm to provide industry-specific results, helping businesses better forecast their tax credit.
2. Complete and Submit Form 8850
Walton’s streamlined platform automates the submission of Form 8850 to ensure it is submitted within the 28-day window, eliminating the risk of missing out on valuable tax credits.
3. Tracking & Reporting
With Walton’s AlwaysON Reporting, employers receive real-time updates on all hiring activities and WOTC eligibility, ensuring they maximize their credits. Workforce Analytics further helps employers track trends in their workforce and make data-driven decisions.
4. Certification and Claiming
Once certification is obtained, Walton management supports businesses through the process of claiming their WOTC tax credits during tax season, ensuring all eligible credits are claimed accurately and efficiently.
What are the Key Benefits of Using Walton Management’s WOTC Services?
Walton Management offers several benefits that help businesses maximize their WOTC savings:
1. Maximizing Savings
Using Walton’s proprietary algorithm, employers can accurately estimate the potential tax credit savings. For example, a company with 100 new hires could calculate how much work opportunity tax credit could save them annually.
2. Streamlined Process
Walton’s automation tools ensure that businesses only need to hire candidates. Walton’s platform handles all other aspects of WOTC eligibility, from pre-screening to claim filing.
3. Real-Time Updates
Through Critical Push Alerts, Walton management ensures that employers stay on track with deadlines and key tasks, helping them avoid missing opportunities for WOTC.
4. Long-Term ROI
Businesses can save up to $9,600 per qualified hire, and Walton management helps businesses calculate and track these savings over time, ensuring the tax credit is fully optimized.
What are the Benefits of WOTC for Employers, Employees, and the U.S. Economy?
The Work Opportunity Tax Credit provides numerous benefits to employers, employees, and the US economy:
For Employers
By reducing tax liabilities and improving the bottom line, businesses can reinvest in their operations and expand their workforce. Walton’s technology helps ensure companies maximize their WOTC savings and remain compliant with all necessary regulations.
For Employees
For individuals in targeted groups, WOTC helps secure stable, long-term employment and a pathway to self-sufficiency, contributing to a more diverse and loyal workforce.
For the Government and Economy
WOTC benefits the broader economy by reducing government spending on assistance programs. Certified individuals who find stable employment contribute to the economy by paying taxes and participating in the workforce.
How Walton’s WOTC Technology Drives Results
Walton Management leverages technology to drive real results:
ForeSite Platform
Walton’s ForeSite platform automates the entire work opportunity tax credit process, from pre-screening to claim filing. It simplifies and streamlines the application, ensuring businesses maximize their tax credit opportunities.
Push Alerts
Employers are kept informed with text and email alerts for critical deadlines and tasks.
AlwaysON Reporting
Walton’s AlwaysON Reporting provides employers with real-time data on their hiring activities, ensuring that no eligible candidate is missed.
Workforce Analytics
By using Walton’s Workforce Analytics, businesses can track important hiring trends and make better decisions about workforce retention and diversity.
Conclusion
The Work Opportunity Tax Credit offers businesses a powerful opportunity to save money while promoting a more diverse and inclusive workforce. For businesses looking to take advantage of the work opportunity tax credit program, Walton Management provides the expertise and technology needed to streamline the process and ensure maximum tax credits. Get started today by contacting us or booking a demo to see how our automated HR solutions can optimize your WOTC savings!